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SEC Proposes Amendments to Modernize Framework for Securities Offerings and Sales to Workers

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Washington D.C.–(Newsfile Corp. – November 24, 2020) – The Securities and Exchange Commission today announced that it has voted to propose amendments to Securities Act Rule 701, which provides an exemption from registration for the issuance of compensatory securities by non-reporting issuers, and Form S-8, the Securities Act registration statement for compensatory offerings by reporting issuers. 

Additionally, in a companion release, the Commission also proposed rules to permit, on a temporary basis and subject to certain conditions, an issuer to provide equity compensation to certain “platform workers” who provide services available through the issuer’s technology-based marketplace platform. 

The proposed amendments to Rule 701 and Form S-8 are designed to modernize the framework for compensatory securities offerings in light of the significant evolution in compensatory offerings and composition of the workforce since the Commission last substantively amended these regulations, allowing employees and other workers to receive equity compensation from their company while maintaining important investor protections. 

“Today’s proposed amendments seek to modernize our requirements for including company securities in worker-company compensation arrangements so that workers have the opportunity to share in the growth of the business,” said Chairman Jay Clayton.  “I thank the staff for their continued efforts to review and improve our rules to better align them with today’s employment practices and the economy more generally.”

The Commission’s proposals are substantially informed by public comments received in response to the Commission’s July 2018 Concept Release on Compensatory Securities Offerings and Sales.  The public comment period for the proposed rule amendments will remain open for 60 days following publication of the release in the Federal Register.

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FACT SHEET

Modernization of Rules and Forms for Compensatory Securities Offerings and Sales
November 24, 2020

The Securities and Exchange Commission today proposed amendments to Rule 701 under the Securities Act of 1933, which provides an exemption from registration for securities issued by non-reporting issuers pursuant to compensatory arrangements, and Form S-8, the Securities Act registration statement for compensatory offerings by reporting issuers. 

Background

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In July 2018, in coordination with adopting final amendments to Rule 701 consistent with congressional direction, the Commission issued a concept release that solicited public comment on possible ways to modernize the Rule 701 exemption and the relationship between the exemption and Form S-8, given the significant evolution that has taken place both in the types of compensatory offerings issuers make and the composition of the workforce since the Commission last substantively amended these regulations.  Informed by comment letters received in response to the concept release, the Commission’s proposed amendments are designed to modernize the framework for compensatory securities offerings, consistent with investor protection.

Highlights

With respect to Rule 701, the proposed amendments would:

  • Revise the additional disclosure requirements for Rule 701 exempt transactions exceeding $10 million, including how the disclosure threshold applies, the type of financial disclosure required, and the frequency with which it must be updated;
  • Revise the time at which such disclosure is required to be delivered for derivative securities that do not involve a decision by the recipient to exercise or convert in specified circumstances where such derivative securities are granted to new hires;
  • Raise two of the three alternative regulatory ceilings that cap the overall amount of securities that a non-reporting issuer may sell pursuant to 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.

With respect to Form S-8, the proposed amendments would:

  • Implement improvements and clarifications to simplify registration on the form, including:
    • Clarifying the ability to add multiple plans to a single Form S-8;
    • Clarifying the ability to allocate securities among multiple incentive plans on a single Form S-8; and
    • Permitting the addition of securities or classes of securities by automatically effective post-effective amendment.
  • Implement improvements to simplify share counting and fee payments on the form, including:
    • Requiring the registration of an aggregate offering amount of securities for defined contribution plans;
    • Implementing a new fee payment method for registration of offers and sales pursuant to defined contribution plans; and
    • Conforming Form S-8 instructions with current IRS plan review practices.
  • Revise Item 1(f) of Form S-8 to eliminate the requirement to describe the tax effects of plan participation on the issuer.

With respect to both Rule 701 and Form S-8, the proposals would:

  • Extend consultant and advisor eligibility to entities meeting specified ownership criteria designed to link the securities to the performance of services; and
  • Expand eligibility for former employees to specified post-termination grants and former employees of acquired entities.

What’s Next?

The comment period for the proposal will remain open for 60 days following publication in the Federal Register.

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Fintech Pulse: Your Daily Industry Brief (Chime, ZBD, MiCA)

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As we close out 2024, the fintech industry continues to deliver headlines that underscore its dynamism and innovation. From IPO aspirations to groundbreaking regulatory milestones, today’s updates highlight the transformative power of fintech partnerships, regulatory evolution, and disruptive technologies. Here’s what you need to know.

Chime’s Quiet Step Toward Public Markets

Chime, the U.S.-based financial technology startup best known for its digital banking services, has taken a significant step by filing confidential paperwork for an initial public offering (IPO). As one of the most valuable private fintechs in the U.S., Chime’s move could potentially signal a renewed appetite for fintech IPOs in a market that has been cautious following fluctuating valuations across the tech sector.

With a valuation that reportedly exceeded $25 billion in its last funding round, Chime’s IPO could set a new benchmark for the industry. Observers note that its strong customer base and revenue growth may make it an appealing choice for investors seeking to capitalize on the digital banking boom. However, the timing and success of the IPO will depend on broader market conditions and the regulatory landscape.

Source: Bloomberg

ZBD’s Pioneering Achievement: EU MiCA License Approval

ZBD, a fintech company specializing in Bitcoin Lightning network solutions, has made history by becoming the first to secure an EU MiCA (Markets in Crypto-Assets Regulation) license. This landmark approval by the Dutch regulator positions ZBD at the forefront of compliant crypto-fintech operations in Europe.

MiCA, which aims to harmonize the regulatory framework for crypto-assets across the EU, has been a focal point for industry players aiming to establish legitimacy and expand their offerings. ZBD’s achievement not only validates its operational rigor but also sets a precedent for other fintech firms navigating the evolving regulatory landscape.

