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Securities Alert

September 26, 2019

SEC Extends “Test-the-Waters” Accommodation to All Issuers

By E. Peter Strand, Gary M. Brown, Kaylen R. Loflin

The SEC announced today that it has adopted new Rule 163B, which will extend the “test-the-waters” accommodation, previously available only to emerging growth companies (“EGCs”), to all issuers. The rule permits any issuer to engage in oral or written communications with potential investors that are, or are reasonably believed to be, qualified institutional buyers (“QIBs”) or institutional accredited investors either prior to, or following, the filing of a registration statement.  

The new rule does not require any legends on or filing of any written communications with the SEC. The rule also is non-exclusive and issuers may rely on other Securities Act rules and exemptions, such as Rule 163, which is an exemption from Section 5(c) of the Securities Act for certain communications by well-known seasoned issuers.

The new rule is the latest in the SEC’s efforts to deregulate certain “offers” that are deemed not contrary to the public interest but assist issuers and others in the capital raising process.

New Rule 163B will become effective 60 days after publication in the Federal Register.

The entire release (No. 33-10699) by the SEC can be found here.

For more information regarding Rule 163B contact your Nelson Mullins attorney or any of the other experienced Nelson Mullins attorneys listed.

Jeff Allred: 404.322.6101 or at jeff.allred@nelsonmullins.com
Gary Brown: 615.664.5330 or at gary.brown@nelsonmullins.com
Brian Caid: 303.583.9918 or at brian.caid@nelsonmullins.com
Kathleen Deutsch: 561.366.5320 or at kathleen.deutsch@nelsonmullins.com
Nina Gordon: 305.373.9426 or at nina.gordon@nelsonmullins.com
Neil Grayson: 864.250.2235 or at neil.grayson@nelsonmullins.com
John Jennings: 864.250.2207 or at john.jennings@nelsonmullins.com
David Mannheim: 919.329.3804 or at david.mannheim@nelsonmullins.com
Allie Nagy: 919.329.3885 or at allie.nagy@nelsonmullins.com
Daniel Nunn: 904.665.3601 or at daniel.nunn@nelsonmullins.com
Mike Rafter: 404.322.6627 or at mike.rafter@nelsonmullins.com
Erin Reeves McGinnis: 404.322.6208 or at erin.reevesmcginnis@nelsonmullins.com
Jim Rollins: 617.573.4722 or at james.rollins@nelsonmullins.com
Doug Spear: 404.322.6266 or at doug.spear@nelsonmullins.com
Jon Talcott: 202.689.2806 or at jon.talcott@nelsonmullins.com
Charles Vaughn: 404.322.6189 or at charles.vaughn@nelsonmullins.com
Peter Strand: 202.689.2983 or at peter.strand@nelsonmullins.com