public company hot topics - schulte roth & zabel · 7/10/2013 · public company hot topics...

Public Company Hot Topics

Contents

Wednesday, July 10, 2013

1. AbouttheSpeakers

2. AbouttheSRZCapitalMarketsPractice

3. AbouttheSRZPIPEsPractice

4. Presentation

5. AdditionalMaterials

• SRZ Alert — SEC Publishes Conflict Minerals FAQ

• SRZ Alert — Is Conflict Minerals Regulation Going International?

• An Overview of the JOBS Act for OTCQX International Issuers

• SRZ Alert — JOBS Act Signed into Law: Key Provisions Affecting Public Companies,

Private Capital Raises and Broker-dealers and Other Intermediaries

Public Company Hot Topics 1.AbouttheSpeakers

Public Company Hot Topics Wednesday, July 10, 2013

Eleazer KleinPartnerSchulte Roth & Zabel LLP919 Third Avenue, New York, NY 10022+1 212.756.2376 | [email protected]

Ele Klein practices in the areas of securities law, mergers & acquisitions, and regulatory compliance. He is highly regarded for his 20+ years of expertise in developing and implementing alternative investment structures for private equity investments and, specifically, the structuring and negotiating of PIPEs and related products, including registered direct offerings (including CMPOs), convertible 144A offerings, reverse mergers, equity lines and SPACs. Ele works on numerous PIPE and PIPE-market-related transactions annually for some of the largest private investment groups and investment banks in the United States and abroad. As a result, Schulte is consistently recognized as the most active investor counsel by industry league tables. Ele also advises clients on initial public offerings and secondary offerings, venture capital financing, indenture defaults and interpretation, and activist investing, as well as counseling clients in the regulatory areas of short-selling, Sections 13 and 16, Rule 144, insider trading and Regulation M/Rule 105.

Based on his extensive PIPEs experience, Ele is a contributing author to Bloomberg Press’s PIPEs: A Guide to Private Investments in Public Equity, a leading treatise in the PIPEs arena, and to the PIPEs content of the Lexis Practice Advisor Securities and Capital Markets module. Additionally, he is the co-author of the “Private Investments in Public Equity (PIPEs)” chapter in the Insider Trading Law and Compliance Answer Book published by Practising Law Institute. Ele is also a leading source for business journalists and business news organizations, and a much sought-after speaker by sponsors of PIPEs, SPACs and regulatory conferences. His most recent presentation was “Registered Directs, CMPOs & Follow-Ons” for the DealFlow Media Conference. Ele was named to the inaugural The DealFlow Power 20 list for being a top influencer in the small cap financing market. His other recognitions include being ranked in The Legal 500 United States, New York Super Lawyers (one of the most respected listings of lawyers recognizing the top lawyers in the New York metropolitan area) and Super Lawyers Business Edition (a national listing selected from the Super Lawyers regional awards).

Ele received his J.D. from Yale Law School, where he was senior editor of The Yale Law Journal. He received his B.S., summa cum laude, from Brooklyn College.

© 2013 Schulte Roth & Zabel LLP. All Rights Reserved.

Public Company Hot Topics © 2013 Schulte Roth & Zabel LLP. All Rights Reserved.

Michael R. LittenbergPartner Schulte Roth & Zabel LLP919 Third Avenue, New York, NY 10022+1 212.756.2524 | [email protected]

Michael R. Littenberg is a partner in Schulte Roth & Zabel’s Business Transactions Group and heads the firm’s public companies practice. His principal areas of focus are corporate finance — across a broad range of equity and debt products — and mergers & acquisitions. As a significant part of his practice, Michael also counsels both domestic public companies and foreign private issuers and their boards, board committees, special committees, executive officers and investors in connection with ongoing compliance under the U.S. securities laws, including under Dodd-Frank, Sarbanes-Oxley and the JOBS Act, and with exchange requirements, as well as on governance and executive compensation matters. His public company clients range from well-known large-cap companies to growing micro-cap companies and his experience spans every major industry.

Michael is a frequent speaker at conferences and seminars, has authored numerous articles and is frequently quoted as an expert in the business and specialty press on topics pertaining to his areas of expertise. Michael is listed in Who’s Who in Securities Law and in New York Super Lawyers for securities and corporate finance. Michael was recently voted by his peers to New York Super Lawyers Top 100 Lawyers in the Metro New York area.

Michael received his J.D., magna cum laude, from Tulane University Law School, where he was an editor of the Tulane Law Review and a member of the Order of the Coif, and his B.S. from Indiana University.

Wednesday, July 10, 2013

Public Company Hot Topics 2.AbouttheSRZCapitalMarketsPractice

Capital Markets Practice

SRZ offers a full-service capital markets practice that provides transactional and ongoing advice through all stages for companies of all sizes. With extensive depth of experience and senior-level attention, we represent U.S. and non-U.S. issuers, investment banks and investors in connection with U.S. and global capital markets transactions, including SEC registered, Regulation D, Rule 144A and Regulation S offerings. Our expertise spans an extensive range of equity and debt products, including initial public offerings, investment grade and non-investment grade debt, SPACs, BDCs and other permanent capital vehicles, trust preferred securities, preferred stock, equity-linked securities, PIPEs, CMPOs, ATMs and registered direct offerings.

In addition to our transactional capital markets practice, we counsel public companies, their boards, board committees, special committees, executive officers and investors in connection with ongoing compliance under the U.S. securities laws, including under Dodd-Frank and Sarbanes-Oxley, and with exchange requirements, as well as on governance and executive compensation matters. We closely monitor and advise our public company clients on rule-making initiatives and evolving best practices.

We have experience in every major industry, including apparel, automotive, aviation, biotechnology, broadcasting, business services, computer hardware, consumer services, defense, energy, entertainment, financial services, food and beverage, government services, healthcare, information technology, insurance, manufacturing, media, natural resources, real estate, restaurant and hospitality, retailing, shipping and logistics, software, technology and telecommunications.

Our public company clients range from well-known large-cap companies to growing micro-cap companies. We are able to leverage our experience to efficiently advise companies of any size. In addition, we have been pre-cleared by the OTC Markets Group to act as an Attorney Designated Advisor for Disclosure/Principal American Liaison (DAD/PAL) for OTCQX companies.

We frequently publish Alerts and hold seminars on developments affecting public companies. To join our Public Companies mailing list, please visit our subscriptions page at www.srz.com/news/subscription.aspx.

Contact: Michael R. Littenberg, Partner +1 212.756.2524 | [email protected]



Public Company Hot Topics 3.AbouttheSRZPIPEsPractice

PIPEs Practice

SRZ represents a variety of investors and investment banks in alternative investment structures, including private investment in public equity (PIPE) transactions and related products such as Rule 144A offerings, registered direct offerings (including CMPOs), pre-IPO financings, special purpose acquisition companies (SPACs), reverse-merger financings and equity lines.

