United States: "FAST Act" Highway Bill Signed Into Law, Includes Securities Law Changes

Last Updated: December 14 2015
Article by Michael J. Solecki

Buried within the 1,300-page "Fixing America's Surface Transportation Act," also known as the FAST Act, which President Obama signed on December 4, 2015, are provisions that (i) amend certain sections of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), (ii) require changes to Form 10-K and Regulation S-K, and (iii) codify the so-called Rule 4(1-1/2) exemption for private resales of securities initially acquired in private placements.

JOBS Act Amendments

The FAST Act contains three important changes for companies that qualify as Emerging Growth Companies under the JOBS Act. In particular, the FAST Act:

  • Reduces the period that an Emerging Growth Company must have its IPO registration statement on public file with the SEC before launching its road show. This period was reduced from 21 days to 15 days. The change is effective immediately.
  • Clarifies that a company that qualifies as an Emerging Growth Company at the time that it submits its confidential registration statement to the SEC in connection with its IPO (or publicly files its IPO registration statement) that subsequently ceases to qualify as an Emerging Growth Company can continue to avail itself of the benefits of the JOBS Act as an Emerging Growth Company until the earlier of the date on which the company consummates its IPO or the end of the one-year period beginning on the date the company ceases to be an Emerging Growth Company. Although not explicitly stated in the FAST Act, we interpret this clarification to apply retroactively to those companies that have already submitted or filed an IPO registration statement with the SEC that qualified as an Emerging Growth Company at such time.
  • Permits an Emerging Growth Company to omit financial information from its Form S-1 or Form F-1, as applicable (and requires the SEC to amend these Forms to such effect), for certain periods otherwise required by Regulation S-X. Emerging Growth Companies can take advantage of this relief as long as: (i) the omitted financial information relates to a historical period that the company reasonably believes will not be required to be included in the Form S-1 or Form F-1 at the time of effectiveness and (ii) such registration statement is subsequently amended to include all required financial information. This change, for example, could alleviate the time and expense involved in preparing a Form S-1 or Form F-1 with nine-month financial information for an Emerging Growth Company when the filer reasonably believes it will not consummate its offering until after it will have full-year financial information. This change is effective 30 days after the enactment of the FAST Act.

Disclosure Modernization and Simplification

The FAST Act also directs the SEC to modernize and simplify its disclosure regime through the following means:

  • Within 180 days after the enactment of the FAST Act, issue regulations permitting a summary page in a company's Annual Report on Form 10-K as long as each item in the summary cross-references to the material contained in the full Form to which such item relates.
  • Within 180 days after the enactment of the FAST Act, revise Regulation S-K to (i) scale back or eliminate disclosure requirements for Emerging Growth Companies, accelerated filers, and smaller reporting companies and (ii) eliminate for all companies provisions that are duplicative, overlapping, outdated, or unnecessary.
  • Within 360 days after the enactment of the FAST Act, carry out a study and issue a report, in consultation with the Investor Advisory Committee and the Advisory Committee on Small Emerging Companies, regarding how to best modernize and simplify Regulation S-K in a manner that emphasizes a company-by-company approach to disclosure and that discourages repetitive and immaterial disclosure. Within 360 days after the report is issued, the SEC is required to implement the recommendations included in the report.

New Section 4(a)(7) Exemption

Historically, practitioners have relied on an informal exemption, known as the "Section 4(1-1/2) exemption," from the registration requirements of the Securities Act for private resales of securities by non-issuers (e.g., employees, executive officers, directors, and large shareholders) that were acquired in a private placement. The FAST Act amends the Securities Act to include new Section 4(a)(7), effective immediately, to permit such resales so long as the following requirements are satisfied:

  • Each purchaser is an accredited investor;
  • Neither the seller, nor any person acting on the seller's behalf, offers or sells the securities by any form of general solicitation;
  • The seller and prospective purchaser obtain reasonably current information prescribed in Section 4(a)(7) if the issuer is not subject to the reporting requirements of the Exchange Act;
  • The transaction is not a sale of a security by the issuer or a subsidiary of the issuer;
  • Neither the seller nor any person that has been or will be paid for their participation in the offer or sale is a "bad actor" (as defined in Regulation D);
  • The issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not a blank check, blind pool, or shell company that has no specific business plan or purpose;
  • The securities must not be part of an unsold allotment to, or a subscription or participation by, an underwriter; and
  • The class of securities must have been authorized and outstanding for at least 90 days before the transaction.

Securities acquired pursuant to Section 4(a)(7) shall be deemed to have been acquired in a transaction not involving a public offering (essentially meaning a private placement). These securities will, therefore, be restricted securities under Rule 144 of the Securities Act. As a result, subsequent resales will still need to comply with the registration requirements of the Securities Act, or the seller will need to find an available exemption.

New Section 4(a)(7) provides certainty to sellers and other transaction participants as to the exempt status of the transaction compared to having to rely on the previously used uncodified practitioners' theory under so-called Section 4(1-1/2). Prior to the adoption of Section 4(a)(7), a seller seeking to rely on the Section 4(1-1/2) exemption would have to ensure that the purchasers of the securities and any intermediaries were not acting as "underwriters" or, alternatively, qualified as "qualified institutional buyers" of such securities, as defined in the Securities Act. Section 4(a)(7) obviates the need to obtain such assurances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Hunton & Williams LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Hunton & Williams LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions