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SEC Proposes Amendments to Modernize and Expand Eligibility for Intrastate Securities Offerings

Proposed Rule 147 amendments would establish a new Securities Act exemption for intrastate offerings of securities by companies doing business in-state, including offerings relying upon newly adopted and proposed crowdfunding provisions of state securities laws.

The U.S. Securities and Exchange Commission has recently issued proposed amendments to modernize and to expand Rule 147 under the Securities Act of 1933, which provides a safe harbor for intrastate offerings exempt from registration pursuant to Securities Act Section 3(a)(11).  The text of SEC Release No. 33-9973 is available here.  The amendments are aimed at modifying certain regulatory requirements of the rule that are no longer compatible with evolving business practices and communication technologies, which have resulted for some time in limiting the utility of the rule for intrastate offerings, particularly in offerings by issuers seeking to raise capital through recently adopted state crowdfunding securities laws.  The amendments would eliminate the current restriction on offers via online advertising, while continuing to require that sales be made only to residents of the issuer’s state.  The amendments would also redefine what it means to be an “intrastate offering” and ease some of the issuer eligibility requirements in the rule, making the rule available to a greater number of businesses.  The firm's full Client Alert can be found here.

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