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Technology Industry Practice Guidance Q&A with Gregg A. Noel and Michael J. Mies

September 28, 2017

Skadden, Arps, Slate, Meagher & Flom LLP.

THE TECHNOLOGY INDUSTRY IS FOCUSED around companies that primarily sell technology or technology services. Major players in the technology industry include:

  • Hardware companies, such as Apple, Dell, HP, and Lenovo, which generate revenue by building and selling physical products
  • Software companies, such as Alphabet (Google), Adobe Systems, Microsoft, and Oracle, which generate revenue by developing and selling software
  • Information technology (IT) services companies, such as IBM, which generate revenue by providing services related to either hardware or software
  • Companies that provide critical components to the technology industry, such as Intel and Applied Materials, which generate revenue by providing software or hardware to other technology companies
  • Peer-to-peer companies, such as Uber, Airbnb, Snapchat, Facebook, and Lyft, which generate revenue by connecting individuals or businesses together online to deal with each other directly
  • Biotechnology and medical device companies, such as Amgen and Medtronic, which generate revenue by developing and selling products or services used in the medical industry The technology industry is also often defined to include companies that rely on technological innovation to disrupt existing business models, such as Amazon and Tesla.

In addition to competing in the technology industry, many technology companies also impact other industries. For example, Apple has established a presence in media with iTunes and its Apple TV product. Alphabet is a pioneer in the car industry, launching a self-driving car project in 2014. Uber and Lyft’s online services are similarly disrupting the transportation industry.

What are the relevant statutes and regulations governing securities offerings by technology companies?

Securities offerings by technology companies, including private and public equity and debt offerings, are subject to the same general set of securities laws and regulations that govern securities offerings by companies in other industries. This includes the Securities Act of 1933, as amended (the Securities Act); the Securities Exchange Act of 1934, as amended (the Exchange Act); the Sarbanes-Oxley Act of 2002; the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the Trust Indenture Act of 1939, as amended; and state securities or blue sky laws.

In particular, the issuance of options, restricted shares, and other forms of equity incentives, on which many technology companies rely heavily to incentivize their employees, requires compliance with the Securities Act and state blue sky laws. For private technology companies, Rule 701 (17 C.F.R. § 230.701) under the Securities Act is an important exemption from the registration requirements of the Securities Act for issuances of equity to employees, officers, directors, consultants, and advisors.

To read the full practice note in Lexis Practice Advisor, follow this link.

Gregg A. Noel is the head of Skadden’s West Coast corporate finance practice. He is recognized as one of the leading capital markets attorneys in the country, representing clients in public offerings, private placements, dispositions, corporate restructurings, and mergers and acquisitions. Michael J. Mies is a corporate partner in Skadden’s Palo Alto office. He represents issuers, underwriters, and lending parties in corporate finance and capital markets transactions in the United States and Japan. He also represents public and private companies, investment banks, and private equity firms in cross-border mergers and acquisitions, joint ventures, and strategic investments.

Related Content

For general information on securities laws and regulations, see

> U.S. SECURITIES LAWS: AN OVERVIEW

RESEARCH PATH: Capital Markets & Corporate Governance > Debt Securities Offerings > Rule 144A/Regulation S Debt Offerings > Practice Notes > The Offering Process

For additional information about the typical process for securities offerings by all types of companies (including technology companies), see

> UNDERSTANDING THE INITIAL PUBLIC OFFERING PROCESS

RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Conducting an IPO > Practice Notes > Offering Mechanics

For guidance on the registration statement review process with the U.S. Securities and Exchange Commission (SEC), see

> UNDERSTANDING THE SEC REVIEW PROCESS

RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Drafting the Registration Statement > Practice Notes > The Registration Statement and SEC Review

For an overview of the periodic and current reporting obligations of companies that are subject to the requirements of Section 13 of the Securities Exchange Act of 1934, see

> PERIODIC AND CURRENT REPORTING RESOURCE KIT

RESEARCH PATH: Capital Markets & Corporate Governance > Public Company Reporting > Current Reports on Form 8-K > Practice Notes > Resource Kits

For a discussion on the corporate governance requirements applicable to corporations, see

> INTRODUCTION TO CORPORATE GOVERNANCE REQUIREMENTS FOR PUBLIC COMPANIES

RESEARCH PATH: Capital Markets & Corporate Governance > Corporate Governance and Compliance Requirements for Public Companies > Corp