Long a leader in investor representation, particularly in the development of sophisticated and complex products, SRZ has also become a leading adviser to investment banks and placement agents. The firm has represented investment banks in innovative going-public, reverse-merger transactions with simultaneous completion of syndicated private placements, and helped an investment bank develop a complicated product that combines PIPE and SPAC elements.

In response to an ever-changing SEC regulatory landscape, SRZ has been at the forefront of developing new structures, approaches and solutions for navigating through the challenges of capital-raising. The firm provides the market with updates on policy changes. In fact, it was at an SRZ-sponsored seminar that the Chief Counsel of the SEC’s Division of Corporation Finance first announced its new policy regarding Rule 415, which governs the use of shelf registration statements in PIPE offerings.

SRZ placed No. 1 in PrivateRaise.com’s list of the Top 25 PIPE Investor Law Firms for total amount advised for 2009, 2010, 2011 and 2012 (the most recent years for which data is available). The firm’s position as America’s leading investor counsel in PIPEs is also recognized by PlacementTracker, another leading research service, which ranked SRZ No. 1 for 2010, 2011 and 2012 based on number of transactions (its sole ranking criterion). Moreover, in both firms’ league tables, SRZ’s deal and dollar totals were not only sizable enough to earn the firm the top spot, but far exceeded those of any other listed investor counsel.

Contact: Eleazer Klein, Partner +1 212.756.2376 | [email protected]



Public Company Hot Topics 4.Presentation

Notes:


Public Company Hot Topics Wednesday, July 10, 2013 | 1

Notes:



Public Company Hot Topics 5.AdditionalMaterials

• SRZ Alert — SEC Publishes Conflict Minerals FAQ

• SRZ Alert — Is Conflict Minerals Regulation Going International?

• An Overview of the JOBS Act for OTCQX International Issuers

• SRZ Alert — JOBS Act Signed into Law: Key Provisions Affecting Public Companies, Private Capital Raises and Broker-dealers and Other Intermediaries

SRZAlert—SECPublishesConflictMineralsFAQ

Alert SEC Publishes Conflict Minerals FAQs Packaging Not Part of the Product; Confirms Other Prevailing Interpretations

May 31, 2013

Late yesterday afternoon, the SEC published its first 12 FAQs concerning the Conflict Minerals Rule. Most significantly, the FAQs provide guidance on packaging that dramatically reduces or eliminates the compliance obligations under the Conflict Minerals Rule for some issuers. The remaining FAQs provide additional clarity concerning various aspects of the Conflict Minerals Rule, but are unlikely to have much impact on the ongoing development and implementation of most conflict minerals compliance programs, since these FAQs largely restate guidance contained in the Adopting Release or confirm prevailing interpretations. The FAQs of course only address a small number of the many day-to-day questions and issues that companies are wrestling with as they implement the Conflict Minerals Rule within their organizations.

The FAQs are summarized below. The full text of the FAQs is available at http://www.sec.gov/divisions/ corpfin/guidance/conflictminerals-faq.htm.

SRZ is a thought leader on the Conflict Minerals Rule. Our other articles on this topic are available at http://www.srz.com/Conflict_Minerals_Resource_Center/.

Packaging Is Not Considered Part of the Product The prior uncertainty around the treatment of packaging has been particularly troublesome for many companies in the food and beverage and pharmaceutical industries, where packaging is often designed to preserve product freshness or stability and is therefore arguably necessary to the functionality of the product. The FAQ resolves this uncertainty, indicating that the packaging or container sold with a product is not considered to be part of the product, even if the packaging or container is necessary to preserve the usability of the product up to and following the product’s purchase. The SEC staff notes in the FAQ that once the consumer starts to use a product, the packaging is generally discarded.

As a result of this guidance, many companies in the food and beverage and pharmaceutical industries will have no in-scope products and will therefore have no reporting obligations under the Conflict Minerals Rule. However, we recommend that companies still conduct a thorough internal analysis for potentially in-scope products. In our experience, many companies that preliminarily concluded that they did not have any in-scope products have reversed those determinations upon a closer examination.

Packaging and containers are still considered to be a product to the extent that the issuer manufactures and sells packaging or containers independent of the product that is ultimately included in the manufactured packaging or container.

Generic Components in Higher-Level Products Are Not Excluded from Compliance The Conflict Minerals Rule does not distinguish between the components of a product that an issuer directly manufactures or contracts to manufacture and the generic purchased components included in the product.

http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm

http://www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm

http://www.srz.com/Conflict_Minerals_Resource_Center/

© 2013 Schulte Roth & Zabel LLP. All Rights Reserved. 2

Therefore, to the extent that the issuer manufactures or contracts to manufacture a higher-level product, it must conduct a reasonable country of origin inquiry with respect to the conflict minerals contained in the generic components included in that product. This FAQ is consistent with the Adopting Release and does not break new ground, although we have found this to be a continuing source of confusion among issuers.

Equipment Used to Provide a Service Is Not a Product An issuer is not required to report on conflict minerals contained in equipment that it manufactures or contracts to manufacture to the extent that the equipment is used for a service provided by the issuer and that: (i) the equipment is retained by the service provider; (ii) is to be returned to the service provider; or (iii) is intended to be abandoned by the customer following the terms of service. The FAQ indicates that the SEC staff does not interpret equipment used to provide a service to be a product under the Conflict Minerals Rule. The example cited in the FAQ is conflict minerals contained in a cruise ship manufactured or contracted to be manufactured by a cruise line. However, this FAQ would presumably apply more broadly beyond the transportation and hospitality industries, for example also applying to companies in the telecommunications, media, power and oil and gas industries.

The Sale of Used Manufacturing Equipment Does Not Trigger Application of the Rule The sale of used tools, machines or other equipment that an issuer manufactured or contracted to manufacture for use in the manufacture of its products does not come under the Conflict Minerals Rule. The FAQ indicates that the SEC staff does not view these items as products of the issuer, and the later entry of these items into the stream of commerce does not transform them into products of the issuer.

Inclusion of a Logo or Other Identifier on a Generic Product Does Not Cause the Product to Be in Scope If an issuer has its logo, a serial number or other identifier etched into a generic product that is manufactured by a third party, that does not result in the issuer being deemed to have contracted to manufacture the product.

Reporting Obligations Are Determined on a Consolidated Basis The Conflict Minerals Rule does not only apply to activities at the issuer level. Consolidated subsidiaries are captured in the issuer’s compliance and reporting as well.

