Private Placement Closing Checklist Flashcards Preview

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Flashcards in Private Placement Closing Checklist Deck (5):
1

What is an Offering Memorandum (OM)?

Purpose: disclosure

Audience: Prospective investors

Law: Rule 144A and Regulation S offering of debt securities.

Content regarding:
(1) the issuer,
(2) the offering,
(3) the terms of the securities being offered and
(4) the risks of the investment.

Form: Substantially similar to a prospectus in an underwritten SEC-registered public offering.

2

Prospectus

The portion of a registration statement for a securities offering delivered to investors describing the issuer, its business and the offering. Note also that Section 2(10) of the ′33 Act defines “prospectus” very broadly to encompass written materials relating to the offering or the issuer not typically filed as part of the registration statement. Prior to the effectiveness of the registration statement, with limited exceptions, the filed preliminary prospectus is the only document within the definition of prospectus that can be circulated or otherwise used.

3

Clean Legal Opinion

An opinion of counsel given in a securities offering which contains only “customary” qualifications and assumptions, as opposed to qualifications and assumptions which, to a non-customary extent, cast doubt on the legal conclusion, limit the scope of the opinion or assume the existence of a crucial fact. Clean opinions are not necessarily mandatory for each issue for which opinions are required in a securities offering, but the decision to accept an opinion other than a clean opinion (and any related disclosure implications) should be carefully considered.

4

What is Rule 144A?

SEC rule that provides a non-exclusive "safe harbor" exemption from the registration requirements of the Securities Act for certain offers and sales of qualifying securities by certain persons (not including the issuer) as long as the offered securities are sold only to qualified institutional buyers (QIBs).

5

What is Regulation S?

SEC rule providing two safe harbor provisions for offers and sales of securities made outside the US. Rule 903 is the issuer safe harbor. Rule 904 is available for resales by persons other than the issuer, a distributor, their respective affiliates and persons acting on their behalf. Regulation S uses a territorial approach, which provides that transactions occurring outside the US are not subject to the registration requirements of Section 5 of the Securities Act.