Release Of Updated Model Form Note Purchase Agreements For Private Placement Transactions

On March 31, the American College of Investment Counsel (ACIC) released comprehensive updates to all four Model Form Note Purchase Agreements used in domestic and cross-border private placement transactions.

These are the first full revisions to the Model Forms since 2016 and reflect current market practice, evolving investor expectations, and recent legal and regulatory developments.

Key Takeaways

• First comprehensive update since 2016. The Model Forms, first introduced in 1994, remain the foundational documentation for domestic and cross-border private placements.

• Developed with broad market input. The revisions were prepared over a two-year period with input from institutional investors, law firms, including ArentFox Schiff, and investment banks.

• Modernized to reflect current expectations. Updates address closing mechanics, representations, reporting obligations, covenants, and transaction flexibility.

Summary of Key Updates

The updated Model Forms introduce changes across the full lifecycle of a private placement transaction, including:

• Closing Deliverables: Refined conditions precedent covering antifraud microdeposit and videoconference language, debt ratings when required, and offeree letter.

• Representations: Expanded representations addressing Securities Act Rule 502(c), Office of Foreign Assets Control and United Kingdom sanctions coverage, Investment Company Act considerations, and updated accredited investor representations.

• Reporting Obligations: Debt ratings when required are now an express reporting requirement, and “requested information” provisions have been broadened to cover Know Your Customer information and organizational changes.

• Change-of-Control and Asset Sale Provisions: New model frameworks for change-of-control prepayment offers and revised asset sale prepayment and covenant provisions.

• Covenants: Introduction of a priority of obligations covenant and a debt ratings covenant aligned with recent National Association of Insurance Commissioners Securities Valuation Office (SVO) changes.

• Housekeeping and Technical Updates: Revisions addressing SVO fee coverage, confidentiality provisions, and electronic delivery.

Why It Matters

The updated Model Forms will influence market standards for private placement documentation. 

Who Is Affected

• Institutional investors participating in private placement transactions.

• Issuers accessing the private placement market.

• Counsel negotiating or updating private placement documentation.

Our Involvement

ArentFox Schiff has long advised institutional investors in private placements and maintains a close relationship with the ACIC. A long-time partner of the ACIC, many ArentFox Schiff attorneys are closely embedded in the ACIC, and several members of the Finance group hold or have held leadership positions within the organization, and we continue to work with the ACIC and its members to shape the future of the private placement market.

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.