SHARE REPURCHASES: SEC PROPOSALS AND NEW EXCISE TAX

Abstract

Share repurchases and insider trading are controversial issues, due to their potential for abuse and oftentimes stunning magnitude. The Securities and Exchange Commission released two proposed regulations in late 2021 and early 2022 addressing these two areas. In addition, the Inflation Reduction Act of 2022 (HR 5376) includes a 1% excise tax on share repurchases beginning in 2023. This article outlines the SEC proposals and comments received, as well as reactions by dissenting Commissioners. Market participants will need to stay abreast of developments in these areas, and monitor whether final rules are issued. Since the share repurchase excise tax has already been signed into law, companies will need to plan to comply with the new tax in 2023 and thereafter.