Publication

“SEC Adopts Changes to Rules 144 and 145 and Rules to Improve Regulation of Small Businesses”

On November 15, 2007, the Securities and Exchange Commission (the “SEC”) voted unanimously to adopt a number of rule amendments aimed at improving the capital-raising abilities of all companies and easing the reporting and disclosure requirements applicable to smaller companies.

As adopted, the final rules will: (i) shorten the holding periods and revise the manner of sale requirements under Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), for restricted securities of public companies; (ii) revise certain resale restrictions under Rule 145 (“Rule 145”) of the Securities Act and eliminate Rule 145’s “presumptive underwriter” provision except with respect to transactions involving shell companies; (iii) create two new exemptions for compensatory employee stock options under Rule 12h-1 (“Rule 12h-1”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), so that the Exchange Act’s registration requirements will not be triggered solely by a company’s compensation decisions; and (iv) make scaled disclosure regulations available to an additional 1,500 companies.

This Stroock Special Bulletin discusses the rule amendments and their implications for both large and small companies.