March 2025 One-Minute Reads

New C&DIs related to Reg A and Reg D

On March 12, the Securities and Exchange Commission (SEC) Division of Corporation Finance (Corp Fin) issued new and updated compliance and disclosure interpretations (C&DIs) under Rule 502 of Regulation D. The new C&DIs include, among others:

• Question 256.35: Outlines factors for applying a reasonableness standard to assess accredited investor status and explains how to use them.
• Question 256.36: Reflects a no-action letter providing guidance on how issuers could reasonably conclude that reasonable steps have been taken to verify accredited investor status in high minimum investment offerings, simplifying the private offering process.

   

For more information regarding the new C&DIs, see this March 13 Cooley PubCo post.

New C&DIs related to M&A

On March 6, Corp Fin updated guidance on Securities Act Section 5 C&DI 239.13 and Form S-4 C&DI 225.10 regarding the use of Form S-4/F-4 to register offers and sales of a buyer’s securities after securing “lock-up” commitments from target insiders to vote in favor of the transaction. Corp Fin also released five new Tender Offer Rules and Schedules C&DIs (101.17 – 101.21), clarifying that offers should remain open for at least five business days after a material change is disclosed and outlining when changes in financing or funding conditions are considered a “material change.” For more information on these new C&DIs, see this March 7 Cooley PubCo post and this March 10 blog from TheCorporateCounsel.net.

SEC enhances accommodations for issuers submitting draft registration statements

On March 3, the SEC announced that Corp Fin had issued guidance to improve accommodations available to companies for nonpublic review of draft registration statements. The 2012 Jumpstart Our Business Startups (JOBS) Act allowed certain companies to confidentially submit draft registration statements for initial public offerings (IPOs) for staff review, and in 2017, these accommodations were expanded to all companies conducting certain securities offerings, including IPOs and follow-on offerings within one year of IPO. The enhanced accommodations will allow more types of forms to be submitted as draft registration statements for nonpublic review, let reporting companies submit draft registration statements for nonpublic review regardless of how much time has passed since their IPO, and give companies the flexibility to omit certain underwriter disclosures from the initial submission, allowing the review process to begin earlier. For more information on the enhanced accommodations, see this March 4 Cooley PubCo post, this March 6 Governance Beat post and this March 4 blog from TheCorporateCounsel.net.

EDGAR Next transition started March 24

On March 6, the SEC issued a press release announcing updates to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system starting March 24. These updates include the launch of a Filer Management dashboard, which will allow filers to enroll in EDGAR Next and enable individuals or entities to submit Form ID access applications. Filers have six months, through September 12, 2025, by which to enroll to avoid interruption in the ability to file. Enrollment ends on December 19, 2025, after which any filer that has not enrolled will need to submit a Form ID to receive codes to file. Filers may continue to file on the existing EDGAR Filing and Online Forms websites in the same way they do now through September 12. In addition, as of March 24, entities and individuals seeking access to file on EDGAR must complete the revised Form ID application for access on the dashboard of the new EDGAR Filer Management website. Watch the Cooley video on “How to Prepare for EDGAR Next” in this March 11 Governance Beat post and see this March 7 Cooley PubCo post.

SEC charges former biopharmaceutical company executives with scheme to mislead about cancer drug application

On March 12, the SEC filed charges against the former CEO, chief medical officer and chief business officer of biopharmaceutical company Allarity Therapeutics for allegedly attempting to hide a harsh critique by the US Food and Drug Administration (FDA) from investors in February 2020 regarding the approval prospects of dovitinib, Allarity’s flagship cancer drug candidate. The SEC’s complaint alleges the three officers learned in February 2020 that the FDA advised against seeking approval for dovitinib due to insufficient data, and instead suggested conducting a new phase III clinical trial, which Allarity had no plans to pursue. The SEC’s complaint alleges that the three officers misled investors by creating press releases with false and misleading claims about dovitinib’s chances of FDA approval, instead of disclosing the FDA’s negative feedback. Meanwhile, Allarity raised funds from investors to stay afloat, and the CEO also allegedly signed several documents that were filed with the SEC and/or posted on Allarity’s website that similarly allegedly misled investors about dovitinib’s prospects for FDA approval. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, civil monetary penalties, and to bar the defendants from serving as officers or directors.

Impacts for US companies of the proposed EU Omnibus package

On February 26, the European Commission proposed an Omnibus package to streamline recently adopted European Union sustainability laws – including the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy Regulation, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM). The proposed changes in the package create a considerable amount of legal uncertainty for US companies operating in the EU. Learn more about the impact on US companies in this February 26 Cooley alert, this March 12 Cooley PubCo post, this February 26 ESG News article and this February 27 ESG Dive article.

More new C&DIs – addressing S-3s and 20-Fs

On March 20, Corp Fin staff released these additional C&DI updates, clarifying when a nonautomatically effective Form S-3 can be declared effective in the interim period between filing an annual report (Form 10-K) forward-incorporating by reference certain information, and a proxy statement. They also address rules for foreign private issuer filings and withdraw a few C&DIs to reflect the vacatur by a federal court of the repurchase modernization rules.

For more information regarding the C&DIs, see this March 21 Cooley PubCo post.

Delaware Senate Bill 21 amends DGCL

On March 26, Delaware Gov. Matt Meyer signed Senate Bill 21, which amends provisions of the Delaware General Corporation Law (DGCL) relating to board approval of transactions with controlling shareholders and places new limits on “books and records” actions by shareholders. It also codifies a balanced framework for stockholder access to corporate books and records. The bill was introduced in February amid growing concerns that Delaware companies might reincorporate in Texas, Nevada or other jurisdictions. The bill was opposed by plaintiffs’ lawyers and investor advocates, including the Council of Institutional Investors. It was approved by the Delaware Senate on March 13. For more information, see this March 26 Cooley PubCo post and this March 25 Cooley PubCo post.

SEC votes to end defense of climate disclosure rules

On March 27, the SEC announced that it had voted to end its defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions. These rules, adopted by the SEC on March 6, 2024, required companies to provide detailed disclosures about climate risks. States and private parties had challenged the rules, leading to consolidated litigation in the US Court of Appeals for the Eighth Circuit (Iowa v. SEC, No. 24-1522). The SEC previously stayed the effectiveness of the rules until the litigation was resolved. After the vote, SEC staff informed the court that the SEC withdrew its defense of the rules, and that its counsel is no longer authorized to advance arguments in the brief that was filed. For more information, see this March 27 Cooley PubCo post, this March 27 statement from Commissioner Caroline Crenshaw and this March 28 Cooley PubCo post.

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