Issuers Have Flexibility in How they Describe Products in the CMR The FAQ reiterates the position articulated in the Adopting Release that an issuer has flexibility in how it describes its products that have not been found to be DRC conflict free or that are DRC conflict undeterminable. The FAQ indicates that an issuer may describe these products based on its own facts and circumstances because it is in the best position to know its products and to describe them in terms commonly understood in its industry. For example, the FAQ makes clear that an issuer is not required to describe its products using model numbers. However, the FAQ notes that the description in the Conflict Minerals Report must state clearly that the products have not been found to be DRC conflict free or are DRC conflict undeterminable, as applicable.

A DRC Conflict Free Determination Triggers Reporting and an Audit If an issuer determines that its covered products contain conflict minerals from the DRC or an adjoining country, but the products are DRC conflict free, it must prepare a Conflict Minerals Report and obtain an independent audit of the applicable portions of the report. However, the issuer is not required to disclose the products containing those conflict minerals in its Conflict Minerals Report or provide the product description information indicated in Item 1.01(c)(2) of the Conflict Minerals Rule, because those products are DRC conflict free. Activities Customarily Associated with Mining Are Not Covered by the Rule Mining is excluded from the Conflict Minerals Rule and is not an activity deemed to be equivalent to manufacturing. The FAQ clarifies that activities customarily associated with mining, including the mining of lower grade gold ore, are not considered to be manufacturing of the minerals and are therefore excluded from the application of the Conflict Minerals Rule. For example, the FAQ notes that mining of lower grade gold ore often involves, in addition to mining the ore, transporting the ore to a processing facility, crushing and milling the ore, mixing crushed or milled ore with cyanide solution, floating cyanide mixture through a leaching circuit, extracting gold from a leached circuit, smelting the gold into ingots or bars and transporting the ingots or bars to a refinery for refining.


A Late Form SD Filing Does Not Affect Form S-3 Eligibility The failure to timely file a Form SD does not cause an issuer to lose eligibility to use a Form S-3 registration statement. The Form S-3 requirement that a registrant timely file all reports and materials required to be filed during the prior 12 months refers only to filings under Sections 13(a), 15(d), 14(a) and 14(c) of the Exchange Act. Form SD is instead required to be filed under Section 13(p) of the Exchange Act.

Voluntary Filers Are Not Exempt Voluntary filers are subject to the Conflict Minerals Rule.

IPO Issuers Can Take Advantage of a Transition Period Before they Are Subject to the Conflict Minerals Rule The Conflict Minerals Rule permits an issuer that acquires or otherwise obtains control over a non-reporting company that manufactures or contracts to manufacture in-scope products to report on the acquired company’s products beginning with the first calendar year that begins no sooner than eight months after the effective date of the acquisition. The FAQ indicates that the SEC staff will not object if an IPO issuer starts reporting for the first calendar year that begins no sooner than eight months after the effective date of its IPO registration statement.

Authored by Michael R. Littenberg (+1 212.756.2524 | [email protected]), Farzad F. Damania (+ 1 212.756.2573 | [email protected]) and Cecilia Wang (+1 212.756.2732 | [email protected]).

If you have any questions concerning this Alert, please contact your attorney at Schulte Roth & Zabel or one of the authors.

About SRZ’s Conflict Minerals Rule Practice SRZ has a leading Conflict Minerals Rule compliance practice advising public and private companies and trade associations on the application of the rule and the OECD framework. For further information concerning SRZ’s Conflict Minerals Rule compliance practice, please contact Michael R. Littenberg at [email protected] or +1 212.756.2524.

Subscribe to SRZ’s Conflict Minerals Resource Center SRZ is the only law firm to have an online Conflict Minerals Resource Center. This frequently updated resource contains an extensive collection of SRZ-authored materials, U.S. government resources, NGO materials, industry group resources and form documents to assist in compliance with the Rule. Subscribe to receive conflict minerals information through the SRZ online Conflict Minerals Resource Center at http://www.srz.com/Conflict_Minerals_Resource_Center/.

U.S. Treasury Circular 230 Notice: Any U.S. federal tax advice included in this communication was not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties. This information has been prepared by Schulte Roth & Zabel LLP (“SRZ”) for general informational purposes only. It does not constitute legal advice, and is presented without any representation or warranty as to its accuracy, completeness or timeliness. Transmission or receipt of this information does not create an attorney-client relationship with SRZ. Electronic mail or other communications with SRZ cannot be guaranteed to be confidential and will not (without SRZ agreement) create an attorney-client relationship with SRZ. Parties seeking advice should consult with legal counsel familiar with their particular circumstances. The contents of these materials may constitute attorney advertising under the regulations of various jurisdictions.

mailto:[email protected]





SRZAlert—IsConflictMineralsRegulationGoingInternational?

Alert Is Conflict Minerals Regulation Going International? New Developments in Canada and the EU

April 9, 2013

In late March, Canada and the EU both took steps toward the further regulation of the use of conflict minerals. As discussed below, these initiatives are in their early stages and it is far from certain that Canadian or EU conflict minerals legislation will be enacted or what any such legislation would require. However, as U.S. public companies continue to gear up for Conflict Minerals Rule compliance in 2013 and beyond, they should keep a watchful eye on developments in Ottawa and Brussels, as these could eventually have significant impact on their Conflict Minerals Rule compliance programs.

Canadian Conflict Minerals Act Proposed On March 26, a bill was introduced in the House of Commons proposing a Canadian Conflict Minerals Act. The proposed Act would require Canadian companies (more on what that means below) to exercise due diligence with respect to conflict minerals sourced from the Great Lakes Region of Africa.

Under the proposed Act, a regulated company would be required to “exercise due diligence in respect of any extraction, processing, purchasing, trading in or use of designated minerals that it carries out in the course of its activities, or that it contracts to have carried out.”

A company that engages in conduct covered by the proposed Act would be required, within 60 days after the end of its fiscal year, to submit to the Minister of Foreign Affairs and publish on its website:

• A report that specifies the measures taken by the company to exercise due diligence in respect of the source and supply chain of the designated minerals;

• An independent third-party audit of the report;

• A description of any use by the company of the designated mineral and of any products containing the designated mineral that were manufactured, or contracted to be manufactured, by the company;

• A description of any commercial and financial transactions that have occurred in relation to the designated mineral to which the company was a party;

• If applicable, a description of the facilities used by the company to process the designated mineral;

• The country of origin of the designated mineral; and

• A detailed description of the efforts made to determine the mine or location of origin of the designated mineral and the results of those efforts.


