Some time ago, in 2018, the Securities and Exchange Commission had issued a concept release requesting public comment on possible amendments to Rule 701 and Form S-8. The concept release followed after the SEC Staff had issued a number of Compliance and Disclosure Interpretations on Rule 701, and after federal legislation had modified the dollar threshold triggering a requirement on issuers to furnish additional disclosures to stock-based compensation awardees. The concept release had noted that in recent years, as more companies remained private longer, their approach to stock-based compensation and their reliance on Rule 701 had changed. The concept release also had commented on new business models (referring to the "gig economy"), which were not contemplated by Rule 701.

Now, the SEC is proposing for public comment amendments to Rule 701. Among other things, the proposed amendments would:

• Revise the Rule 801 disclosure requirements for transactions in excess of the $10 million threshold;
• Raise two of the three alternative ceilings that cap the overall amount of securities that a non-reporting issuer may issue in reliance on the exemption during any consecutive 12-month period; and
• Make the exemption available for offers and sales of securities under a written compensatory benefit plan established by the issuer's subsidiaries, whether or not majority-owned.

The proposed amendments would also modernize Form S-8 to facilitate the addition of multiple plans on a single registration statement, clarify the ability to allocate securities among multiple plans, and add securities or new classes of securities by post-effective amendment.

The comment period for the proposal will remain open for 60 days following publication in the Federal Register. See the SEC press release and fact sheet here, and the proposing release here. A client alert will follow.