Cleansing Release

Definition:

A disclosure release used by a public company or a non-public company undergoing debt restructuring where it has provided Material Non-Public Information to investors or potential investors in connection with a private or exempt offering. The recipients of this Material Non-Public Information will typically require the issuer to disclose such information within a day or less of Pricing to avoid any Insider Trading implications. The investors are therefore “cleansed” of the Material Non-Public Information.

The issuer may also be required to file a Form 8-K in order to satisfy its obligations under Regulation D. In a Rule 144A Offering, an issuer may decide to disclose the Material Non-Public Information before or simultaneously with the commencement of the offering.

The duty to disclose may be negotiated with investors as part of their Confidentiality Agreement or may be deemed by counsel to arise automatically.

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