Among the myriad regulatory changes in the last few months, at least two are of note to the small business community here in Ohio.
First, there are now rules for the ride-sharing game here in Ohio. State regulations have been passed regarding the insurance requirements for ride-sharing drivers. The largest operator of ride-sharing platforms, Uber, has expressed approval of House Bill 237. For drivers, this bill has a few key impacts:
It defines drivers as independent contractors for insurance purposes at least. The responsibility to carry insurance is with the driver therefore, and the policy must meet certain coverage requirements. Remember, this is a separate commercial policy and not an extension of one’s personal auto coverage.
Drivers must go through a minimum application process involving certain background checks. These checks are primarily aimed at filtering out potential drivers that have been convicted or pleaded guilt to vehicle related crimes or certain sex offenses within the past 5-10 years (offense-specific).
The bill also imposes prohibitions against a driver using any drugs or alcohol during any point in which they are logged onto the “transportation network” – i.e. rideshare platform. As with the insurance, the act of logging into the system and merely being available as a system driver has implications for drug and alcohol use accordingly.
Passengers are further protected by a new rule requiring certain disclosures by the system related to fares and fare estimates. This was perhaps included in response to concerns that surge pricing and similar fare calculations were arbitrarily gouging riders.
Nationwide, a former securities resale exemption that merely existed in theory has now been codified. Referred to as exemption 4(a)1-1/2, the basic concept blended the 4(a)1 exemption and 4(a)2 exemption into a defensible explanation for resales of securities by accredited and informed investors. There was always some exposure though because the regulating authorities never provided a written blessing of the practice. Now they have. Under section 4(a)7, resales of unregistered securities are fine so long as:
securities sold only to accredited investors
no general solicitation
if the issuer is not a reporting company, the seller and prospective buyer are able to obtain from the issuer certain reasonably current information about the issuer, including the number of shares outstanding, information about the officers and directors, any persons registered as a broker, dealer or agent that will receive any commission for the transaction; recent balance sheet and profit and loss statements; and if the seller is a control person of the issuer, a statement regarding the nature of the affiliation and a certification by the seller that it has no reasonable grounds to believe that the issuer is in violation of the securities laws
seller is not a direct or indirect subsidiary of the issuer
neither the seller nor any person being paid in connection with the sale is a bad actor, as described in Regulation D
the issuer is not a blank check, blind pool or shell company; and
the class of securities has been outstanding for at least 90 days prior to the transaction.
Regulatory Updates: Ridesharing & Securities
Among the myriad regulatory changes in the last few months, at least two are of note to the small business community here in Ohio.
First, there are now rules for the ride-sharing game here in Ohio. State regulations have been passed regarding the insurance requirements for ride-sharing drivers. The largest operator of ride-sharing platforms, Uber, has expressed approval of House Bill 237. For drivers, this bill has a few key impacts:
Nationwide, a former securities resale exemption that merely existed in theory has now been codified. Referred to as exemption 4(a)1-1/2, the basic concept blended the 4(a)1 exemption and 4(a)2 exemption into a defensible explanation for resales of securities by accredited and informed investors. There was always some exposure though because the regulating authorities never provided a written blessing of the practice. Now they have. Under section 4(a)7, resales of unregistered securities are fine so long as: