[World Corporate Law News] SEC to Discuss ‘Regulation A’ Reform | CSA Flags Acquisition Risks

World Corporate Law News provides a weekly snapshot of corporate law developments from around the globe. Here’s a glimpse of the key corporate law update this week.

1. Securities Law

1.1 SEC Small Business Advisory Committee to discuss Regulatory Framework for Finders and continue exploring Regulation A

On July 7, 2025, the Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee announced that it will hold a meeting at the SEC Headquarters in Washington D.C on Tuesday, July 22, 2025 at 10 a.m. E.T. The meeting will be open to the public, in-person, as well as webcast on the SEC website, and will explore Regulation A and the topic of “finders,” persons who assist companies with limited capital-raising activities in private markets.

The meeting will start by finalising the discussion of potential regulatory improvements to Regulation A, building upon ideas generated during the previous committee meeting. In line with the committee’s efforts to promote small business capital formation, including access to capital for founders building businesses outside prominent entrepreneurial hubs or without robust capital-raising networks, the committee will spend the remainder of the meeting exploring “finders” and related matters.

Staff from the SEC’s Division of Trading and Markets will provide the committee with an overview of the SEC’s 2020 release, which proposed a limited, conditional exemption from broker registration for “finders.”

The committee will also learn more about the role of “finders” and potential regulatory solutions from industry practitioners, including Gary Ross, Managing Partner at Ross Law Group, and Kelley Arena, Founder of Golden Hour Ventures. As part of this discussion, the committee will explore potential principles, frameworks, conditions, and safeguards that could permit certain “finders” to engage in limited capital-raising activities.

The Small Business Capital Formation Advisory Committee provides guidance and recommendations to the SEC on rules, regulations, and policy matters that affect small businesses.

Source: Official Announcement

1.2 CSA issues guidance about regulatory concerns with certain asset or business acquisitions

On July 3, 2025, the Canadian Securities Administrators (CSA) published guidance addressing regulatory concerns related to certain asset or business acquisitions, primarily occurring in venture markets, including concerns about misleading disclosure that could constitute market manipulation.

The guidance pertains to reporting issuers that distribute a substantial number of securities to acquire assets or businesses that appear to have little or no actual value or operating history, and pay prices that appear to be significantly inflated.

CSA Staff Notice 51-366, Regulatory Concerns with Certain Asset or Business Acquisitions, explains the regulatory concerns associated with these types of acquisitions and reminds issuers of the requirements that may apply. It does not introduce any new requirements.

The Key regulatory concerns with these transactions include:

• The potential for misleading disclosure or misrepresentations in a reporting issuer’s continuous disclosure record.
• A potential lack of a reasonable basis for the value ascribed to the asset or business being acquired.
• Potentially untrue or unbalanced promotional campaigns to support the acquisition.
• Whether a reporting issuer records all or a portion of the consideration paid as intangible assets or goodwill based on unreasonable or unsupportable assumptions, and impairs them shortly after the acquisition.

Further, staff will continue to apply additional regulatory scrutiny to reporting issuers involved in acquisitions that appear to raise the concerns set out in the staff notice. The CSA, the council of the securities regulators of Canada’s provinces and territories, coordinates and harmonises regulation for the Canadian capital markets.

Source: Official Guidance

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