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U.S. securities law developments in 2020

Author(s): Rob Lando, Jason Comerford, Kelsey Weiner, Jie Chai

Dec 8, 2020

In 2020, the Securities and Exchange Commission (SEC) continued to focus on streamlining and modernizing disclosure requirements and expanding access to capital for smaller businesses. The SEC simplified financial disclosure requirements in merger and acquisition transactions and expanded the categories of investors and intermediaries that are able to participate in private placements. The SEC also revisited some of its proxy rules relating to third-party shareholder communications.

SEC expands accredited investor and qualified institutional buyer definitions

In August, the SEC issued final rules expanding the definitions of “accredited investor” in Regulation D under the U.S. Securities Act of 1933 (the U.S. Securities Act) and “qualified institutional buyer” in Rule 144A under the U.S. Securities Act. These are the categories of individuals and entities that the SEC deems to have sufficient knowledge and experience to participate in U.S. private placements without the protections of the SEC’s securities registration process. The new rules broaden the investor pool from which Canadian companies will be able to raise capital in U.S. private placements. The rules also resolve certain technical disqualifications (discussed below) that some Canadian institutional investors have faced when assessing their eligibility to participate in private placements limited to qualified institutional buyers...

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