Last month, the SEC issued relief – in the form of an exemptive order – permitting certain types of tender offers to remain open for only 10 business days, cutting in half the prior general requirement of 20 business days. Here’s an excerpt from this Cooley Alert penned by Ali Murata, Michael Bergmann and Janice Chan:
“What this means for equity award tenders
Because of the conditions attached to the reduced 10-day tender period, the SEC relief should generally work in favor of companies, but it is limited. For both private and public company equity award tender offers, the 10-day window is effectively limited to company self-tenders for cash. Notably, it does not apply to tender offers in connection with repricings, modifications or option exchanges – areas where incentive equity compensation often implicates the tender offer requirements.
In the right circumstances – for instance, an option award buyback – a company will now be able to launch and close a cash tender offer more quickly than has been the case in the past, and can do so without inadvertently disqualifying options intended to qualify as incentive stock options.
Two caveats to note:
- First, because of the procedure used to grant the relief, it may be revoked by the SEC at any time.
- Second, and more importantly, the tender offer rules remain a highly technical and complicated thicket requiring great care to successfully navigate.”
Authored by
Broc Romanek