US reporting companies that are planning or have completed a significant acquisition of a business may be required to file separate target financial statements and related pro forma financial statements under Rule 3-05 and Article 11 of Regulation S-X.  The specific US Securities and Exchange Commission rules and financial reporting obligations triggered by a significant acquisition can be quite complex, requiring careful evaluation by an acquiring company.  This note discusses the SEC’s financial reporting and disclosure requirements triggered by a company’s significant business acquisition. Continue reading.

 

Sunday, July 19, 2020
9:00 a.m. – 10:00 a.m. EDT
4:00 p.m. – 5:00 p.m. Israel Time
Register here

Join Mayer Brown and PwC for a webinar on Life Sciences IPOs.  Panelists will discuss the pre-IPO and IPO markets and IPO preparedness, among other topics. CEO and Co-Founder of InMode, Moshe Mizrahy, will join our panel, and give an insider’s perspective on the IPO process.

Speakers

  • Omer Gavish, Partner, Pharma & Life Sciences Leader, PwC Israel
  • Phyllis Korff, Partner, Mayer Brown LLP
  • Moshe Mizrahy, CEO and Co-Founder, InMode
  • Anna Pinedo, Partner and Co-Leader of Global Capital Markets, Mayer Brown LLP
  • Marc Rosenbaum, Partner, PwC Israel

On July 2, 2020, the Securities and Exchange Commission (the “SEC”) approved, with immediate effectiveness, the New York Stock Exchange’s (“NYSE”) proposal to extend its waiver of the shareholder approval requirements set forth in Section 312.03 of the NYSE Listed Company Manual through September 30, 2020.  As we previously blogged, the SEC initially approved the NYSE’s waiver of such requirements through June 30, 2020.  In the proposal, the NYSE noted that a number of listed companies completed capital raising transactions that would not have been possible without the flexibility provided by the waivers and expressed that it wanted to provide more flexibility to listed companies that need to access capital in the current unusual economic conditions.

Section 312.03(b) requires shareholder approval of any issuance to a related party if the number of shares of common stock to be issued (or that are exercisable) exceeds 1% of the number or voting power of shares prior to such issuance.  The waiver of this requirement is limited to transactions that involve the sale of shares for cash at a price that meets an applicable minimum price standard.  Section 312.03(c) requires shareholder approval of any transaction relating to an issuance of 20% or more of the company’s outstanding common stock prior to such issuance other than a public offering for cash.  In order to be afforded the waiver, among other requirements, the company needs to demonstrate that the transaction is due to circumstances related to the COVID-19 pandemic and meets an applicable minimum price standard.  In either case, an issuance to a related party must also be reviewed and approved by the company’s audit committee.  Any transaction will still be subject to shareholder approval if required under the change of control requirements of Section 312.03(d).

View the SEC’s approval here.

July 16-17, 2020
Register here

This two day program will provide an in-depth review of the basic aspects of the U.S. federal securities laws. Emphasis will be placed on the interplay among the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, the Dodd-Frank Act, the JOBS Act, the securities-related provisions of the FAST Act, related SEC regulations and significant legislative and regulatory changes and proposals.

Partner Anna Pinedo will co-lead a discussion entitled Securities Act Exemptions on Day One of the program.

Discussion topics will include:

  • Exempt securities versus exempt transactions;
  • Private placements, including offerings under Rules 504 and 506 of Regulation D;
  • Regulation A+ offerings;
  • “Intrastate” offerings;
  • Crowdfunding;
  • Employee equity awards;
  • Rule 144A offerings;
  • Regulation S offerings outside the U.S..
  • Resales of restricted and controlled securities: Rule 144, Section 4(a)(7) and “Section 4(a)(1½)”

This market trends article identifies cybersecurity risk disclosures that offer detailed discussions on the potential reputational, financial, or operational harm resulting from cybersecurity breaches and the potential litigation or regulatory costs, policies, and procedures in addressing cybersecurity risks. This article concludes with practical advice on how to prepare and enhance the required disclosures on cybersecurity risks and incidents. Continue reading.

