What are some key aspects of the amendments? For securities of public companies, the required holding period for both affiliated and nonaffiliated investors has been reduced from one year to six months. For nonaffiliates of public companies, after the initial six-month period has elapsed, the investor may make unlimited resales, provided that, during months seven through 12, the issuer complies with certain informational requirements. Previously, a two-year holding period would apply before unlimited resales could be made. For nonaffiliates of nonpublic companies, after a one-year holding period, the holder may make unlimited resales. Again, previously, a two-year holding period was required.
Investors will now be subject to fewer “manner of sale” limitations when selling equity securities. Resales of debt securities will be subject to fewer volume restrictions and will no longer be subject to the “manner of sale” limitations. Finally, Rule 145 has been revised to eliminate the so-called presumptive underwriter rule.
So who wins? Each in different ways:
issuers of privately placed securities;
existing shareholders of issuing companies;
underwriters and placement agents;
venture capitalists; investors in private rounds by public companies; and
private equity sponsors and other shareholders of acquired private companies.
