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MoFo Jumpstarter

For jumpstarts, upstarts and start-ups

Update on SEC Rulemaking

Posted in Accredited Investor Standard, Crowdfunding, Dodd-Frank News, SEC News

Chair White, addressing the Investor Advisory Committee, provided an update on SEC rulemaking.  Chair White identified the following initiatives:

  • the disclosure effectiveness initiative;
  • the review of the “accredited investor” definition;
  • action on the tick size pilot; and
  • the adoption of final crowdfunding rules.

Chair White also noted that the Commission must complete its required rulemakings under Dodd-Frank, including the Title VII and the executive compensation related rulemakings.  See her remarks here: http://www.sec.gov/news/statement/opening-remarks-to-the-investor-advisory-committee.html.

Complimentary Teleconference: Structuring Your Regulation A+ Offering

Posted in Events, Regulation A+

On April 14, 2015, at 1:00 pm EST, Morrison & Foerster Partners Marty Dunn, David Lynn and Anna Pinedo will lead a teleconference on structuring Regulation A+ offerings. Now that the Securities and Exchange Commission has adopted final rules amending Regulation A, issuers, venture and private equity investors and financial intermediaries may want to consider a Regulation A offering as a capital-raising or as a liquidity opportunity. Although its availability is not limited to any particular industry sector, life sciences and biotech companies, community banks, and real estate businesses may find this alternative especially attractive. During our briefing session, we will provide an overview of the new rules and focus on Tier 2 offerings, permitting an issuer to raise up to $50 million in proceeds. Speakers will address:

  • Eligibility requirements;
  • Preparation of disclosure materials;
  • Testing-the-waters and other communications issues;
  • Integration of offerings in close proximity;
  • Regulation A as a precursor to an IPO;
  • Use by selling stockholders; and
  • Obtaining a concurrent stock exchange listing.

CLE credit is pending.

To register for this session, or for more information, please click here.

Investor Advisory Committee Meeting

Posted in Advisory Committee on Smaller and Emerging Companies, SEC News

The SEC Investor Advisory Committee will hold its next meeting on Thursday, April 9, 2015, beginning at 9.30am.  The meeting will be webcast on the SEC’s website.  The agenda includes a discussion of the recommendations of the SEC Advisory Committee on Small and Emerging Companies.  The full agenda may be found here:  https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac040915-agenda.htm.

Complimentary Seminar: Choreographing Your Financings

Posted in Biotech, Events, Intellectual Property, IPO On-Ramp, Private Placements, Public Companies

Dance Moves

On May 5th, 2015, in Tel Aviv, Israel, Morrison & Foerster will present a complimentary seminar titled “Choreographing Your Financings”. For intellectual property-based companies, like technology and life science companies, planning your financing strategy is essential. Timing your financings in light of upcoming product announcements or design wins, milestones, or trial results may often be the difference between success and failure. In this series of sessions, Morrison & Foerster Partners Anna Pinedo and James Tanenbaum, along with a few guest speakers, will focus on the special disclosure considerations and financing approaches that are most significant whether you are planning an IPO or are already a public company. Topics will include:

Preparing for an IPO for the IP-Based Issuer

  • Discussion of IP risks;
  • Disclosure relating to potential IP litigation arising around time of IPO; and
  • IP opinions.

Ongoing Disclosure Issues for IP Based Companies

  • Milestones, royalties and your MD&A disclosure;
  • Frequently Issued SEC comments; and
  • Obtaining confidential treatment.

Financing Trends for Tech and Biotech Companies

  • The Pre-IPO private placement;
  • Equity Lines, PIPEs and Confidentially Marketed Public Offerings; and
  • Sequencing Financings in Conjunction with Clinical and Related Announcements.

For more information, or to register, please click here.

PLI Webinar: Capital-Raising using Regulation A+

Posted in Events, Regulation A+

On April 6, 2015, at 1:00 pm EST, Morrison & Foerster Partners Anna Pinedo and David Lynn, and Zachary O. Fallon, Special Counsel, Division of Corporation Finance, U.S. Securities and Exchange Commission (invited), will participate in a PLI Webinar on capital-raising using Regulation A+.  On March 25, 2015, the U.S. Securities and Exchange Commission unanimously adopted final rules, which will be effective this summer, that amend Regulation A.  Regulation A+ will provide an important capital-raising alternative for private companies in the United States and Canada.  A Regulation A+ offering may be used in connection with a primary offering of newly issued shares by a company or to resell securities held by existing stockholders.  Whether you are contemplating a Regulation A+ offering as a precursor to an IPO, as a liquidity opportunity for existing holders or as an alternative to a traditional IPO, you will need to understand the requirements of the final rule.  In this webinar, speakers will discuss:

  • Tier 1 and Tier 2 offerings;
  • Eligible issuers and eligible securities;
  • Availability for selling securityholders;
  • Communications rules and testing the waters;
  • Disclosure, financial statement and other filing requirements;
  • Ongoing reporting requirements for Tier 2 issuers; and
  • Concurrent Regulation A+ and Exchange listings.

