SEC regulatory relief
We expect that the Trump administration and the Republican-led U.S. Congress will advance significant policy shifts and rule changes at the SEC that are designed to encourage companies toward public ownership and to facilitate capital formation in both public and private markets.
Reforms designed to promote public ownership will likely focus on (a) eliminating duplicative requirements (including disclosures already required by generally accepted accounting principles); (b) removing “non-material” disclosure requirements (including conflict materials, mine safety and pay ratio); (c) providing additional scaled disclosure requirements for smaller public companies (extending the definition of “smaller reporting company” and “non-accelerated filer” to cover companies with higher public floats and extending the length of time that a company may be considered an emerging growth company); and (d) addressing concerns regarding shareholder proposals (increasing holding requirements and revising resubmission thresholds) and shareholder advisory firms.
Reforms designed to promote access to capital will likely focus on (a) liberalizing pre-initial public offering communication (allowing all issuers to “test the waters”), (b) revising the definition of “accredited investors,” (c) considering ways to facilitate pooled investments in private or less-liquid offerings, and (d) expanding the use of Regulation A+ and crowdfunding.
Although smaller companies will likely be the greatest beneficiaries of the proposals being considered, many proposals will also benefit large public companies by eliminating certain duplicative and non-material disclosure requirements and addressing concerns regarding shareholder proposals.
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