On May 23, 2006 the Securities and Exchange Commission took significant actions to:

  • finalize its interpretive guidance for management's assessment of internal controls over financial reporting and eliminate the need for auditor's to attest to management's internal controls assessment process;
  • propose an increase to the number of companies eligible for the scaled disclosure and reporting requirements for smaller reporting companies;
  • propose new eligibility requirements for primary securities offerings on Forms S-3 and F-3 for companies with a public float of less than $75 million;
  • propose exemptions for compensatory employee stock options from registration under Section 12(g) of the Securities Exchange Act of 1934 for non-reporting companies;
  • propose amending Regulation D under the Securities Act of 1933, among other things, to modify the definition of "accredited investor," create a new exemption for offers and sales of securities to a newly defined category of "qualified purchasers", provide greater guidance relating to integration of offerings and require that Form D filings be made electronically; and
  • propose amending Rule 144 under the Securities Act to revise holding periods and filing thresholds, simplify compliance for non-affiliates and codify staff interpretations.

The SEC's press releases on these important proposals are here and here. The full text of the SEC's rules and proposals should be released within the next several weeks.

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