On September 9, 2022, the Securities and Exchange Commission announced amendments to its rules in order to implement inflation adjustments mandated by the JOBS Act. The SEC's amendments increase the annual gross revenue threshold for emerging growth companies and raise certain dollar amounts contained in Regulation Crowdfunding. Pursuant to the JOBS Act, the SEC is required to make inflation adjustments to various JOBS Act rules at least once every five years.
Title I of the JOBS Act added Securities Act Section 2(a)(19) and Exchange Act Section 3(a)(80) that define the term "emerging growth company." Pursuant to the statutory definition, the SEC is required to index to inflation the annual gross revenue amount used in determining EGC status. The SEC therefore adopted amendments to Securities Act Rule 405 and Exchange Act Rule 12b-2 to adjust the EGC threshold from $1.07 billion to $1.235 billion.
Title III of the JOBS Act added Securities Act Section 4(a)(6), which provides an exemption from the registration requirements of Section 5 of the Securities Act for certain crowdfunding transactions. Sections 4(a)(6) and 4A of the Securities Act set forth dollar amounts to be used in connection with the crowdfunding exemption. The SEC implemented inflation adjustments for Rules 100 and 201(t) of Regulation Crowdfunding, which cover offering maximum and investment limits, and financial statement requirements, respectively. The SEC noted, due to increases it made in March 2021 to Regulation Crowdfunding's offering limit contained in Rule 100(a)(1), it is declining to further increase the $5 million offering limit. Please see the Fact Sheet below for the specific dollar amounts in Rules 100 and 201(t) as adjusted for inflation.
The new thresholds will become effective upon publication of the amendments in the Federal Register. See Press Release here. See Fact Sheet here. See Final Rule here.
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