Take-Aways from the Bill. The bill is the second run at conflict minerals legislation in Canada over the last few years and its adoption is by no means certain. In addition, if Canadian conflict minerals legislation has a similar path to adoption and implementation as the U.S. Conflict Minerals Rule, the bill will undergo significant modification. With the help and input of our Canadian law firm friends, we will continue to monitor the progress of the bill.

The bill has been colloquially referred to as the “Canadian Conflict Minerals Rule,” suggesting that it is substantially similar to its U.S. counterpart. However, there are a number of significant differences between the proposed Act and the U.S. Conflict Minerals Rule, including the following:

• The proposed Act only would apply to companies incorporated in Canada and their subsidiaries. It would not apply to companies up the chain. However, it would apply to Canadian subsidiaries of foreign companies, including the Canadian subsidiaries of U.S. companies. And, unlike the U.S. Conflict Minerals Rule, the application of the proposed Act would not be limited to public companies. Therefore, a U.S. company that already is subject to the U.S. Conflict Minerals Rule could find its Canadian subsidiaries subject to additional conflict minerals due diligence and disclosure requirements. Furthermore, a privately held U.S. company that is not subject to the U.S. Conflict Minerals Rule could have diligence and disclosure requirements with respect to its Canadian subsidiaries under the Act.

• The countries covered by the proposed Act are slightly different than those covered by the U.S. Conflict Minerals Rule. Unlike its U.S. counterpart, the proposed Act includes Kenya and Sudan. However, it does not include the Republic of the Congo or South Sudan.

• The definition of “designated mineral” under the Act is broader than the definition of “conflict mineral” under the U.S. Conflict Minerals Rule. It includes any of the derivatives of cassiterite, wolframite and coltan, not just the 3Ts. However, in contrast to the U.S. Conflict Minerals Rule, the definition is location-specific, so the proposed Act would not apply to or require any disclosure with respect to minerals that originate outside of the covered countries.

• The activities covered by the proposed Act are significantly broader than those covered by the U.S. Conflict Minerals Rule. The proposed Act applies to extraction, processing, purchasing, trading in or use, not just manufacturing or contracting to manufacture. The proposed Act also does not include a concept of “necessary to the functionality or production” of a product.

• The proposed Act requires that due diligence be carried out in accordance with a supply chain policy that conforms to the requirements of the OECD due diligence framework. Unlike the U.S. Conflict Minerals Rule, it does not provide for due diligence to be conducted in accordance with another nationally or internationally recognized due diligence framework if one were to be developed.

• Unlike under the U.S. Conflict Minerals Rule, there is no differentiation between scrap, recycled and newly mined minerals.

• The disclosure requirements are similar to those under the U.S. Conflict Minerals Rule, except that disclosure also would be required with respect to any commercial and financial transactions that have occurred in relation to the designated mineral to which the reporting company was a party.

• Unlike under the U.S. Conflict Minerals Rule, there is no phase-in of the audit requirement or “conflict undeterminable” designation.

• Disclosures under the proposed Act would be required to be made on a fiscal year basis and within 60 days after fiscal year end. In contrast, the U.S. Conflict Minerals Rule keys disclosure off of the calendar year and gives companies until May 31 to file their Form SD. Therefore, under the proposed Act, companies would have significantly less time to complete their audits than under the U.S. Conflict Minerals Rule.


EU Public Consultation on Conflict Minerals On March 27, the European Commission launched a public consultation regarding a potential EU initiative for responsible sourcing of minerals from conflict-affected and high-risk areas. According to the public announcement, the Commission wants to deepen its understanding of issues such as the sourcing and security of supply of minerals, supply chain transparency and good governance.

The Commission will use the results of the public consultation to help it decide whether — and how, in a reasonable and effective manner — to complement and/or continue ongoing due diligence initiatives and support for good governance in mineral mining, especially in developing countries affected by conflict. The consultation is open until June 26, 2013.

The Commission’s Directorate-General for Trade has posted an online questionnaire for participating in the consultation. The questionnaire contains more than 50 substantive check-box and free-form response questions. Topics covered by the questionnaire relate to (1) responsible sourcing rationales and existing responsible sourcing frameworks; (2) the need for and scope of a possible EU initiative; (3) continuation of activity, security of supply and other international actors; (4) the nature of any EU initiative; (5) lessons learned from the EU timber regulation, which was an analogous initiative; (6) positive incentives for companies; and (7) economic, competitive, environmental and social impact. Some of the key questions included in the questionnaire include the following:

• Are existing initiatives sufficient and, if not, how can they be improved?

• What practical lessons can the EU draw from existing initiatives, including the OECD framework and the U.S. Conflict Minerals Rule?

• Should the EU issue a rule at all, and, if so, what countries, minerals, industries, products, supply chain participants and size companies should it cover?

• Should an initiative be voluntary or binding?

• Should an initiative provide positive incentives to businesses?

• Can existing frameworks, such as the OECD framework or the ICGLR certification initiative, be used to facilitate EU incentives?

The questionnaire can be accessed on the SRZ online Conflict Minerals Resource Center at http://www.srz.com/Conflict_Minerals_Resource_Center/.

As a leader in U.S. Conflict Minerals Rule compliance, advising domestic and foreign public and private companies and trade associations across a broad range of industries, we will be making a submission in connection with the consultation. We invite our clients and other friends of the firm to share their thoughts and perspectives with us in connection with our submission. If you would like to arrange a time to speak regarding the submission, please contact either Michael R. Littenberg (+1 212.756.2524 | [email protected]) or Farzad F. Damania (+1 212.756.2573 | [email protected]).

Authored by Michael R. Littenberg (+1 212.756.2524 | [email protected]), Farzad F. Damania (+ 1 212.756.2573 | [email protected]) and Cecilia Wang (+1 212.756.2732 | [email protected]).














Subscribe to SRZ’s Conflict Minerals Resource Center Schulte Roth & Zabel is the only law firm to have an online Conflict Minerals Resource Center. This frequently updated resource contains an extensive collection of SRZ-authored materials, U.S. government resources, NGO materials, industry group resources and form documents to assist in compliance with the rule. Subscribe to receive conflict minerals information through the SRZ online Conflict Minerals Resource Center at http://www.srz.com/Conflict_Minerals_Resource_Center/.



AnOverviewoftheJOBSActforOTCQXInternationalIssuers

An Overview of the US JOBS Act for OTCQX International Issuers © 2012 Schulte Roth & Zabel LLP

| 1

The JOBS Act, which was signed into law in April

2012, loosens restrictions around capital raises,

lessens both U.S. IPO and ongoing disclosure and

other obligations for many issuers, including foreign

issuers, and reduces the cost of being public in the

United States. Please see our Alert, JOBS Act Signed

into Law: Key Provisions Affecting Public Companies,

Private Capital Raises and Broker-dealers and Other

Intermediaries (http://www.srz.com/JOBS_Act_

Signed_into_Law/), for a more extensive overview of

the Act. For additional information on the OTCQX

International quotation process, please see our White

Paper, Getting Quoted on OTCQX International — An

Overview for Non-US Companies (http://www.srz.

com/Getting_Quoted_on_OTCQX_International/).