PLI Webinar
July 9, 2020
1:00 pm- 2:00 pm EDT
Register here

Many smaller public companies seek access to financing through equity line financing arrangements.  Equity line transactions often are confused with continuous offerings that are structured as at the market offering programs.  Each financing alternative has distinct characteristics, and differ in important respects.  During this webcast, the speakers will discuss the following:

  • Basic structure of an equity line; public versus private
  • SEC’s historic analysis of private equity lines;
  • Registration of securities sold in private equity line transactions;
  • Overview of, and application of Nasdaq 20% limitation / shareholder vote rules to equity line financings;
  • At the market offering basics;
  • Application of Nasdaq rules to ATMs;
  • Differences between equity lines and ATMs; and
  • SEC’s S-3 baby shelf rules applied to continuous offerings.

On July 9, 2020, starting at 9.30 am, the Securities and Exchange Commission will host a roundtable discussion on investing in emerging markets.  Given the proposed legislation regarding public companies based in emerging markets that do not allow access to PCAOB inspections and other regulatory oversight (see our prior blog post here) and the President’s order here (see our prior blog post here) regarding the need to study and propose measures to address these matters, the SEC roundtable should prove interesting.  The panels will address retail investor concerns, the limitations on inspection and enforcement in emerging markets and auditor oversight, and disclosure and reporting considerations with respect to investments in emerging markets.  See the notice for additional details regarding the agenda here.

July 23, 2020
2:00 pm – 3:00 pm EDT
Register here

As many issuers continue to seek access to the capital markets in light of the pandemic related downturn, our webcast will focus on convertible bonds. Converts have been among the most popular financing tools in recent months, and, for good reason.

Please join Mayer Brown’s Anna Pinedo and Remmelt Reigersman, along with Claude DeSouza and Pete Pergola from Raymond James as they discuss the state of the market, as well as additional topics such as:

  • A convertible bond overview;
  • Accounting and reporting implications for issuers;
  • Accompanying antidilutive strategies, including capped call and call/warrant structures;
  • Tax considerations for the issuer;
  • Addressing busted converts; and
  • Other securities and disclosure considerations.

This market trends article examines recent trends regarding medium-term note programs (MTN programs), providing an overview of the market in 2019 and 2020 with a focus on general deal structure and process, recent deal terms, and disclosure trends. Financial service companies, such as bank holding companies, continued to use medium-term note programs as their vehicles for issuing large, underwritten offerings of notes as well as structured notes in 2019. A significant change occurred in 2019 and early 2020: the addition of new provisions adding the secured overnight financing rate (SOFR) as a new base rate for issues of floating rate notes, in anticipation of the replacement of U.S. dollar LIBOR. Continue reading.

The first quarter 2020 PwC/CB Insights MoneyTree Report for the first quarter of 2020 provides insights on the level of venture funding.

US venture capital deal activity has declined for three straight quarters, with 1,533 deals raising $28.6 billion, 1,399 deals raising $23.3 billion, and 1,271 deals raising $26.4 billion raised, respectively, in each of the last three quarters ended with first quarter 2020.  Deal activity in 2020 was off to its slowest start since first quarter of 2013.  However, despite these declines, VC funding is still above quarterly averages compared to prior periods in the last five years.  Seed deals saw the sharpest declines, while later stage growth deals (Series E and above) increased slightly during the first quarter 2020.  Mega-rounds increased during the first quarter 2020, with 58 deals completed raising $12 billion.

The five largest deals in the United States in the first quarter 2020 (each raising more than $450 million) included JUUL Labs, Joby Aviation, Impossible Foods, Lyell Immunopharma, and Snowflake Computing.  Internet SaaS and healthcare companies attracted the most capital.  Nearly half of all US funding during the first quarter 2020 came from mega-rounds.  Unicorn births declined during the first quarter 2020, with only 12 newly minted unicorns.  The top valued US unicorns remain unchanged from late 2019 and include JUUL Labs, Stripe, Airbnb, SpaceX, and Palantir Technologies.  The number of M&A exits remained flat in the first quarter 2020 compared to fourth quarter 2020, with 154 exits, and exits occurring on average seven years from inception.  As we have previously reported, the number of IPOs fell in the first quarter 2020 to 15—so while there were fewer IPOs in Q1 2020, the number of M&A exits remained virtually flat.

Globally deal activity and funding both declined year over year, with the largest decline occurring in Asia.