The five-year transportation bill known as the Fixing America’s Surface Transportation (FAST) Act that a House-Senate conference committee agreed on earlier this week is not something we ordinarily would comment on here. But in that inestimable way that Congress manages to do things, the transportation bill contains so many provisions affecting public company financing and reporting that Broc Romanek of TheCorporateCounsel.net blog described the provisions collectively as “JOBS Act 2.0.” The House and Senate passed the bill on Dec. 3, 2015, and President Obama is expected to sign it into law shortly.
As described in a November 6, 2015 post on the Cooley law firm’s Pub.Co. blog (here), House Financial Services Chairman Jeb Hensarling successfully attached to the transportation bill an amendment comprised of 15 other bills that had passed the House as stand alone measures. These provisions relate to “capital for emerging market companies, disclosure modernization, the development of secondary markets, and the registration process for smaller companies.”
As detailed in the Cooley law firm blog post and in a December 2, 2015 memo from the Davis Polk law firm (here), the various provisions address a variety of issues. Among other things, the bill would reduce from 21 to 15 the number of days before the roadshow that a confidentially submitted IPO registration statement must be made public.
The bill would also allow an issuer that qualified as an emerging growth company at the time it initially submitted its registration statement but thereafter ceased to qualify to continue to be treated as an EGC until the offering is completed. The bill would also ease the burden on ECGs during the confidential filing review phase.
The bill also includes provisions to ease the resale of restricted securities, subject to certain conditions; specifically, it exempts from registration any resale transaction to accredited investor purchasers, if no general solicitation is used and other conditions are met.
The bill also imposes certain responsibilities on the SEC to complete changes of Reg. S-K to ease the burden on smaller companies and to eliminate duplicate or burdensome requirements for all companies. The SEC is also required to conduct a study for the modernization of Reg. S-K requirements.
To me, while these provisions will institute needed revisions, overall the provisions represent improvements or adjustments rather than wholesale changes. Even though they may collectively represent significant number of adjustments, these adjustments even taken collectively will be most important for practitioners and advisors. Others will simply want to be aware of the changes, particularly the shortening of the confidentiality period for ECG registration statements.
A Note to Readers: Some of you note that this post is shorter and less detailed than my usual posts. If I were to recount here the number and variety of technical issues that surrounded my attempts to create and post this article, you would think I was making things up. Suffice it to say that I finally posted this item in a coffee shop at the corner of 40th Street and Madison Avenue in New York , which was the fourth separate location on which I had attempted to work on the post. If I am fortunate, I will finally get this item posted just before my laptop (the last of my three devices that is still functioning) runs out of juice. Let me just say this – if you are thinking of starting a blog, give me a call. I will talk you out of it.