SEC eases restrictions on Regulation D, Regulation A, crowdfunding offerings

In order to make it easier for smaller and medium-sized companies to raise capital through securities offerings, the U.S. Securities and Exchange Commission (the “SEC”) recently adopted amendments that will expand certain exemptions from registration.

The amendments, which will become effective 60 days after Federal Register publication, make the following changes: 

• Allow companies to raise capital more quickly by shortening the “integration” safe harbor period from six months to 30 days;
• Liberalize communications restrictions by:
  • Establishing a new generic “solicitation of interest” / “testing the waters” exemption for communications with any investor prior to determining which offering exemption to use;
  • Creating a new “demo day” exemption to the prohibition on general solicitation and general advertising (“general solicitation”);
• Reduce the disclosures that must be made to accredited investors in Regulation D offerings, including not requiring audited financial statements in offerings of up to US$20m; and
• Increase the offering limits under Rule 504 of Regulation D, Regulation A and Regulation Crowdfunding (CF).

In addition, the amendments will eliminate the competitive harm requirement when an issuer seeks confidential treatment for portions of material contracts filed as exhibits with the SEC. 

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