As John noted last month, we have been receiving questions from members in our Q&A Forum (see Topic No. 11109) and via email about when the SEC would adopt the inflation adjustment to the emerging growth company revenue cap required by the JOBS Act.
Last week, the SEC announced that it had finally adopted amendments to its rules to implement the inflation adjustments mandated by the JOBS Act. The SEC is required to make inflation adjustments to some of the JOBS Act rules at least once every five years. The new thresholds will become effective when they are published in the Federal Register.
The annual gross revenue amount used to determine emerging growth company status will increase from $1,070,000,000 to $1,235,000,000.
For Regulation Crowdfunding, the threshold for assessing an investor’s annual income or net worth to determine investment limits under Rules 100(a)(2)(i) and 100(a)(2)(ii) will increase from $107,000 to $124,000. The lower threshold of Regulation Crowdfunding securities permitted to be sold to an investor if annual income or net worth is less than $124,000 under Rule 100(a)(2)(i) will increase from $2,200 to $2,500. The maximum amount that can be sold to an investor under Regulation Crowdfunding in a 12-month period pursuant to Rule 100(a)(2)(ii) will increase from $107,000 to $124,000. Further, the three thresholds set forth in Rule 201(t) of Regulation Crowdfunding for determining the financial statements required for the offering will each increase by approximately 15%.
Back in March of last year, Regulation Crowdfunding’s offering limit increased from $1,070,000 to $5,000,000 as a result of the amendments adopted in the Exempt Offering Harmonization release. Given that this increase exceeded the inflation-based increase that would have otherwise been adopted in 2022, the SEC did not increase Regulation Crowdfunding’s offering limit, which will remain at $5,000,000.
— Dave Lynn, TheCorporateCounsel.net, September 12, 2022