Securities Offering Reform

On June 29, 2005, the Securities and Exchange Commission (SEC) unanimously adopted new rules, substantially in the form they were proposed in November 2004, modifying and significantly enhancing the communication, registration and offering process under the Securities Act of 1933. According to the SEC, the reforms are intended to eliminate "unnecessary and outmoded restrictions" on registered offerings. This White Paper highlights the key reforms that are likely to affect the conduct of registered offerings.

It should be noted that blank check, shell and penny stock issuers, delinquent filers, companies with "going concern" audit opinions in the last year, issuers that have filed for bankruptcy protection in the last three years, and those that have been found to have violated the antifraud provisions of the securities laws ("ineligible issuers") will not be able to benefit from the new rules. With respect to securities law violators, the new rules base ineligibility on agency decisions, court orders or government settlements that involve anti-fraud violations, rather than on all violations as was previously proposed in November 2004. In addition, settlements entered prior to the effective date of the new rules would not be a basis for disqualification. Specifically, the White Paper outlines the following topics:

• Automatic Shelf Registration
• Additional Shelf Registration Improvements
• Offering Period Communications
• Free Writing Prospectuses
• Liability Provisions
• Access Equals Delivery
• Incorporation by Reference
• Research Reports
• Exchange Act Report Disclosure
• Effectiveness of New Rules

For the full story, please view the PDF.