With a total of 284 U.S. operating company IPOs in 2014, the U.S. securities market might appear to be on an upswing – after all, this was its biggest year since the dot com era ended in 2000. Nonetheless, this figure does not compare with what it should be given our annual 3% GDP growth rate, which would have required 520 IPOs if the dot com era is used as the baseline. Furthermore, the U.S. is no longer the world leader in IPOs – it has fallen to #2 in large IPOs and #12 in small IPOs, and has experienced a decrease to only 5,000 listed companies from 9,000 in 1997. The shrinking U.S. IPO market brings associated potential problems: lackluster employment opportunities, decreased innovation and failure of the U.S. to sustain itself as a market leader. Continue Reading
On March 25, 2015, the Securities and Exchange Commission adopted final rules amending its Regulation A, i.e., the so-called “Regulation A+ Rules”. Regulation A has been a little used provision in the securities laws due to, among other shortcomings, the limit on offering size to $5 million in any 12-month period and the requirement that these offerings be cleared not just by the SEC but any state in which an issuer was planning to offer and sell the securities. From 2012 to 2014, there were only 26 Regulation A offerings. Instead, private companies have relied heavily on Rule 506 of Regulation D, which offers no cap on the amount that can be raised and federal preemption of state securities laws. Continue Reading
In “Bringing the Individual Accredited Investor Definition into the 21st Century,” which was posted on December 18th of last year, it was suggested that there might be certain common venture capital transactional structures that provide protections that could justify eliminating the additional disclosures and limitations required when non-accredited investors participate in an offering under Regulation D. If any of these structures were utilized, all securities issued in the transaction would be exempt from the registration requirements of the Securities Act. This is not a concept foreign to the Securities Act. For example, Section 3(a)(9) provides an exemption for “any security exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.” The following are three additional types of transactional structures that could arguably sufficiently protect non-accredited investors and thus justify exempting the securities issued pursuant thereto from the registration requirements of the Securities Act.
On January 20, 2015, the FDA issued draft guidelines designed to give developers whose products and applications promote healthy lifestyles (so-called “general wellness products”) direction on when such products qualify as medical devices under Section 201(h) of the Food Drug & Cosmetics Act (the “Act”) and are therefore subject to the Act’s regulatory requirements for devices.
On December 17, 2014, the SEC’s Advisory Committee on Small and Emerging Companies (the “Committee”) held its first meeting in over a year. The transcript and an archive of the webcast of the meeting are not yet available, but will be posted on the SEC’s website in the near future.
On October 24, 2013, the Securities Exchange Commission (the “SEC”) published proposed rules (Release Nos. 33-9470; 34-70741) to permit companies to offer and sell securities through “regulation” crowdfunding as proposed in the Jumpstart Our Business Startups Act (the “JOBS Act”), which we have written about here. The 90-day comment period on the proposed rules ended January 23, 2014 but comments are still being submitted to the SEC’s website, with the latest comment submitted on June 3, 2014. There is no indication as to when the SEC will publish its final rules relating to crowdfunding.
Apple’s apps store lists close to a 100,000 health apps. Together with wearable technology, direct-to-consumer testing services, and greater consumer participation in the decision to purchase health insurance, the healthcare market in the United States is undergoing a significant transformation. Whether and how to regulate this evolving market is subject to substantial discussion and debate.
On June 30, 2013, the State of Delaware amended the Delaware General Corporations Law (the “DGCL”) to include two new sections, Section 204 and Section 205 (together, the “Ratification Provisions”). Set to take effect on April 1, 2014, the Ratification Provisions provide Delaware companies with two alternative processes to remedy defective corporate acts that may have previously been deemed void or voidable: by the company itself (under Section 204) or by the Delaware Court of Chancery (under Section 205). Upon the ratification or the validation by either the company or the court, the defective corporate act will be deemed retroactively effective and valid as of the time the defective corporate act was taken.
On January 9, 2014, the Securities and Exchange Commission released its examination priorities for 2014 (the “2014 Exam Priorities Release”), covering a wide range of issues at financial institutions, including investment advisers and investment companies, hedge funds and private equity funds. The 2014 Exam Priorities Release highlights a number of areas and key risks that the SEC will be monitoring and examining in 2014. The SEC has identified the following core risk areas for investment advisers:
Individuals form limited partnerships, limited liability companies and corporations to limit their personal liability. These legal structures encourage entrepreneurs to take risks. The California Court of Appeal, Second Appellate District, however, has made it easier to add a business owner to a judgment that initially was entered only against the corporate or limited partnership entity he or she owns. In Relentless Air Racing LLC v. Airborne Turbine Ltd Partnership (Dec. 31, 2013) 2d Civil No. B244612, the Second Appellate District reversed the trial court’s finding that the business owner could not be added to the judgment under an “alter ego” theory. The Court of Appeal required the limited partners, as well as current and former general partner entities to be added to the judgment against the limited partnership.