Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

On May 3, 2016, the SEC adopted final rules regarding reporting obligation thresholds under the Securities Exchange Act of 1934 mandated by the JOBS Act and the securities provisions of the FAST Act.  The rules become effective 30 days after publication in the Federal Register.  In a press release, SEC chair Mary Jo White announced, “With the adoption of these amendments, the Commission has completed all of the rulemaking mandated under the JOBS Act.”

Amendments to Exchange Act Reporting Thresholds

The SEC amended Rules 12g-1 through 12g-4 and 12h-3 (relating to the beginning, suspension, and termination of reporting obligations under Section 12(g)) to account for the increased thresholds created by the JOBS Act – for the majority of issuers (i.e. those other than banks) $10 million in assets and a class of equity securities held of record by 2,000 persons or 500 persons who are not accredited investors.

The final rules further amended Rule 12g-1 to clarify that the definition of “accredited investor” found in Rule 501(a) promulgated under the Securities Act of 1933 applies in the context Exchange Act Section 12(g).

Amendments to Exchange Act Rule 12g5-1

The SEC amended Rule 12g5-1 promulgated under the Exchange Act to establish a non-exclusive safe harbor for determining holders of record that allows issuers to exclude, for Section 12(g) purposes, securities “held of record” by persons who acquired them pursuant to an employee compensation agreement that would meet the requirements of Rule 701(c) promulgated under the Securities Act.  The safe harbor is also available to surviving entities after a M&A transaction if they have a reasonable belief that at the time of issuance, the securities of the predecessor were issued in a transaction meeting the requirements of Rule 701(c).


An issuer that is not a bank, bank holding company or savings and loan holding company is not subject to the reporting obligations imposed by Exchange Act Section 12(g) until it has more than $10 million in assets and its securities are “held of record” by either 2,000 persons or 500 persons who are not accredited investors.  An issuer who is a bank, bank holding company or savings and loan holding company need not report until it has more than $10 million in assets and the securities are “held of record” by 2,000 or more persons.

If you are so inclined, you can read the final rules release here (starts automatic download).



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