Archive for April, 2012
It was this concern that prompted Regulation D, a special exemption that became effective April 15, 1982. It’s not just another exemption, but rather one of the key exemptions for small business that want to raise money by selling stock to the general public. It is also considered a form of taking a company public without the burden and expenses of a full registration process with the SEC such as in a traditional Initial Public Offering.
Regulation D consists of six basic rules. The first three are simply basic rules; they are concerned with definitions, conditions, and notification. Rule 501 covers the definitions of the various terms used in the rules. Rule 502 sets forth the conditions, limitations, and information requirements for the exemptions in rules 504, 505, and 506. Rule 503 contains the SEC notification requirements. The last three rules deal with the specifics of raising money. Rule 504 generally pertains to securities sales up to $1 million. Rule 505 applies to offering from $1 million to $5 million. Rule 506 is for securities offerings exceeding $5 million.
1. The concept of free transferability of shares in a public company under section 111A of the Companies Act, 1956 is perhaps the most significant unresolved controversy in contemporary Indian corporate law. Time and again the issue has arisen whether the right of first refusal (pre-emptive rights) in the shareholders’ agreement and joint venture agreement constitute restriction on the free transferability of shares. Right of first refusal is a commonly used device in the corporate world. Under the right of first refusal, a second party planning to exit the company, is obliged to give the first party ( promoter) an opportunity to buy the shares before the shares can be sold to a third party which is an outside party. This is basically to prevent an easy entry of third party into the company by purchasing shares from the party who wish to exit the company. Many corporates, unlisted as well as some listed ones, have such agreements with large shareholders.
Right of first refusal whether violate section 111A
It is old news that President Obama signed the American Recovery and Reinvestment Act, popularly known as the Stimulus Package, into law last month. What hasn’t made the news are the dramatic changes the law makes to HIPAAs (Health Insurance Portability and Accountability Act) Security Rules. The changes subject business associates to the rules, requires notifications for breaches, expands who may seek damages and increases penalties for violations. Here are just some of the biggest changes to the HIPAA Security Rules.
Arguably the biggest change is the expansion of who is covered under HIPAA. The law now places the same security requirements to business associates as covered entities. This includes the administrative, physical, and technical safeguards mandated by the Security Rule. This will require every business associate to appoint a security official, develop written procedures, and train its workforce on safeguarding private health information. In short they need better data security from creation to shredding. A business associate is now also subject to civil and criminal penalties under HIPAA.