In addition, new Rule 506(d) prohibits an issuer from relying on Rule 506 if the issuer or certain of its affiliates (including beneficial owners of 20 percent or more of the issuer’s outstanding voting equity) have been convicted of or are subject to court or administrative sanctions for having violated specified laws that occur after September 23, 2013. Prior convictions and administrative sanctions will not disqualify reliance on Rule 506 if disclosed to offerees prior to the offering. These provisions will require issuers to modify their standard subscription documents in order to censure compliance.
Attorneys should familiarize themselves with the new rules, since they require that modifications be made to standard investor questionnaires and representations in placement agency and purchase agreements, and change the closing processes on all Rule 506 offerings.
Read Akin Gump’s summary of the new rules here.