The JOBS Act Allows Broader Marketing of U.S. Private Placements

The most immediate benefit of the JOBS Act

for most OTCQX International issuers will be the

elimination of restrictions on general solicitations

and general advertising in connection with most

U.S. private placements.

OTCQX International issuers typically are exempt

from U.S. reporting pursuant to the U.S. Securities

and Exchange Commission’s Rule 12g3-2(b) ex-

emption. Because this exemption is not available

to foreign issuers that publicly raise capital in the

United States, OTCQX International issuers that raise

capital in the United States typically do so through

private placements. Under current U.S. law, issuers

and intermediaries are severely limited in their ability

to promote a private placement. Among other things,

they cannot engage in print, Internet or broadcast

advertising and are limited in their ability to engage in

other activities that may condition the market for the

securities being offered, such as press releases, press

conferences and interviews.

The JOBS Act shifts the focus away from how pro-

spective purchasers of privately-placed securities

are solicited. The JOBS Act requires the SEC to

amend existing private placement rules to allow

general solicitations and general advertising in

connection with private placements conducted in

accordance with Rule 506 of Regulation D and Rule

144A under the Securities Act, which are the two

most common private placement exemptions relied

on in connection with U.S. institutional placements.

The issuer in a Rule 506 offering will be permitted

to engage in general solicitations and general

advertising in connection with the offering so long

as it takes reasonable steps to verify that all of the

purchasers in the Rule 506 offering are accredited

investors. In the case of Rule 144A, which is a resale

exemption for privately placed securities, there

must be a reasonable belief that all purchasers

are qualified institutional buyers. In most respects,

Viewpoint

An Overview of the US JOBS Act for OTCQX International IssuersMay 10, 2012 | By Michael R. Littenberg and James Nicoll

Many OTCQX International issuers, prospective issuers and other members

of the OTCQX International community have asked us about the impact of

the U.S. Jumpstart Our Business Startups Act, or JOBS Act, on OTCQX

International issuers. This article provides an overview of those portions

of the JOBS Act of particular relevance to OTCQX International issuers.


| 2

these requirements are consistent with existing Rule

506 and Rule 144A offering practice and do not

meaningfully limit the purchaser universe. An accred-

ited investor generally is a higher net worth individual

with individual income exceeding US$ 200,000 or net

worth exceeding US$ 1 million or an entity with more

than US$ 5 million of assets. A qualified institutional

buyer generally is an institutional investor with US$ 100

million or more in assets under management.

Over time, these changes are likely to affect how

private placements are marketed in the United States

and are likely to be especially beneficial to smaller

companies that are not as well known among U.S.

institutional investors.

The SEC is required to adopt amendments to Rule

506 and Rule 144A giving effect to this portion of the

JOBS Act within 90 days after its enactment, or by

July 4, 2012. An open question that the SEC will need

to address is the interplay between the amendments to

Regulation D and Rule 144A and offshore offerings

conducted under Regulation S, which is the exemption

from U.S. registration for offshore public offerings that

satisfy specified criteria.

The JOBS Act Reduces the Compliance Costs of Being Public in the United States

The JOBS Act creates a new category of U.S. issuer,

the “Emerging Growth Company.” EGCs can take

advantage of a transition period — what is known as

the “IPO on-ramp” — before they become subject to

all of the disclosure and substantive requirements

applicable to other issuers. A foreign issuer, including

a Canadian MJDS issuer, can be an EGC.

OTCQX International issuers typically are exempt

from U.S. public company reporting under the Rule

12g3-2(b) exemption because they have not engaged

in a U.S. public offering and their securities are not

listed on a U.S. securities exchange (typically the

NYSE, NYSE MKT or NASDAQ; in contrast, OTCQX

International is classified as an inter-dealer quotation

system). However, for those issuers that view an

OTCQX International quotation as an initial step into

the U.S. markets, to be followed in the future by a

public offering in the United States and/or a listing

on a U.S. securities exchange, the JOBS Act may

reduce the compliance costs of being public in the

United States.

To qualify as an EGC, an OTCQX International issuer

must have had total annual gross revenues of less than

US$ 1 billion during its most recently completed fiscal

year prior to raising capital publicly in the United States

or listing on a U.S. securities exchange.

An issuer will retain EGC status until the earliest of:

• The end of the fiscal year during which it had

total annual gross revenues of US$ 1 billion or

more;

• The end of the fiscal year following the fifth

anniversary of its U.S. equity IPO;

• The date on which it has issued more than

US$ 1 billion in non-convertible debt during

the prior three year period; or

• The date on which it is deemed to be a “large

accelerated filer” (i.e., in addition to certain

other requirements, an issuer with a worldwide

non-affiliated public float of at least US$ 700

million as of the end of the second quarter of its

most recently completed fiscal year).

The U.S. IPO registration statement for an EGC in most

cases only is required to include two years of audited

financial statements, as compared to three years under

prior disclosure requirements. In addition, selected

financial data and full fiscal year “Management’s

Discussion & Analysis” disclosure generally is not

required in filings for any period preceding the audited

financial statements contained in the IPO prospectus.

Furthermore, EGCs are not required to comply with any

new or revised financial accounting standards that are

of general applicability until private companies also are

required to comply with those standards.

EGCs also are exempt from Section 404(b) of the

Sarbanes-Oxley Act, which requires auditors to attest

to and report on management’s assessment of internal

control over financial reporting. For many EGCs, this is

expected to result in meaningful cost savings.

Other benefits to EGCs include the ability to “test the

waters” with institutional investors in advance of a U.S.

public offering and more flexibility around the timing

of the publication of research by analysts, bringing U.S.

regulations more in line with market practice outside of

the United States. However, it is still too early to predict

how U.S. practice around pre-marketing and research

will change with respect to EGC public offerings. EGCs

also can make confidential IPO submissions with the

SEC, although, for some foreign issuers, the confidential

submission protocol is less generous than that currently

available to them.


| 3

Looking Further Down the Road

A More Robust Exemption for Smaller Company

Offerings?

The JOBS Act requires the SEC to adopt what is com-

monly referred to as the “Regulation A+” exemption.

