Rule 701-Exemption for offers
and sales of securities pursuant to certain compensatory benefit
plans and contracts relating to compensation
Extension without change of a currently approved collection
No
Regular
09/05/2025
Requested
Previously Approved
36 Months From Approved
10/31/2025
3,725
800
1,863
400
3,352,500
480,000
Absent an available exemption, the
Securities Act of 1933 (“Securities Act”) requires that a
registration statement be filed with the Commission disclosing
prescribed categories of information before securities may be
offered for sale. Where a registration statement is required,
securities may not be sold to the public until the registration
statement becomes effective. Congress recognized that in some
situations there may not be a need for registration in connection
with offers and sales of securities; it provided a number of
exemptions from Securities Act registration and provided the
Commission with authority to adopt exemptions from Securities Act
registration. Rule 701 (17 CFR 230.701) provides an exemption from
Securities Act registration for an issuer that is not subject to
the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (“non-reporting issuer”) for offers and sales
of securities under a written compensatory benefit plan or written
compensation contract established by the issuer (or its parents,
its majority-owned subsidiaries, or majority-owned subsidiaries of
the issuer’s parent) for the participation of their employees,
directors, general partners, trustees, officers, or consultants and
advisors, and their family members who acquire such securities from
such persons through gifts or domestic relations orders. The total
sales price or maximum amount of securities that may be sold under
Rule 701 during any consecutive 12-month period must not exceed the
greatest of: (1) $1 million, (2) 15% of the total assets of the
issuer (or its parent company if the issuer is a wholly-owned
subsidiary, subject to certain conditions), or (3) 15% of the
outstanding amount of the class of securities being offered and
sold in reliance on Rule 701. All issuers relying on Rule 701 must
deliver to investors a copy of the compensatory benefit plan or
contract. In addition, if the total sales price or amount of
securities sold during any consecutive 12-month period exceeds $10
million, the issuer must deliver the following additional
disclosure to investors a reasonable period before the date of sale
(or, for derivative securities, including options, the date of
exercise or conversion, or, for deferred compensation or similar
plans, the date the irrevocable election to defer is made): (1) a
copy of the summary plan description required by the Employee
Retirement Income Security Act of 1974 (“ERISA”) or, if the plan is
not subject to ERISA, a summary of the material terms of the plan,
(2) information about risks associated with investment in the
securities, (3) the financial statements required to be furnished
by Part F/S of Form 1-A under Regulation A, and (4) parent
financial statements (where the issuer uses its parent’s total
assets to determine the amount of securities that may be sold). The
purpose of Rule 701 is to enable non-reporting issuers to
compensate employees and others without registering an offer and
sale of securities under the Securities Act, while requiring
issuers, as a condition of reliance on the rule, to provide
investors with certain information that is important to investment
decision making.
US Code:
15
USC 77e Name of Law: Securities Act of 1933
US Code: 15
USC 77f Name of Law: Securities Act of 1933
US Code: 15
USC 77c Name of Law: Securities Act of 1933
US Code: 15
USC 77g Name of Law: Securities Act of 1933
US Code: 15
USC 77s(a) Name of Law: Securities Act of 1933
US Code: 15
USC 77z-3 Name of Law: Securities Act of 1933
US Code: 15
USC 77aa Name of Law: Securities Act of 1933
PL:
Pub.L. 115 - 174 507 Name of Law: Economic Growth, Regulatory
Relief, and Consumer Protection Act
The increase in burden hours of
1,463 (from 400 hours to 1,863 hours) is due to—and the increase of
$2,872,500 in cost burden (from $480,000 to $3,352,500) is due in
part to—an increase in the estimated number of annual Rule 701
responses (from 800 responses to 3,725 responses). The increase in
cost burden also reflects the Commission’s increase in the cost
burden per hour estimate from $400 per hour to $600 per hour for
outside professionals.
$0
No
No
No
No
No
No
No
Pearl Crawley 202 551-3256
crawleyp@sec.gov
No
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
20250905_3235-0522_2025-17030_90 FR 42991_30-Day Submission Notice.pdf.pdf
Rule 701, Exemption for offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation