Corp Fin Provides Guidance On Section 3(a)(10) Exemption

Section 3(a)(10) of the Securities Act of 1933 (Securities Act) exempts the offer and sale of securities in certain exchange transactions from the registration requirements of the Securities Act. In the staff bulletin,¹ the Securities and Exchange Commission (SEC) staff Division of Corporation Finance (Corp Fin) provided its views regarding the Section 3(a)(10) exemption and the resale status of Section 3(a)(10) securities. The highlight of the Bulletin is the discussion regarding Corp Fin's view of the impact of the amendments to the Rule 144/145 resale provisions on Section 3(a)(10) securities. The Section 3(a)(10) exemption is available when securities are issued in exchange for other securities, not for cash, and the fairness of the exchange is approved by a court or a governmental entity. The fairness hearing must be open to everyone to whom securities would be issued in the proposed exchange.