Industry insiders view this as a strategic advantage for ZBD as it broadens its footprint in Europe. By leveraging its regulatory approval, the company can accelerate its product deployment and establish trust with institutional and retail users alike.

Source: Coindesk, PR Newswire

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The Fintech-Credit Union Synergy: A Blueprint for Innovation

The convergence of fintechs and credit unions continues to reshape the financial services ecosystem. Collaborative initiatives, such as the one highlighted in the recent partnership between fintech innovators and credit unions, are proving to be a potent force in delivering tailored financial solutions.

This “dream team” approach allows credit unions to leverage fintech’s technological expertise while maintaining their community-focused ethos. Key areas of collaboration include digital payments, personalized financial management tools, and enhanced loan processing capabilities. These partnerships not only enhance member engagement but also enable credit unions to remain competitive in an increasingly digital-first financial environment.

Industry analysts emphasize that such collaborations underscore a broader trend of traditional financial institutions embracing fintech-driven solutions to bridge service gaps and foster innovation.

Source: PYMNTS

Tackling Student Loan Debt: A Fintech’s Mission

Student loan debt remains a pressing issue for millions of Americans, and a Rochester-based fintech aims to offer relief through its cloud-based platform. This innovative solution is designed to simplify loan management and provide borrowers with actionable insights to reduce their debt burden.

The platform’s features include repayment optimization tools, personalized financial education, and seamless integration with loan servicers. By addressing the complexities of student loan management, this fintech is empowering borrowers to make informed decisions and achieve financial stability.

As the student loan crisis continues to evolve, solutions like this highlight the critical role fintech can play in addressing systemic financial challenges while fostering financial literacy and inclusion.

Source: RBJ

Industry Implications and Takeaways

Today’s updates underscore several key themes shaping the fintech landscape:

  1. Regulatory Milestones: ZBD’s MiCA license approval exemplifies the importance of regulatory compliance in unlocking growth opportunities.
  2. Strategic Partnerships: The collaboration between fintechs and credit unions demonstrates the value of combining technological innovation with traditional financial models to drive customer-centric solutions.
  3. Market Opportunities: Chime’s IPO move reflects a potential revival in fintech public offerings, signaling confidence in the sector’s long-term prospects.
  4. Social Impact: Fintech’s ability to tackle systemic issues, such as student loan debt, showcases its role as a force for positive change.

 

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SPAYZ.io prepares for iFX EXPO Dubai 2025

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Leading global payments platform SPAYZ.io has confirmed it will be attending iFX EXPO Dubai 2025 on 14 to 16 January. Exhibiting at Stand 64 at Trade Centre Dubai, SPAYZ.io’s team of professionals will be on hand providing live demonstrations of its renowned payment services for payment providers. Attendees will also receive exclusive insight into SPAYZ.io’s plans for 2025 alongside early early access to its upcoming plans for the new year.

SPAYZ.io delivers a host of payment solutions that leverage the latest technological innovations and open access to the fastest growing emerging markets across Africa, Europe and Asia. Over the past year, there has been huge demand for its Open Banking and local payment method services, alongside bank transfers, mass payouts, online banking and e-wallets.

Yana Thakurta, Head of Business Development at SPAYZ.io commented: “We look forward to once again participating at iFX Dubai to expand our network of partners and clients. It’s a fantastic way to kick off the year, connecting with thousands of industry leaders from FOREX platforms to trading companies, and everything in between.

“Our key goal for iFX Dubai EXPO 2025 is to expand our portfolio of solutions and geographies. We’re using this as an opportunity to partner with like-minded entities who share our ambition to provide payment solutions that are truly global.”

Come meet SPAYZ.io’s team at the Trade Centre Dubai at Stand 64. You can also book a meeting slot with a member of a team.

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Airtm Enhances Its Board of Directors with Two Strategic Appointments

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Airtm, the most connected digital dollar account in the world, is proud to announce the addition of two distinguished industry leaders to its Board of Directors: Rafael de la Vega, Global SVP of Partnerships at Auctane, and Shivani Siroya, CEO & Founder of Tala. These appointments reflect Airtm’s commitment to innovation and financial inclusion as the company enters its next phase of growth.

“We are thrilled to welcome Rafael and Shivani to Airtm’s Board of Directors,” said Ruben Galindo Steckel, Co-founder and CEO of Airtm. “Their unique perspectives and proven track records will be invaluable as we continue scaling our platform to empower individuals and businesses in emerging markets. Together, we’ll push the boundaries of financial inclusion and innovation to create a more connected and equitable global economy. Rafael and Shivani bring a wealth of experience and strategic insight that will strengthen Airtm’s mission to connect emerging economies with the global market.”

Rafael de la Vega, a seasoned leader in fintech global partnerships and technology innovation, is currently the Global SVP of Partnerships at Auctane. With a proven track record of delivering scalable, impactful solutions at the intersection of fintech, innovation, and commerce, Rafael’s expertise will be pivotal as Airtm continues to grow. “Airtm has built a platform that breaks down barriers and opens up opportunities for people in emerging economies to connect to global markets. I am excited to contribute to its growth and help further its mission of fostering financial inclusion on a global scale,” said Rafael.

Shivani Siroya, CEO and Founder of Tala, is a pioneer in financial technology, renowned for empowering underserved communities through access to credit and essential financial tools. Her leadership in leveraging data-driven innovation aligns seamlessly with Airtm’s vision of creating more equitable financial opportunities. “Empowering underserved communities has always been at the core of my work, and Airtm’s mission resonates deeply with me. I’m thrilled to join the Board and work alongside such a dynamic team to expand access to financial tools that truly make a difference in people’s lives,” said Shivani.

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