Corporate Counsel Guest Article: The Offer: What Small-Cap Issuers Need to Know


U.S. securities laws tightly regulate communications in connection with securities transactions, and tough questions can arise about what communications are acceptable. In particular, the communications that concern public companies and the securities law practitioners who advise them are “offers.” The Securities Act of 1933 (Securities Act) defines an “offer” broadly “as every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” Given this broad definition, different kinds of communications may be considered offers, and the U.S Securities and Exchange Commission’s long-held policy is that any kind of communication that arouses interest in the sale of an issuer’s securities may be deemed an “offer.”

All public offerings must be registered under the Securities Act, and once a registration statement for a securities offering is filed with the SEC, written and oral offers must comply with an intricate framework of restrictions and safe harbors. A comprehensive review of all the securities laws concerning offers would be beyond the scope of this article. This article will focus on a hypothetical scenario that presents itself all too often during a road show, in which management’s real-time responses could mean the difference between a successful deal and a potential violation of the Securities Act.

Excerpted from Corporate Counsel, August 15, 2014. To view full article, click here.

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