Category Archives: SEC Regulations

The SEC is closed for Columbus Day: Monday, October 12


In honor of Columbus Day, the SEC is closed on Monday, October 12, 2015. No files can be received.

Files submitted after 5:30 pm ET, Friday, October 9, 2015 will receive a filing date of October 13, 2015 and will be posted to the public on October 13, 2015 at 6:00 am ET.

As with other holiday closings, the following file types will receive a Friday, October 9, 2015 filing date if filed by 10:00 pm ET on Friday, October 9, 2015:

  • Form 13H filings
  • Section 16 filings (3, 3/A, 4, 4/A, 5, 5/A)

For any filing with a due date of Monday, October 12, 2015, the SEC will move the due date to the next business day, Tuesday, October 13, 2015.

Have a great holiday.

Regulation A+ takes off!

Reg A+ has been a win for creating capital raising opportunities for developing companies. Prompted by the JOBS Act, these new SEC rules and amendments to Regulation A became effective June 19, 2015. The “+” is the increasing of the maximum annual offering amount to $50,000,000 from just $5,000,000.


We have already worked with several companies – many “testing the waters” as Confidential IPOs. Two clients that did complete their process – and are openly on the SEC website are:

As you can see, Reg A+ is a very precise process. It should not be considered an “easy path.” Just “easier.” To be eligible for the Regulation A+ exemption, issuers must file an offering statement on SEC Form 1-A. This is similar to a S-1 registration statement but somewhat less arduous and has no SEC fee. The EDGAR system – and Vintage – are the tools used.

Regulation A+ offerings are divided as two tiers:

  • Tier 1: annual offering may not exceed $20 million; no more than $6 million offered by selling security holders that are affiliates
  • Tier 2: annual offering may not exceed $50 million; no more than $15 million offered by selling security holders that are affiliates

Tier 1 offerings or Tier 2 offerings that will be listed on OTC Markets, NASDAQ or NYSE do not have specific investor qualifications. For other Tier 2 offerings, investors must either be “accredited investors” or limit their investment to no more than 10 percent of the greater of annual income or net worth.

A Reg A+ exemption is offered to most companies organized and primarily located in North America. The following organization types cannot use Reg A+.

  • Companies subject to Securities Exchange Act of 1934 requirements
  • Investment companies or BDC (business development companies)
  • Confirmed “bad actors”
  • Development stage companies that have no specific business plan or purpose
  • Development stage companies that have designated that their business plan is to merge or acquire with an “unidentified entities”

As above, the Reg A+ process is very much like the S-1 process. This white paper illustrates that.

What’s all this fussydoo* about Apple and RegFD?

Last week there was a bushel of securities law / capital markets conjecture regarding whether Apple’s CEO, Tim Cook, violated RegFD with a rare mid-quarter update via an email to CNBC’s Jim Cramer.

“Obviously I can’t predict the future, but our performance so far this quarter is reassuring,” Cook wrote.

The media exploded with pundit-ism from every corner of the web, even touting the SEC’s 2012 social media relaxed view on RegFD. It all seemed to be an unnecessary “news-jacking” and knee-jerking reaction. Most of it was trying to make controversy where none was needed.

That email to Mr. Cramer was sent on Monday. Whether it was selective disclosure or not, Apple’s IR and regulatory teams had until the next trading day to correct any possible RegFD gaffe by simply filing a Form 8-K.


Form 8-K requires public companies to make prompt disclosures about a large number of specified events – including, as required by Regulation FD, a possible slip of non-public information in an exclusive, selective manner

Issuers need to ensure that they have in place disclosure controls and procedures that will permit them to monitor developments that could trigger a Form 8-K filing requirement. Apple certainly does. They have a top IR team and probably more in-house counsel than I can imagine.

Generally, a Form 8-K must be filed within four business-days after the day of the incident of a reportable (potential) material faus pax. The following table indicates the day of the week on which Form 8-K filings will generally be due under the standard four-business-day deadline:

Day of selective disclose Filing deadline
Sunday Thursday
Monday Friday
Tuesday Monday
Wednesday Tuesday
Thursday Wednesday
Friday Thursday
Saturday Thursday
Our free guidebooks discuss 8-k at great detail. They are free. Request your copy here.

Our free guidebooks discuss Form 8-k in painful detail. They are free. Request your copies here.

This is an 8-K at it’s most simplistic. As with any regulation, there are exceptions including:

  • Earnings announcements
  • Creation of a contingent obligation under certain off-balance sheet arrangements
  • Termination of employees as part of a plan to exit an activity The appointment of certain new officers
  • Material impairments identified in connection with preparation, review or audit of financial  statements
  • Temporary suspension of trading under the company’s employee benefit plans
  • Company’s decision regarding the frequency of future shareholder advisory votes on executive compensation
  • Voluntary disclosures
  • RegFD violation

Our free guidebooks discuss Form 8-K in painful detail. They are free. Request your copies here. Review our EDGAR services here.

*Not a real word used in securities law or capital markets.


The 5 Stages of M&A: overview chart is now downloadable

Having just five stages is a bit oversimplified, however working with young, inexperienced organizations – many Emerging Growth Companies –  we’ve found that having a 30,000 foot view of a deal has proved useful. Certainly, the law firms have the street-level “to-do” list however this guides their corporate working group to think in deadlined-structured buckets.



The five stages:

  1. Foundation
  2. Preparation
  3. Examination
  4. Negotiation
  5. Completion

As you read on the one-page guide, CLICK HERE, both sides of the M&A transaction have tasks at each stage.

Our role within the five stages is two-fold: 1.) the set-up and management of the secure virtual data room (watch video demo) and 2.) with the material disclosure required to the SEC and/or across the news media and to shareholders.


