On November 24, 2020, the SEC released proposed amendments and proposed temporary rules relating to the federal securities laws that govern the issuance of equity securities to service providers pursuant to compensatory arrangements. Each proposal will be subject to a 60-day public comment period following publication in the Federal Register.

  • First, the SEC proposed amendments to modernize the framework for securities offerings and sales to workers under Rule 701 of the Securities Act of 1933 and registration statements on Form S-8.
  • Second, the SEC proposed temporary rules to facilitate limited participation in compensatory offerings under Rule 701 and Form S-8 by certain gig workers (or “platform workers”) who provide services through the company’s internet-based platform or other widespread, technology-based marketplace platform or system.

These amendments and temporary rules come following the SEC’s 2018 request for public comment on possible ways to modernize Rule 701 and Form S-8 in light of developments in compensation and the labor markets, including the expansion of the gig economy. We previously discussed the SEC’s July 2018 concept release here and Davis Polk’s comment letter submitted in response to the concept release here.

Our latest memorandum provides:

  • An overview of Rule 701 and Form S-8;
  • A summary of the proposed amendments to modernize Rule 701 and Form S-8 and of the proposed temporary rules for platform workers;
  • A series of Q&As relating to key topics addressed by the two proposals; and
  • A complete list of the SEC’s requests for additional comments on each proposal.

Read the full memo here.

Law clerk Elizabeth Smith contributed to this publication.