SEC Enhances Exemptions for Local Offerings

SEC Enhances Exemptions for Local Offerings

December 1, 2016, Covington Alert

The Securities and Exchange Commission (the “SEC”) recently adopted rules to update and enhance registration exemptions for intrastate and regional securities offerings. The final rules amend Rule 147, a safe harbor for exempt intrastate offerings under the Securities Act of 1933 (the “Securities Act”). In addition, the final rules establish a new offering exemption, Rule 147A under the Securities Act, which expands flexibility for intrastate offerings by (i) allowing issuers to make communications that would constitute offers through media that cannot practicably be limited to a single state and (ii) permitting use of the rule by companies that are incorporated or organized in a state other than the state where the securities are being sold. Aside from these two key differences, discussed in more detail below, amended Rule 147 and new Rule 147A are substantially similar.