SEC Amendments To Exempt Offering Rules Become Effective

The Securities and Exchange Commission ("SEC") recently adopted final rules (the "Final Rules") to amend the "patchwork" framework for exempt securities offerings.¹ The Final Rules largely adopt and supplement the amendments as proposed² and became effective on March 15, 2021. In adopting the Final Rules, the SEC aims to (1) simplify the complex exempt offering framework, (2) clarify the ability of issuers to move from one exemption to another, and (3) promote capital formation while maintaining protections for investors. This memorandum summarizes the more significant aspects of the Final Rules.

I. Final Rules

A. New Integration Framework

The Final Rules include a new Rule 152, which simplifies the previous five-factor test³ for determining whether an issuer's private and public offerings will be integrated. This new Rule 152 replaces the prior Rules 152 and 155. The new Rule 152(a) provides that two or more offerings (other than those covered under safe