Current Regulation A is a small offering exemption

from registration under the Securities Act. Not more

than US$ 5 million may be raised pursuant to the

Regulation A exemption in any 12-month period. As

a result, the exemption is infrequently used since the

compliance costs outweigh the benefits to most is-

suers. The JOBS Act requires the SEC to adopt rules

increasing the maximum amount that can be raised

under this exemption or a new exemption to US$ 50

million. Issuers will be able to publicly “test the waters”

before launching a Regulation A+ offering. In addition,

under certain circumstances, securities sold under the

exemption will not be required to comply with U.S. state

securities laws.

Securities offered and sold under the exemption will

not be treated as restricted under the Securities Act,

meaning that they can be publicly resold by purchasers

without any holding period. In addition, an issuer that

conducts an offering pursuant to the Regulation A+

exemption will not become a Securities Exchange Act

registrant (which triggers significant ongoing U.S.

public reporting requirements) solely by virtue of

having completed a Regulation A+ offering.

There are still a number of significant questions

surrounding the Regulation A+ exemption, so its

utility generally and for OTCQX International issuers in

particular remains to be determined. Most significantly

for foreign issuers, the current Regulation A exemption

is available only to U.S. domestic and Canadian issuers.

It is uncertain whether other foreign issuers will

be eligible to use Regulation A+. In addition, issuers

that offer securities in reliance on the Regulation A+

exemption will be required to file an offering circular

for review with the SEC, the content of which is not

fleshed out in the JOBS Act and will be covered in

future SEC rule-making. And, although they will not

be subject to ongoing periodic reporting requirements

generally, Regulation A+ issuers will be required to file

audited financial statements with the SEC annually.

The JOBS Act permits the SEC to adopt other ongoing

periodic disclosure requirements regarding, among

other things, the issuer and its business operations,

financial condition and corporate governance principles.

If the Regulation A+ exemption is too cumbersome and

expensive to use, issuers may find U.S. private place-

ments more attractive for capital-raising, especially

in light of the JOBS Act liberalization of public

communications in connection with private placements.

Unlike most other aspects of the JOBS Act, the Act

does not specify an outside date for the adoption of the

Regulation A+ exemption. Given the significant number

of other rule-making initiatives that it currently has to

contend with, many of which are behind schedule, it

may be some time before the SEC proposes rules that

implement the Regulation A+ exemption.

A Change in How EGC Securities Are Traded?

The JOBS Act requires the SEC to conduct a study

examining the transition to trading and quoting

securities in one penny increments, also known as

decimalization. The study is required to examine the

impact that decimalization has had on the number

of IPOs. The study also is required to examine the

impact that decimalization has had on liquidity for

small- and mid-cap company securities and whether

there is sufficient economic incentive to support

trading of these securities in penny increments. The

SEC is required to submit its findings to Congress by

July 4, 2012.

To the extent that the SEC determines that EGC

securities should be quoted and traded using a

minimum increment of greater than US$ 0.01, within

180 days following the enactment of the JOBS Act,

the SEC may designate a minimum increment of up

to less than US$ 0.10 for the quotation and trading

of EGC securities. An increase in the minimum

trading increment of EGC securities may increase

broker-dealer interest in trading the securities of

smaller less-liquid EGCs.


| 4

SRZ offers a full-service capital markets practice that provides transactional and ongoing advice through all

stages for companies of all sizes. With extensive depth of experience and senior-level attention, we represent

U.S. and non-U.S. issuers, investment banks and investors in connection with U.S. and global capital markets

transactions, including SEC registered, Regulation D, Rule 144A and Regulation S offerings. Our expertise spans

an extensive range of equity and debt products, including initial public offerings, investment grade and non-

investment grade debt, SPACs, BDCs and other permanent capital vehicles, trust preferred securities, preferred

stock, equity-linked securities, PIPEs, CMPOs, ATMs and registered direct offerings.

In addition to our transactional capital markets practice, we counsel public companies, their boards, board com-

mittees, special committees, executive officers and investors in connection with ongoing compliance under the

U.S. securities laws, including under Dodd-Frank and Sarbanes-Oxley, and with exchange requirements, as well

as on governance and executive compensation matters. We closely monitor and advise our public company cli-

ents on rule-making initiatives and evolving best practices.

We have experience in every major industry, including apparel, automotive, aviation, biotechnology, broadcast-

ing, business services, computer hardware, consumer services, defense, energy, entertainment, financial services,

food and beverage, government services, healthcare, information technology, insurance, manufacturing, media,

natural resources, real estate, restaurant and hospitality, retailing, shipping and logistics, software, technology

and telecommunications.

Our public company clients range from well-known large-cap companies to growing micro-cap companies. We

are able to leverage our experience to efficiently advise companies of any size. In addition, we have been pre-

cleared by the OTC Markets Group to act as an Attorney Designated Advisor for Disclosure/Principal American

Liaison (DAD/PAL) for OTCQX companies.

We frequently publish Alerts and hold seminars on developments affecting public companies. To join our Public

Companies mailing list, please visit our subscriptions page (http://www.srz.com/news/subscription.aspx).

SRZ’s Capital Markets Practice

Authored by Michael R. Littenberg and James Nicoll.

Michael R. LittenbergPartner+1 [email protected]

James Nicoll Special Counsel +1 212.756.2497 [email protected]

Schulte Roth & Zabel International LLPLondonHeathcoat House, 20 Savile RowLondon W1S 3PR+44 (0) 20 7081 8000+44 (0) 20 7081 8010 fax

Schulte Roth & Zabel LLPNew York919 Third AvenueNew York, NY 10022+1 212.756.2000+1 212.593.5955 fax

www.srz.com

Schulte Roth & Zabel LLP Washington, DC1152 Fifteenth Street, NW, Suite 850 Washington, DC 20005 +1 202.729.7470+1 202.730.4520 fax

This information has been prepared by Schulte Roth & Zabel LLP (“SRZ”) for general informational purposes only. It does not constitute legal advice, and is presented without any representation or warranty as to its accuracy, completeness or timeliness. Transmission or receipt of this information does not create an attorney-client relationship with SRZ. Electronic mail or other communications with SRZ cannot be guaranteed to be confidential and will not (without SRZ agreement) create an attorney-client relationship with SRZ. Parties seeking advice should consult with legal counsel famil-iar with their particular circumstances. The contents of these materials may constitute attorney advertising under the regulations of various jurisdic-tions. © 2012 Schulte Roth & Zabel LLP. All rights reserved.

