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SEC Adopts Technical Amendments to JOBS Act Rules

On March 31, the Securities and Exchange Commission adopted technical amendments to rules adopted by the SEC under the Jumpstart Our Business Startups Act (JOBS Act). These technical amendments include, among others, an increase in the revenue cap for determining emerging growth company (EGC) status; an increase of the amount of money companies can raise through crowdfunding; and revisions to certain rules and forms to conform to amendments made to the Securities Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act) by the JOBS Act.

Specifically:

  • The amendments increased the annual gross revenue cap for a company to qualify as an EGC from $1 billion to $1.07 billion to adjust for inflation. The JOBS Act, enacted in April 2012, requires the SEC to index to inflation the annual gross revenue cap every five years at minimum.
  • The amendments increased the amount that companies can raise through crowdfunding to adjust for inflation, as described more fully in a press release issued by the SEC on April 5 (SEC Press Release). The SEC is required to make such an inflation adjustment at least every five years, as is the case with the EGC annual gross revenue cap. SEC acting Chairman Michael Piwowar stated in the SEC Press Release that “[r]egular updates to the JOBS Act, as prescribed by Congress, ensure that the entrepreneurs and investors who benefit from crowdfunding will continue to do so . . . Under these amendments, the JOBS Act can continue to create jobs and investment opportunities for the general public.”
  • The amendments revised Securities Act Forms S-1, S-3, S-4, S-8, S-11, F-1, F-3 and F-4 and the Exchange Act Forms 10, 8-K, 10-Q, 10-K, 20-F and 40-F. As a result of the amendments, for example, the cover pages of Securities Act registration statements and Exchange Act reports now include a “check the box” item to indicate if the company filing the report is an EGC. Further, EGCs filing reports may check an additional box indicating “if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.”

These amendments will become effective when they are published in the Federal Register, which is expected to occur in the next few days.

The technical amendments are available here.

The SEC Press Release is available here.

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About this Author

Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

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Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and strategic alliances.  He is a leading practitioner in representing investors, public companies and placement agencies in private investment in public equity (PIPE) transactions. In addition, he also counsels public companies on securities law compliance, disclosures, corporate governance and compensation-related issues. Many of his clients are middle market and upper middle market companies in the technology, oil and gas, manufacturing, health care and commercial banking industries.

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Shannon Traylor, Corporate Attorney, Katten Law Firm
Associate

Shannon Traylor concentrates her practice in general corporate matters.

While attending law school, Shannon was a member of the Virginia Journal of International Law and its submission review board. Prior to law school, Shannon worked in the Washington, DC area for a nonprofit devoted to nuclear nonproliferation.

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