On March 31, 2017, the Securities and Exchange Commission adopted final rules amending a variety of SEC forms and rules under the Securities Act of 1933 and the Exchange Act of 1934 to conform to (1) the amendments made by the Jumpstart Our Business Startups (JOBS) Act in 2012 and (2) subsequent SEC guidance regarding the JOBS Act.
The SEC also adopted new rules that set forth inflation-adjusted amounts for (1) the annual revenue threshold in the definition of emerging growth company (EGC) and (2) the dollar thresholds provided in Regulation Crowdfunding, both as required by the JOBS Act.
The final rules will be effective upon publication in the Federal Register, which is expected shortly.
The principal amended and new rules and amended forms are summarized below. Additional information is contained in the SEC adopting release, which is available on the SEC website.
Amended Securities Act and Exchange Act Forms
Although the revisions to SEC forms are most relevant to EGCs, all companies should include the two new check boxes when filing the forms listed below after the effective date of the amendments:
- Securities Act Forms S-1, S-3, S-4, S-8, S-11 and related F-series forms, and
- Exchange Act Forms 8-K, 10-Q, 10-K, 10 and related forms for certain foreign companies.
The amendments modify the cover page of these forms to include two new check boxes that indicate:
- whether the company is an EGC at the time of the filing, and
- whether the company has elected not to use the extended transition period for complying with any new or revised financial accounting standards.
Inflation Indexing Adjustments
EGCs. The JOBS Act originally defined EGC as an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. The JOBS Act required the SEC to adjust this amount every five years to account for inflation. As adjusted by the SEC, the EGC gross revenue threshold will increase by $70 million, resulting in a maximum total annual gross revenue threshold of $1.07 billion.
Regulation Crowdfunding. Similar adjustments to amounts under Rule 100 and Rule 201(t) of Regulation Crowdfunding will result in a new $1.07 million maximum aggregate amount of securities that a company can sell under Regulation Crowdfunding during any 12-month period, and a new threshold of $107,000 for assessment of an investor’s annual income or net worth to determine investment limits under Regulation Crowdfunding. The SEC made similar inflation-based adjustments to other dollar thresholds in Regulation Crowdfunding.