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Article

SEC finalizes rules implementing inflation adjustments for JOBS Act

Oct 06, 2022
#
Financial reporting SEC matters Audit

The SEC has adopted final rules, Inflation Adjustments under Titles I and III of the Jobs Act,  for inflation adjustments for annual gross revenue for the determination of an emerging growth company (EGC) and for the crowdfunding exception as required by the Jumpstart Our Business Startups (JOBS) Act.

Every five years, to reflect the changes in inflation, the SEC is required to index to inflation the annual gross revenue amount to determine the EGC status of an entity. The amendment has increased annual gross revenue for this purpose from $1,070,000,000 to $1,235,000,000.

The SEC is also required to adjust, for inflation, the dollar amounts used in connection with the crowdfunding exception at least once every five years.

The following sets out the inflation adjusted amounts in Rule 100 of Regulation Crowdfunding for offering maximum and investment limits:

Regulation Crowdfunding Rule

Prior Amount

Inflation-adjusted amount

Threshold for assessing investor’s annual income or net worth to determine investment limits (Rules 100(a)(2)(i) and 100(a)(2)(ii))

$107,000

$124,000

Lower threshold of Regulation Crowdfunding securities permitted to be sold to an investor if annual income or net worth is less than $124,000 (Rule 100(a)(2)(i))

$2,200

$2,500

Maximum amount that can be sold to an investor under Regulation Crowdfunding in a 12-month period (Rule 100(a)(2)(ii))

$107,000

$124,000

The following sets out the inflation-adjusted amounts in Rule 201(t) of Regulation Crowdfunding for financial statement requirements:

Regulation Crowdfunding Rule

Prior Amount

Inflation-adjusted amount

201(t)(1)

$107,000

$124,000

201(t)(2)

$535,000

$618,000

201(t)(3)

$1,070,000

$1,235,000

No further changes were made to the Regulation Crowdfunding offering limit which remains at $5,000,000.

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