PLI will provide CLE credit.

To register for this session, or for more information, please click here.

A-Okay, Regulation A+

Posted in Regulation A+, SEC News

This is a very brief, initial summary.  We will be reporting on the final rule in an upcoming alert.  The SEC’s proposed rules already had provided a very practical format for private issuers seeking to raise capital.  The proposing release generated mixed comments, with practitioners largely supporting the SEC’s proposal, and others raising concerns about the pre-emption of state securities review.

From today’s open meeting, and without having yet reviewed the final rules, it sounds like the SEC has taken an approach that seeks to promote capital formation, while preserving the disclosure requirements (both initial disclosure requirements and periodic reporting requirements for larger offerings) and other investor protection measures that were central to the proposing release.

The final rule establishes two tiers:  Tier 1, for offerings that raise up to $20 million in proceeds in a 12-month period, including no more than $6 million of securities sold on behalf of selling securityholders, and a Tier 2, for offerings that raise up to $50 million in proceeds, including no more than $15 million of securities sold on behalf of selling securityholders.  This will permit smaller and emerging companies to have an opportunity to raise substantial capital.  The $50 million limit is, by statute, subject to periodic review by the SEC to determine whether the threshold is reasonable.  The final rule also will include a limitation on the overall amount of securities that may be sold on behalf of selling securityholders.

The exemption will not be available to certain bad actors and to other entities, such as investment companies.

The final rule, consistent with the proposed rule, modernizes the offering process by, for example, requiring that Regulation A+ offering statements be filed on EDGAR.  The final rule incorporates a confidential submission process, similar to that available to EGCs relying on the JOBS Act, as well as the use of test-the-waters communications.  Consistent with the proposed rule, a Tier 2 offering will be subject to rigorous disclosure standards, including a requirement to include audited financial statements, as well as to an investor limit. Issuers conducting Tier 2 offerings will also be subject to a requirement to file annual, semiannual and current event reports.

Most important to the success of Tier 2 offerings, Tier 2 offerings, given the detailed disclosure requirements and SEC review, will not be subject to state securities review.  In addition, the final rule provides for a Tier 2 issuer to concurrently file a short-form Form 8-A to register a class of securities under Exchange Act Section 12(g) or 12(b)—this means that a Tier 2 issuer will, if it chooses to do so, be able to conduct a Regulation A+ offering and list on a national securities exchange.

Press Release

Commissioner Statements regarding Regulation A+

Chair White

Commissioner Aguilar

Commissioner Piwowar

Commissioner Gallagher

Chair White’s Testimony on SEC Initiatives

Posted in Dodd-Frank News, JOBS Act News, Regulation A+, SEC News

In testimony today, Chair White provided a brief update on various rulemaking initiatives.  She noted that, in connection with the Dodd-Frank Act mandates, the Division of Corporation Finance continues to work to implement provisions of the Dodd-Frank Act relating to executive compensation matters and payments by resource extraction issuers, and is currently conducting the review of the accredited investor definition.  On the JOBS Act, Chair White noted that tomorrow the Commission will meet to consider a final rule implementing Regulation A+ (Title IV of the Act).  She did not comment on Title III, crowdfunding.  She noted that the Division of Corporation Finance is developing recommendations for updating disclosure requirements in furtherance of the work done on the JOBS Act-mandated Regulation S-K study.  She noted that the Commission intends to continue evaluating the tick size pilot program.  The text of the testimony is available here:  http://www.sec.gov/news/testimony/2015-ts032415mjw.html#.VRGymU10yFg.

On the Hill this Week….

Posted in Capital Formation, Dodd-Frank News, JOBS Act News

On March 24th, the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Securities, Insurance and Investment will hold a hearing on “Capital Formation and Reducing Small Business Burdens.”  Information about the hearing is available here:  http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=72b34807-258f-41be-ae69-42bcdb0c150a.

Also on March 24th, the U.S. House Committee on Financial Services will hold a hearing, “Examining the SEC’s Agenda, Operations and FY 2016 Budget Request.”  Chair White is the only witness testifying at the hearing and is expected to address the SEC’s rulemaking progress toward implementation of the Dodd-Frank Act and the JOBS Act.

A+ or Not?

Posted in JOBS Act News, Regulation A+, SEC News

The SEC has scheduled an open meeting for this Wednesday to consider whether to adopt rules and forms related to the offer and sale of securities pursuant to Section 3(b) of the Securities Act of 1933 to implement Section 401 of the Jumpstart Our Business Startups Act—or, in other words, whether to adopt the Reg A+ rules.  See here for the meeting notice:  http://www.sec.gov/news/openmeetings/2015/ssamtg032515.htm.  As we have written in prior blog posts, the utility and future of Reg A+ will turn largely on state pre-emption for Tier 2 (or larger) Reg A+ offerings.