As the 116th United States Congress came to a close, in its final hours, and skipping weeks of political drama for purposes of this post, the legislative body took the unprecedented step and overrode a presidential veto for the first time during the Trump Administration to pass the National Defense Authorization Act for Fiscal Year 2021 (the Defense Act). Included in the Defense Act is the Corporate Transparency Act (the CTA). The CTA, which was initially introduced by the House of Representatives in 2019, seeks to provide appropriate safeguards to identify bad actors engaged in terrorism, money laundering, sex trafficking and other heinous acts through “shell companies” that are not actually engaged in a bona fide business venture but instead are created for the principal purpose of shielding the owners from liability for engaging in illicit behavior and, in many cases, their identities. (more…)
Following the lead of California, Illinois and other states, Nasdaq, which is home to some of the largest companies in the world including Amazon, Google and Facebook, may require diversity on the board of directors of those companies. Earlier this month, Nasdaq submitted to the Securities and Exchange Commission (SEC) its proposal to require at least two diverse board members and certain disclosure requirements on the 3,000+ public companies that trade on the Nasdaq exchange. Currently more than 75% of Nasdaq’s listed companies do not meet this requirement. (more…)
Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances
The ability to raise capital is one of the most critical challenges facing small businesses in the U.S. today. Capital can allow for exponential growth of a well-run startup with a good idea, but the lack of capital is the death knell for many others. While many small companies initially rely on friends and family for funding, there has perennially been a gap between raising money from those in your immediate circle and working with investment bankers who are registered broker-dealers for larger rounds of funding. In years past, unregistered finders stepped in to fill this gap despite the legal challenges involved. The role and responsibilities that a finder can legally undertake is a gray area. To the chagrin of their lawyers, companies often “looked the other way” and risked sanctions, possible rescission of offerings and other penalties in order to get the capital they so desperately sought. The problem of unregistered finders has been discussed by the Securities and Exchange Commission (SEC) for decades but, until the new rules proposed by the SEC on October 7, 2020, they did little to provide relief to small companies seeking to raise private placement funds through the use of finders.
The Environmental Protection Agency (EPA) announced in a memo released on Thursday, March 26, 2020 that it will relax its enforcement of environmental legal obligations under certain circumstances during the COVID-19 pandemic.
Applicable retroactively to March 13, 2020, the EPA will use enforcement discretion in specific situations where a company or governmental entity is unable to comply with an obligation usually required by the EPA due to the consequences of the COVID-19 pandemic, if the company takes certain steps to mitigate and document its noncompliance. This enforcement discretion only applies to civil violations of environmental legal obligations and explicitly does not extend to any criminal violations or conditions of probation in criminal sentences, activities that are carried out under Superfund and RCRA Corrective Action enforcement instruments or imports.
On March 9, 2020, the United States Department of Health and Human Services (HHS) issued two new sets of rules under the 21st Century Cures Act designed to provide patients with more control over their health care data. With the goal of interoperability, the final rules developed by each of the HHS Office of the National Coordinator for Health Information Technology (ONC) and Centers for Medicare & Medicaid Services (CMS) require providers, payers and information technology vendors to provide patients with the ability to easily access their electronic health information (EHI) on electronic devices, including smart phones. (more…)
- Corporate Transparency Act and Implications for Entity Formation and Transaction Structures
- Nasdaq’s Giant Leap Towards Diversity on the Board
- The Marijuana Opportunity Reinvestment and Expungement Act of 2019
- IRS to Allow “Workaround” to Deduction Limits for State and Local Income Taxes
- Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances