Securities Law Issues in M&A Deals: Exemptions From Registration, Required Disclosures

A transfer of stock as part of the sale of a business in an M&A transaction is considered a securities offering under the Securities Act, as is the issuance of new stock to shareholders of another company in exchange for their shares of stock. Due to costliness and the complexities of registration requirements, issuers often seek an exemption from the Act.

The Section 4(a)(2) exemption and Reg D safe harbors are the most common exemptions used for stock issued as part of a merger or acquisition. Reg D prohibits public solicitation and advertising and limits the ability to sell securities to nonaccredited purchasers. Also, the securities are restricted and subject to limitations on resale.

Penalties can be steep, and mistakes can be costly to the deal, so counsel must carefully consider securities law implications before structuring the transaction and closing the deal.

Listen as our authoritative panel examines the applicability of the Securities Act to a stock transfer or issuance in an M&A deal. The panel will provide guidance on choosing the right registration exemptions for common M&A situations and advising clients on appropriate disclosure documentation and integration issues.