Business and Corporate

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Beginning September 1, 2014, the American Arbitration Association (“AAA”) will require that any business using or intending to use the AAA rules in a consumer contract register the arbitration clause with the AAA. Upon submitting the clause, the AAA will review it for “material compliance” with the AAA’s due process standards contained in its Consumer…

The use of standard form terms and conditions, without a signed contract, often leads to disputes over whether the parties actually agreed to be bound by such terms and conditions, as was the case in Shelter Mutual Insurance Co. v. Rimkus Consulting Group, Inc. of Louisiana, et al., 2013-1977 (La. 7/1/14). In that case,…

We have become accustomed to having regular check-ups with our doctors. The doctor will analyze our current physical condition, including heart rate, blood pressure, cholesterol level, lung condition or otherwise. The doctor may order a treadmill test or a screening for a particular function. The doctor will also compare current test results to any prior…

On Monday June 30, 2014, the Supreme Court ruled that requiring family owned corporations to pay for insurance coverage for contraception under the Affordable Care Act (“ACA”) violated a federal law protecting religious freedom. As noted in my previous entry, the contraception coverage requirement was challenged by corporations whose owners claimed that they run…

On the recommendation of the Louisiana Law Institute, the Louisiana Legislature passed Act 281 (the “Act”). The Act concerns amendments to the Louisiana Civil Code relative to security, pledge and recordation. Civil Code art. 3133 et seq. concerning pledge have been deleted in their entirety and replaced with general articles on the liability of…

Starting January 1, 2015, all employers subject to the Affordable Care Act must track, on a month-to-month basis, each full-time employee (generally any employee who averages 30+ hours of service per week per month) and the employee’s share of the lowest cost monthly premium for self-only coverage (if any) by calendar month, among other information.…

Yesterday (March 25, 2014), the Supreme Court heard oral arguments in Sebelius v. Hobby Lobby Stores, Inc. (“Hobby Lobby”) and Conestoga Wood Specialties Corp. v. Sebelius (“Conestoga”), two consolidated cases which challenge requirements under the Affordable Care Act (“ACA”). Specifically, each case involves private companies that challenge the federal health care law’s mandate that employee…

On February 12, 2014, President Obama followed up on comments made during his State of the Union address and signed an Executive Order increasing the minimum wage for employees of federal contractors. The Order, which increases the minimum wage from $7.25 to $10.10 per hour, covers all employees who perform services or construction work under…

For most startups and emerging companies, fundraising continues to be challenging. With the passage of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), Congress tasked the Securities and Exchange Commission (the “SEC”) with revamping federal securities laws to make fundraising more accessible for small companies in attempt to help create jobs. Recently, the SEC has implemented and proposed new and revised securities laws to achieve this mandate. While not all of these rule changes make life easier for small companies seeking to raise capital, some of the rules do potentially provide new fundraising alternatives for small companies. Companies and investors should also be aware that certain new rules impact established practices and, predictably, there are new pitfalls to avoid. This post briefly introduces some of the recent developments in unregistered offerings and provides some key takeaways for companies and investors to consider.

Background: The JOBS Act

As a reference point, the JOBS Act consists of the following five parts or Titles: Title I is the so-called “on-ramp” to the initial public offering (“IPO”) process for emerging growth companies that introduced certain relaxed disclosure and audit requirements (this topic is not covered in this post); Title II tasked the SEC to promulgate rules to lift the ban on general solicitation in effect under existing private placement exemptions; Title III created an exemption for crowdfunding offerings; Title IV tasked the SEC with improving the Regulation A offering exemption; and Title V increased the limit on the number of shareholders a company may have before it triggers public reporting requirements.

Traditional Regulation D Private Placements

Companies seeking to raise capital through the offer and sale of securities must either register the securities offered with the SEC under the Securities Act of 1933 (the “Securities Act”) or rely on an exemption from registration. Historically, when small companies raised funds from private investors in unregistered offerings, such offerings were generally conducted as private placements exempt from registration under Rule 506 of Regulation D under the Securities Act, which allows an unlimited amount of capital to be raised from an unlimited number of accredited investors (and up to 35 sophisticated non-accredited investors).(1)  One of the requirements of former Rule 506, now revised Rule 506(b), is that a company cannot engage in general solicitation or advertising in connection with the offering.Continue Reading Jumper Cables: Recent Developments in Securities Laws Aim to Boost Small Company Fundraising

On February 10, 2014, the Treasury Department released final regulations on the employer mandate provisions under the Affordable Care Act (a.k.a. Obamacare). While the final rules retain much of what was outlined in the proposed regulations issued in December 2012, the most significant news is the additional one-year delay for certain covered employers with respect…