United States

SEC makes inflation adjustments to certain JOBS Act rules


The SEC is required to make inflation adjustments to certain Jumpstart Our Business Startups (JOBS) Act rules at least once every five years after it was enacted in 2012. Therefore, in Release 33-10332, Inflation Adjustments and Other Technical Amendments under Titles I and III of the JOBS Act, the SEC recently approved the following amendments, among others, to Regulation Crowdfunding such that:

  • An issuer is permitted to raise a maximum aggregate amount of $1,070,000 through crowdfunding offerings in a 12-month period
  • Individual investors, over the course of a 12-month period, are permitted to invest in the aggregate across all crowdfunding offerings up to:
    • If either their annual income or net worth is less than $107,000, then the greater of: (a) $2,2000 or (b) five percent of the lesser of their annual income or net worth
    • If both their annual income and net worth are equal to or more than $107,000, then 10 percent of the lesser of their annual income or net worth
  • During the 12-month period, the aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $107,000 

Also, the SEC adopted amendments to the definition of an emerging growth company (EGC) that reflects an inflation-adjusted annual gross revenue maximum threshold of $1,070,000,000. In addition, Sections 102 and 103 of the JOBS Act amended the Securities Act and the Exchange Act to provide several exemptions from a number of disclosure and other regulatory requirements for any issuer that qualifies as an EGC. Specifically, among several other provisions, the regulatory relief provided under Section 102 and 103 of the JOBS Act permits an EGC to:

  • Include only two years of audited financial statements in its common equity initial public offering (IPO) registration statement
  • Provide Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosures that correspond to the financial statements included in its IPO registration statement
  • Omit selected financial data in its registration statements or periodic reports for any period before the earliest audited period in its initial effective registration statement
  • Defer compliance with new or revised accounting standards until the date on which companies that are not issuers are required to comply
  • Be exempt from the Sarbanes-Oxley Act Section 404(b) auditor attestation on management’s assessment of its internal controls

The regulatory relief provided under Sections 102 and 103 of the JOBS Act was self-executing and became effective once the JOBS Act was signed into law. The technical amendments the SEC is adopting conform several rules and forms to reflect these and other JOBS Act statutory changes.