On April 5, the Securities and Exchange
Commission ("SEC") announced
that it has adopted amendments to increase the amount of money
companies can raise through crowdfunding to adjust for inflation.
It also approved amendments that adjust for inflation a threshold
used to determine eligibility for benefits offered to
"emerging growth companies"
("EGCs") under the Jumpstart Our
Business Startups (JOBS)
The SEC is required to make inflation adjustments to certain
JOBS Act rules at least once every five years after it was enacted
on April 5, 2012. In addition to the inflation adjustments, the SEC
adopted technical amendments to conform several rules and forms to
amendments made to the Securities Act of 1933
("Securities Act") and the
Securities Exchange Act of 1934
("Exchange Act") by Title I of the JOBS
Act. The Commission approved the new thresholds on March 31.
They will become effective when they are published in the Federal
The Commission provided a helpful chart that sets out the
inflation-adjusted amounts for the maximum amount of offerings and
investment limits, specifically: (i) the maximum aggregate amount
an issuer can sell in a 12-month period; (ii) the threshold for
assessing an investor's annual income or net worth to determine
investment limits; (iii) the lower threshold of Regulation
Crowdfunding securities permitted to be sold to an investor if
annual income or net worth is less than the adjusted thresholds;
(iv) the maximum amount that can be sold to an investor under
Regulation Crowdfunding in a 12-month period; and (v) the
inflation-adjusted amounts for determining financial statement
Also, pursuant to sections of the Securities Act and the
Exchange Act added by the JOBS Act, which define the term
"emerging growth company," every five years the
Commission is directed to index the annual gross revenue amount
used to determine EGC status to inflation. To carry out this
statutory directive, the SEC has adopted amendments to Securities
Act Rule 405 and Exchange Act Rule 12b-2 to include a definition
for EGC that reflects an inflation-adjusted annual gross revenue
threshold. Press Release.
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