Readers may recall that last December, President Biden signed the Consolidated Appropriations Act of 2023, HR 2617. This legislation included a statutory exemption for mergers and acquisition brokers. 15 U.S.C. ยง 78(o)(b)(13). That exemption took effect in March, 2023.
Importantly, this exemption does not preempt state registration requirements. Thus, practitioners will need to continue to consider whether brokers exempt from federal registration must nevertheless be licensed under state law. California has long had a rule, 10 CCR 260.204.5, exempting mergers and acquisition specialists, something that I wrote about 13 years ago yesterday in this space. In 2015, the North American Securities Administrators Association (NASAA) proposed a model exemption rule.
Earlier this month, the Nevada Secretary of State announced the adoption of numerous updates to the Nevada Administrative Code. While the Secretary of State characterized the changes as cleaning up and clarifying outdated regulations, the changes did include a new exemption for certain mergers and acquisition brokers. This new exemption is similar, but not exactly the same as, NASAA's model exemption.
Readers should not assume that all persons who broker mergers and acquisition transactions are now exempt from licensure. These exemptions are not the same and it is possible that someone is exempt under one rule or statute but not another. Also, it must be kept in mind that these are exemptions from broker-dealer registration requirements and it is possible that other licensing laws, such as real estate brokers, will apply to the activity. See M&A Brokers - What About George Babbitt?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
