Dodd Bill Does Not Include Sarbanes 404(b) Relief

The other day I did confirm that, unfortunately, the financial industry reform package put forth by the US Senate does not include a permanent exemption for smaller reporting companies from Sarbanes-Oxley Section 404(b). SOX 404(b) would obligate these companies’ auditors to attest to the adequacy of the company’s internal financial controls. Most of us see ...

Tip of the Week: Knowing the Pros and Cons of Reverse Mergers vs. IPOs 2

To those who just recently started following reverse mergers, I think it is a timely opportunity to rehash why reverse mergers or other alternatives such as self-filings can be a better option than the traditional initial public offering (IPO). Let me briefly illustrate why a small to middle market company would seek out this option.   ...

The Newest AARP Member

I’m hitting the big one next month. Five-oh. And yep I joined the AARP. About 10 years ago I got a mailing from them encouraging me to join, even though you’re supposed to be 50 to be a member. I called my Mom, trying to suggest what a joke it was 10 years early, and ...

Deals are Back!

This month’s Reverse Merger Report lets us know that deal volume in February hit an all-time monthly high of 31. The article also talks about the increase in the use of Form 10 shells in reverse merger deals, mentioning the reverse merger of Kobe Sport with a Form 10 shell that month (disclaimer: my law ...

Tip of the Week: Financing in Reverse Mergers

Generally speaking, financing is easier to obtain when a company goes public because investors are seeking an opportunity for liquidity.  Although it is difficult to overstate the importance of financing as regards reverse mergers, about half of these mergers, in recent years, involve no financing whatsoever.  This does not imply that there is no intention ...

Senate Financial Reform Bill Could Affect Regulation D Offerings

Sen. Chris Dodd (D-CT) has just today introduced a version of his “Restoring American Financial Stability Act of 2010,” which now includes “Authority of State Regulators over Regulation D Offerings,” which would diminish the “covered security” preemption of 1933 Act Sec. 18(b)(4)(D). That preemption made many Reg. D offerings much easier. Some points of interest at Section 926 include:   the SEC ...

Intro to CPC's – Part III: Lots of Deals!

Completing this introductory series on capital pool companies, or CPCs, in Canada, the technique has been quite successful indeed. The Reverse Merger Report  has reported that 14 deals (known as qualifying transactions or QTs) have been completed just in the period of February 10 through March 11. It seems that energy and Chinese deals rule. Remember that these ...

Tip of the Week: Don't Forget Good Standing!

Sometimes when corporations enter into important transactions the parties neglect to confirm that the corporation is current and in “good standing” in its jurisdiction of incorporation. Too many times this is assumed, or reliance is made on a certificate of good standing that is not current. A corporation that is not in good standing might not ...

Intro to CPC’s – Part II: Definitely Not SPACs

As mentioned in the first installment of this series on CPCs, or capital pool companies, in Canada, there are some differences between these smaller shell companies that go public on the TSX Venture Exchange seeking combinations with development stage companies and SPAC’s, or special purpose acquisition companies in the US, which raise large amounts of money hoping ...

Intro to CPC's – Part I: Basics

We’ve all been hearing a lot about “CPCs,” emanating out of Canada. CPC stands for capital pool company. Essentially the program permits shell companies to go public through an IPO, raise money and then hope to conclude an acquisition through reverse merger. The TSX Venture Exchange established the program, which is not available in all Canadian ...