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Securities & Exchange Commission’s Reforms The Integration Rules.
Among the current Jobs Act amendments of November 2, 2020, the SEC toppled the Integration Doctrine.
The integration doctrine sought to prevent an issuer from separating a single offering into two or more separate offerings in an effort to fit the “separate” offerings within registration exemptions that would not be available for the combined offering.
The Securities Act integration framework consists of a mixture of rules and SEC guidance for determining whether ostensibly separate securities transactions should be considered part of the same offering.
The amendments establish a new integration framework with a general principle that looks to be facts specific of the two or more offerings, basing the analysis on whether the issuer establishes that the offerings either complies with the registration requirements of the Securities Act, or that an exemption from registration is available for the particular offering.
The new integration framework appears in the form of an amendment to Rule 152 under the Securities Act. New Rule 152 will provide that offers and sales will not be integrated if, based on the particular facts of the offerings, the company issuing the deal can demonstrate that each offering either complies with the registration requirements of the Securities Act, and is eligible for an exemption from registration.
The amendments also provide the following four non-exclusive safe harbors from integration:
Any offering made more than 30 days before the commencement of any other offering, or more than 30 days after the termination or completion of any other offering, provided certain conditions are met. Offers and sales made in compliance with Rule 701, pursuant to an employee benefit plan or in compliance with Regulation S will not be integrated with other offerings an offering for which a registration statement has been filed will not be integrated if it is made subsequent to (i) a terminated or completed offering for which general solicitation is not permitted, (ii) a terminated or completed offering for which general solicitation is permitted that was made only to qualified institutional buyers and institutional accredited investors, or (iii) an offering for which general solicitation is permitted that terminated or was completed more than 30 calendar days prior to the commencement of the registered offering; and offers and sales made in reliance on an exemption for which general solicitation is permitted if made subsequent to any terminated or completed offering.