SRZAlert—JOBSActSignedintoLaw:KeyProvisionsAffectingPublicCompanies,PrivateCapitalRaisesandBroker-dealersandOtherIntermediaries

Alert JOBS Act Signed into Law: Key Provisions Affecting Public Companies, Private Capital Raises and Broker-dealers and Other Intermediaries

April 9, 2012

President Obama signed the Jumpstart Our Business Startups Act, or JOBS Act, into law late last week. The JOBS Act loosens restrictions around capital raises, lessens both IPO and ongoing disclosure and other obligations for many issuers and reduces the costs of being a public company. This Alert outlines the key provisions of the JOBS Act.

New “Emerging Growth Company” Category Created An “emerging growth company,” or EGC, is a new category of public company that is eligible for more favorable treatment than other public companies for a transition period. To qualify as an EGC, an issuer must have had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. An issuer that completed its equity IPO on or before Dec. 8, 2011, cannot qualify as an EGC.

An issuer will retain EGC status until the earliest of:

• The end of the fiscal year during which it had total annual gross revenues of $1 billion or more;

• The end of the fiscal year following the fifth anniversary of its equity IPO;

• The date on which it has issued more than $1 billion in non-convertible debt during the prior three year period; or

• The date on which it is deemed to be a “large accelerated filer” (i.e., in addition to certain other requirements, an issuer with a non-affiliated public float of at least $700 million as of the end of the second quarter of its most recently completed fiscal year).

Based on historical patterns, most IPO issuers will be EGCs.

EGCs Can Take Advantage of Scaled Governance, Disclosure and Audit Requirements: The JOBS Act exempts EGCs from several provisions of Dodd-Frank. EGCs are not required to conduct say-on-pay, say-on-frequency or say-on-golden parachute votes and will not be required to provide pay for performance or internal pay equity disclosure when those requirements are adopted. EGCs also may follow the scaled executive compensation disclosure requirements applicable to smaller reporting companies, which among other things do not require these companies to prepare Compensation Discussion and Analysis disclosure.

An EGC also is subject to less onerous financial disclosure and audit requirements in connection with its IPO and after it becomes a public company, which will result in cost savings for the issuer.

The IPO registration statement for an EGC only is required to include two years of audited financial statements, as compared to three years under prior disclosure requirements. In addition, selected financial


data and full fiscal year MD&A disclosure generally is not required in filings for any period preceding the audited financial statements contained in the IPO prospectus. Furthermore, EGCs are not required to comply with any new or revised financial accounting standards until such time as private companies also are required to comply with those standards.

EGCs also are exempt from Section 404(b) of the Sarbanes-Oxley Act, which requires auditors to attest to and report on management’s assessment of internal control over financial reporting. Finally, to the extent enacted, EGCs will be exempt from any new PCAOB rules requiring mandatory audit firm rotation or a supplemental auditor discussion and analysis.

Confidential SEC Review of IPO Registration Statements Available: In a break from prior practice for domestic issuers, EGCs now can confidentially submit an IPO registration statement to the SEC for review. However, the initial confidential submission and all subsequent amendments must be publicly filed with the SEC not later than 21 days before the date on which the issuer begins its road show.

“Testing the Waters” Permitted: EGCs and their representatives may engage in oral or written communications with potential investors that are “qualified institutional buyers” (generally institutional investors with $100 million or more in assets under management) or “institutional accredited investors” (generally banks, private business development companies, 501(c)(3) organizations, corporations, partnerships or trusts, in certain cases subject to the requirement that they have total assets in excess of $5 million) to determine whether such investors might be interested in participating in an offering by the issuer. These communications may occur prior to the filing of a registration statement without running afoul of “gun jumping” restrictions.

Restrictions on Research Analysts Loosened: The JOBS Act loosens restrictions on the publication of research and the involvement of research analysts in the offering process.

An investment bank participating in a proposed public offering of common equity of an EGC may publish research relating to that issuer at any time, whether before the filing of a registration statement, during the waiting period or after it is declared effective, without that research being treated as an offer to sell a security.

The JOBS Act also prohibits the SEC and FINRA from adopting or maintaining regulations in connection with the IPO of an EGC that restrict investment bankers from arranging for communications between a securities analyst and a potential investor or restricting an analyst from participating in communications with the management of an EGC that also are attended by investment banking personnel. In addition, the SEC and FINRA are prohibited from adopting or maintaining regulations prohibiting investment banks from publishing or distributing research or making a public appearance with respect to an EGC within any specified quiet period following the EGC’s IPO or within any prescribed period of time prior to the expiration of any IPO lock-up.

Private Placement Restrictions Loosened for All Issuers The JOBS Act eliminates restrictions on general solicitation and general advertising in connection with private placements conducted in accordance with Rule 506 of Regulation D and Rule 144A under the Securities Act. However, all purchasers in a Rule 506 offering must be accredited investors and there must be a reasonable belief that all purchasers in a Rule 144A offering are qualified institutional buyers. These provisions of the JOBS Act benefit all issuers, not just EGCs. The SEC is required to adopt amendments to Rule 506 and Rule 144A giving effect to this portion of the JOBS Act within 90 days after its enactment.

In conjunction with the elimination of the restriction on general solicitations and general advertising in Rule 506 offerings, the JOBS Act also provides an exemption from broker-dealer registration for platforms that facilitate Rule 506 offerings and for persons that co-invest in securities offered or sold in reliance on Rule 506 or provide ancillary services with respect to those securities, such as, subject to specified limitations, due diligence services or the provision of standardized documents to the issuer and investors. In order to rely on the exemption from broker-dealer registration, the person may not receive any compensation in connection with the purchase or sale of the Rule 506 security, it may not have possession of customer funds or securities in connection with the purchase or sale of the security and it may not be subject to statutory disqualification.

Crowdfunding Exemption Adopted Crowdfunding typically involves raising small amounts of capital from large numbers of people, often over the Internet. Previously, it was virtually impossible to cost-effectively issue equity through crowdfunding under the framework of the Securities Act and state securities laws.


The JOBS Act will enable an eligible issuer to offer and sell securities in crowdfunding transactions without registration under the Securities Act or compliance with most state securities law requirements if the following conditions are satisfied:

• The aggregate amount of securities sold does not exceed $1 million during a 12-month period; and

• The aggregate amount sold to any investor during a 12-month period does not exceed: (1) the greater of $2,000 or 5 percent of the annual income or net worth of the investor, if either is less than $100,000; or (2) 10 percent of the annual income or net worth of the investor, up to a maximum aggregate amount sold of $100,000, if either the annual income or net worth of the investor is equal to or more than $100,000.

Foreign issuers, Exchange Act registrants and investment companies are not eligible to use the crowdfunding exemption.

