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About U.S. Securities Regulation: All You Need to Know about Going Public, Listing, Reporting and Private Placements
All you need to know about going public, listing, reporting and private placements.
A step-by-step guide to issuing in the U.S. for domestic and foreign issuers, U.S. Securities Regulation is a practical handbook written by an author with 25 years’ experience in the field. Including each of the listing, registration, accounting and reporting requirements, a full description of Regulation S, fraud and protection measures, and enforcement and liabilities for breach, this book is essential for every company officer and their advisors. Includes practical hints for going public and a Sarbanes-Oxley compliance checklist for issuers.
Chapters include:
• The registration process for going public
• Forms of registration statements
• U.S. trading markets and listing
• Private placements
• Resale of securities
• Regulation S
• Exchange Act registration and reporting
• Tender offers
• Fraud in the purchase or sale of securities: Rule 10b-5
• Liability and enforcement
• Appendix A Going public: a practical guide
• Appendix B NYSE listing standards
• Appendix C Nasdaq listing standards
• Appendix D The new federal corporate governance standards: Sarbanes-Oxley, NYSE and Nasdaq listing standards
• Appendix E Sarbanes-Oxley compliance checklist for foreign private and Canadian issuers
Table of Contents:
Contents
About the author xi
Preface xii
Chapter 1: Introduction to U.S. securities regulation 1
Federal securities statutes 1
State securities laws 1
The U.S. Securities and Exchange Commission 1
Chapter 2: What is a security? 4
Introduction 4
Investment contracts and unorthodox securities 5
Other instruments 5
Chapter 3: The registration process for going public 7
Introduction 7
Registration of securities 7
SEC review of the registration statement 11
Due diligence - making sure the registration statement is accurate
and complete on the effective date 11
Publicity 12
Prospectus delivery 15
The underwriting process 15
Closing 16
NASD review 17
Blue sky laws 17
Merit statutes 17
Listing exemption 17
Chapter 4: Forms of registration statements 18
Forms of registration statements for U.S. issuers 18
Forms of registration statements for foreign private issuers 20
Forms of registration statements for MJDS offerings of
Canadian companies 22
Chapter 5: U.S. trading markets and listing 27
Introduction 27
NYSE and AMEX exchanges 27
Over-the-counter market – Nasdaq 27
Listing 27
Chapter 6: Private placements 28
Introduction 28
Section 4(2): the private placement 28
Regulation D (Rules 501-508) 29
Liability in private placements 33
Regulation FD 33
State ‘blue sky’ laws 34
Chapter 7: Resale of securities 35
Introduction 35
Statutory framework 35
Rule 144 37
Section 4(12) – private resales 40
Rule 144A – resales to institutional buyers 41
Regulation S 44
Rule 144A’s interaction with Regulation S 44
Resales after business combinations 45
Resales after bankruptcy 45
Registration under the Securities Act 45
Chapter 8: Regulation S 47
Introduction 47
General statement 47
General conditions of both safe harbors 48
Definitions 48
Rule 903: the issuer and affiliate safe harbor 48
Rule 904: the resale of safe harbor 50
Rule 905: status 50
Chapter 9: Exchange Act registration and reporting 52
Introduction 52
Registration under the Exchange Act 52
Registration and reporting under the Exchange Act 53
The U.S. Foreign Corrupt Practices Act 62
General disclosure obligations 62
Officer, director and shareholder reports 64
Ownership reports 68
Chapter 10: Accounting 71
Introduction 71
Financial reporting 71
Basic financial statement requirements 71
MD&A disclosure 74
Non-GAAP financial measures 75
Disclosure of management’s assessment of internal controls 76
Selection of independent accountants 76
Auditor registration with the Public Company Accounting
Oversight Board 77
Chapter 11: Tender offers 78
Introduction 78
What is a tender offer? 78
Tender offers rules for registered equity securities: Section 14(d) 80
Tender offer rules for all securities: Section 14(e) 82
Cross-border tender offer for a foreign target – Tier I and Tier II 83
The MJDS and tender offers 86
‘Stop at the border’ offerings 87
Complying with U.S. domestic tender offer rules 88
Chapter 12: Fraud in the purchase or sale of securities: Rule 10b-5 89
Introduction 89
Elements of a 10b-5 action 89
Damages and penalties 90
Statute of Limitations 91
Controlling person liability 91
Insider-trading 91
Chapter 13: Liability and enforcement 93
Introduction 93
Securities Act violations and public offerings 93
Other liability provisions 94
Private placements 94
Exchange Act violations 94
Controlling persons: directors and officers 95
Enforcement 95
SEC 95
Appendix A Going public: a practical guide 97
Introduction 97
Deciding whether to go public: advantages and disadvantages
of going public 97
Evaluating a company’s ability to go public 98
Selecting the right underwriter 100
Structuring the offering 101
Preparing for the offering 102
The registration process 103
Costs of going public 103
Listing considerations 103
Obligations once the company is public 104
Conclusion 104
IPO timetable 104
Appendix B NYSE listing standards 105
U.S. standards 105
Non-U.S. standards 105
Appendix C Nasdaq listing standards 109
Nasdaq national market 109
Nasdaq SmallCap Market 109
Appendix D The new federal corporate governance standards: Sarbanes-
Oxley, NYSE and Nasdaq listing standards 112
Introduction 112
The board of directors 113
Director independence criteria 113
The audit committee 114
Other board committees 117
Codes of ethics: governance guidelines 117
Other SOX standards applicable to directors or officers 117
Shareholder approval requirements 118
Education and training of directors 118
Certification 119
Appendix E Sarbanes-Oxley compliance checklist for foreign private
and Canadian issuers 120
AUTHOR AUTOBIOGRAPHY
Guy P. Lander is a partner at DaviesWard Phillips & Vineberg LLP in New York City, where he specializes in corporate and securities law for international and domestic companies and financial institutions. Over the years, his practice has emphasized a wide range of financial transactions, including U.S. and international public and private offerings, Rule 144A placements, Regulation S offerings, MJDS offerings, listing foreign companies on U.S. exchanges, venture capital financings, tender and exchange offers, mergers, and acquisitions.
Mr. Lander's practice includes providing corporate governance and Sarbanes–Oxley advice to corporate clients. He also devotes a significant part of his time to regulatory matters for financial services firms. Mr. Lander advises securities brokerage firms, investment advisers and hedge funds on their structuring, documentation, compliance, business activities and significant
transactions.
Mr. Lander is the author of the highly regarded treatise U.S. Securities Law for International Financial Transactions and Capital Markets, Two Vols., West Group. He is also the author of What is Sarbanes-Oxley, McGraw Hill, Resales of Restricted Securities Under SEC Rules 144 and 144A, BNA Corporate Practice Series and numerous articles for legal and securities industry journals.
Mr. Lander is the former Chairman of the Committee on Securities Regulation of the New York State Bar Association (NYSBA) and the former Chairman of the NYSBA's Section on Business Law. He also participates in continuing legal education programs and is a frequent chair and speaker at programs sponsored by the NYSBA, including those on public offerings, private placements and corporate governance.
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