Dodd-Frank pay ratio disclosure requirement adopted: It’s time to practice “CEOR”

Investor Relations (IR) officers may have a new job description: Chief Executive Officer Relations (CEOR). You may have to begin planning to simultaneously communicate the company’s AND the CEO’s financial brand.

In a 3-2 vote, the Securities and Exchange Commission, yesterday, adopted a final rule that requires public companies to disclose the ratio of their CEO’s compensation against the median compensation of its employees.

Beginning with their first fiscal year on or after January 1, 2017, this new element within Dodd-Frank’s say-on-pay mandate, may force IROs to “justify” their CEO value to The Street, employees and even consumers. Coincidently, new research from Harvard Business School shows that customers favor retailers that reign in their CEOs’ salaries. Their research documented that an issuer with an unbalanced CEO-to-employee Yin & Yang must offer a considerable 50% discount to be par with a company that keeps a low ratio.


Time will tell what Wall Street thinks… certainly, activist investors and CSR-minded institutional investors will use the ratio data when it benefits them most. IR and corpcomm’s workload will undoubtingly increase to counterbalance the predicted hype from media and markets’ pundits “naming and shaming” well paid CEOs and the companies that employ them.

Issuers do have some flexibility in calculating their pay ratio:

  • Companies will have to include part-time and non-U.S. employees in CEO pay ratio calculation
  • Pay ratio will allow issuers to exclude 5% of non-U.S. employees or those in nations with restrictive data privacy laws
  • The median employee determination calculation is required only once every three years
  • The determination date can be within the last three months of a company’s fiscal year

The ratio disclosure would apply to all companies required to provide executive compensation disclosure under Item 402(c)(2)(x) of Regulation S-K.  Smaller reporting companies, foreign private issuers, MJDS filers, emerging growth companies, and registered investment companies would not be subject to the requirement.

For details on Form S-K filings, our free guidebooks are recommended. REQUEST A SET HERE.


SEC Reg A+ gives Twitter and StockTwits a “Like”

The enhancements to Reg A+ (read more here) not only increases the capital raise allotment ten-fold, but the Securities and Exchange Commission’s Compliance and Disclosure Interpretation published that an emerging growth company post a social media message about its offering to “test the waters” towards potential investors.


Their points are below. Note, when the SEC says “…technological limitations on the number of characters or amount of text…” they mean Twitter and StockTwits type platforms.

  • The electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
  • Including the required statements in their entirety, together with the other information, would cause the communication to exceed the limit on the number of characters or amount of text; and
  • The communication contains an active hyperlink to the required statements that otherwise satisfy Rule 255 and, where possible, prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.

These conditions are consistent with the SEC’s view on social media, when it gave the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings a thumbs up. Of course, this all birthed from the 2012 Jumpstart Our Business Startups Act, which deregulated fundraising rules for emerging growth companies.

5 questions and 37 answers about SEC Reg A+

Each day, our Reg A+ team (READ HERE) is fielding more questions from clients, eager to learn about the impact the new Regulation A+ can have on their potential capital raise. Here is a quick to-date Q&A compilation. Spoiler: there is a lot of industry jargon below.



Why a new Regulation A (+)?

  • Mandated by JOBS Act. Old Reg A was rarely used. Exemption only allowed $5 million capital raise. Reg D exemption much more widely used.
  • Blue sky (state) review was required
  • Updated Reg A (Reg A+) allows for capital raise up to $50 million, and Tier
  • Two raises not subject to Blue sky review
  • Reg A+ securities are not restricted (advantage over Reg D)
  • Potential liquidity advantage: exit strategy for VC

Who can use Reg A+?

  • Must be U.S. or Canadian company
  • Must NOT be already subject to Exchange Act reporting
  • Canadian companies can be listed in Canada
  • REITs allowed; BDCs NOT allowed (yet)
  • 40 Act companies, shell companies NOT allowed
  • Securities offered must be equity, debt, or convertible to equity
  • ABS NOT allowed

What are the requirements? 

Tier 1 (up to $20 million)

  • File an Offering Circular on Form 1-A. Some exhibits required
  • File an Exit Report on Form 1-Z
  • Tier 1 still subject to Blue Sky review
  • Intended for smaller, regional offerings
  • Not expected to be a large portion of the filings

Tier 2 (up to $50 million) 

  • File an Offering Circular on Form 1-A. Some exhibits required
  • Prelim/Final Offering Circulars under Form Type 253(G1-4) [similar to 424 filing on Registered side]
  • Ongoing periodic reporting (current, semiannual, annual)
  • Audited Financials
  • May see voluntary Quarterly Financial filings to allow 144A sales
  • Exit report required on 1-Z
  • Transfer Agent services likely necessary
  • Monitor number of shareholders
  • Limited exemption from Exchange Act filing, but even if over limit, 2 year transition to Exchange Act reporting

Are Confidential Draft filings allowed?

  • Similar to Emerging Growth Companies, who can file DRS
  • Reg A+ confidential filings file under DOS
  • DOS filings (and amendments) must be made public at time of 1-A filing— eliminates need to refile confidential filings as exhibits; starts 21-day clock towards qualification
  • There is no “Effectiveness” since there is no “Registration”; instead there is “Qualification”

Is Reg A+ a stepping stone to a exchange listing?

  • OTC changing its rules to allow Tier 2 Reg A+ disclosure to fully meet OTC disclosure requirements for the OTCQB Venture.
  • Partially meets OTCQX requirements (must also make quarterly financial reports, timely disclosure of material news events and have PCAOB audit standards)
  • Canadian companies must be listed on a qualified foreign exchange (e.g.TSXV)
  • Form 8-A eligible (no need for longer Form 10)