Crowdfunding transactions must be conducted through an intermediary broker or funding portal that registers with the SEC. A funding portal may not: (1) offer investment advice or recommendations; (2) solicit purchasers, sales or offers; (3) compensate employees or other persons for the solicitation; (4) hold, manage, possess or otherwise handle investor funds or securities; or (5) engage in such other activities as determined by the SEC. Although a funding portal will be required to register with the SEC, it will be conditionally exempt from registration as a broker-dealer pursuant to additional rules to be adopted by the SEC. Crowdfunding intermediaries will be required to satisfy a number of requirements in connection with the transactions in which they are involved, including providing risk disclosure and educational materials to investors, obtaining investor affirmations, conducting background checks on issuer principals, ensuring that offering proceeds only are received by the issuer when the target offering amount has been reached and ensuring that investors comply with crowdfunding investment limitations.

In addition, the issuer must provide to investors and the intermediary and file with the SEC specified information relating to the issuer, including information concerning its directors and officers, business, financial condition, use of proceeds, target offering amount, ownership and capital structure and certain specified risks to investors. If the target offering amount is $100,000 or less, the disclosure must include the issuer’s tax returns for its most recently completed year and financial statements that are certified by the issuer’s CEO to be true and complete in all material respects. If the target offering amount is more than $100,000 but less than $500,000, the financials must be reviewed by an independent public accountant. And, if the target offering amount is more than $500,000, the financial statements must be audited. On an ongoing annual basis, the issuer must file with the SEC and provide to crowdfunding investors financial statements and a report of the issuer’s results of operations, as the SEC determines to be appropriate in further rule-making.

Securities acquired through a crowdfunding offering will not be transferable until one year after purchase, except to the issuer, to an accredited investor, as part of a registered offering, to a member of the purchaser’s family or in connection with the death or divorce of the purchaser.

For purposes of determining when an issuer has the requisite number of record holders to trigger Exchange Act registration of a class of securities, persons who acquire securities pursuant to the crowdfunding exemption will be excluded (other changes to the Exchange Act reporting threshold are discussed further below).

The SEC generally is required to issue any additional rules relating to the crowdfunding provisions of the JOBS Act within 270 days after its enactment. Among other things, the SEC has express authority under the crowdfunding rules to require issuers to provide additional disclosure beyond what already is specified in the Act and to establish additional restrictions on the resale of securities acquired in crowdfunding offerings.

Regulation A Transaction Exemption Increased Regulation A is a small offering exemption from registration under the Securities Act. Not more than $5 million may be raised pursuant to the Regulation A exemption in any 12-month period. As a result, the exemption is infrequently used since the compliance costs outweighed the benefits to most issuers. The JOBS Act requires the SEC to adopt new rules increasing the maximum amount that can be raised under this exemption or a new exemption to $50 million. Unlike most other aspects of the JOBS Act, the Act does not specify an outside date for the enactment of these rules. Securities offered and sold under the exemption will not be treated as restricted under the Securities Act.


Issuers that sell securities in reliance on the exemption will be required to file an offering circular for review with the SEC. However, they will be able to publicly “test the waters” before doing so. An issuer that conducts an offering pursuant to the exemption will not become an Exchange Act registrant, although it will be required to file audited financial statements with the SEC annually. The SEC also is permitted to adopt other ongoing periodic disclosure requirements regarding, among other things, the issuer and its business operations, financial condition and corporate governance principles.

Securities sold under the exemption will not be required to comply with state securities laws to the extent they are offered or sold on a national securities exchange (e.g., NYSE or the Nasdaq Stock Market) or to qualified purchasers, as defined by the SEC.

Exchange Act Reporting Threshold Increased The JOBS Act amends Section 12(g) of the Exchange Act to raise the threshold that triggers ongoing periodic reporting under the Exchange Act. Pursuant to the JOBS Act, companies other than banking institutions that at the end of a fiscal year have more than $10 million of total assets and a class of equity securities held of record by either 2,000 persons or 500 persons who are not accredited investors must register the class under the Exchange Act within 120 days after the last day of the fiscal year. Previously, the Exchange Act reporting threshold was $10 million of total assets and securities held of record by 500 persons.

The JOBS Act provides for a somewhat different reporting threshold for banks and bank holding companies. These entities will be subject to Exchange Act registration if they have more than $10 million of assets and securities held of record by 2,000 persons at the fiscal year end. Banks and bank holding companies will be able to deregister under the Exchange Act if their securities are held of record by less than 1,200 persons; previously, the threshold for deregistration was less than 300 holders of record. The SEC is required to issue final regulations implementing this aspect of the JOBS Act within one year after its enactment.

Securities held by persons who received them pursuant to an employee compensation plan in transactions exempt from registration under the Securities Act will not be counted in the number of record holders. As discussed above, persons who acquire securities pursuant to the new crowdfunding exemption also will be excluded from the recordholder count for purposes of Section 12(g).

Authored by Michael R. Littenberg (+1 212.756.2524 | [email protected]) and James Nicoll (+1 212.756.2497 | [email protected]).







This information and any presentation accompanying it (the “Content”) has been prepared by Schulte Roth & Zabel LLP (“SRZ”) for general informational purposes only. It is not intended as and should not be regarded or relied upon as legal advice or opinion, or as a substitute for the advice of counsel. You should not rely on, take any action or fail to take any action based upon the Content.

As between SRZ and you, SRZ at all times owns and retains all right, title and interest in and to the Content. You may only use and copy the Content, or portions of the Content, for your personal, non-commercial use, provided that you place all copyright and any other notices applicable to such Content in a form and place that you believe complies with the requirements of the United States copyright and all other applicable law. Except as granted in the foregoing limited license with respect to the Content, you may not otherwise use, make available or disclose the Content, or portions of the Content, or mention SRZ in connection with the Content, or portions of the Content, in any review, report, public announcement, transmission, presentation, distribution, republication or other similar communication, whether in whole or in part, without the express prior written consent of SRZ in each instance.

This information or your use or reliance upon the Content does not establish a lawyer-client relationship between you and SRZ. If you would like more information or specific advice on matters of interest to you, please contact us directly.

U.S. Treasury Circular 230 Notice: Any U.S. federal tax advice included in this communication was not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties.


Schulte Roth & Zabel International LLPLondonHeathcoat House, 20 Savile RowLondon W1S 3PR+44 (0) 20 7081 8000+44 (0) 20 7081 8010 fax

Schulte Roth & Zabel LLPNew York919 Third AvenueNew York, NY 10022+1 212.756.2000+1 212.593.5955 fax

www.srz.com

Schulte Roth & Zabel LLP Washington, DC1152 Fifteenth Street, NW, Suite 850 Washington, DC 20005 +1 202.729.7470+1 202.730.4520 fax

public company hot topics - schulte roth & zabel · 7/10/2013 · public company hot topics...

Documents