SEC Amendment Includes “Check Box” Notice of Emerging Growth Company Status

By Evan Condran, Vice President of Compliance Services

As you have seen over the past month or two, the SEC has released a number of new rulings set to impact your upcoming filings. One of the most recent, published on March 31, 2017 as a Final Rule, and effective April 12th, 2017, the SEC adopted technical amendments to Titles I and III of the Jumpstart Our Business Startups (“JOBS”) Act. The amendment includes changes to conform the Securities Act of 1933 and Exchange Act of 1934 with Titles I and III of the JOBS Act. Among the changes is a new “Check Box” notice to Securities Act Forms S-1, S-3, S-4, S-8, S-11, F-1, F-3 and F-4 and Exchange Act Forms 10, 8-K, 10-Q, 10-K, 20-F and 40-F.

Prior to the amendment, registrants checked the box for Large Accelerated Filer, Accelerated Filer, Non-accelerated Filer or Smaller Reporting Company. This latest amendment includes an additional check box on the cover page entity filer category of Emerging Growth company for qualifying issuers with less than $1B in total annual gross revenues during its most recently completed fiscal year. In addition, the registrant will need to include a sentence with a checkbox as to whether the emerging growth company has elected to use the extended transition period for complying with accounting standards.

Section 101(a) of the JOBS Act indicates that a qualifying issuer electing to file as an Emerging Growth company may maintain that status until:

1.The last day of the fiscal year of the issuer during which it has total annual gross revenues of $1 billion or more

2.The last day of its fiscal year following the fifth anniversary of the first sale of its common equity securities pursuant to an effective registration statement

3.The date on which the issuer has, during the previous three-year period, issued more than $1 billion in nonconvertible debt

4. The date on which the issuer is deemed to be a “large accelerated filer” (measured as an aggregate worldwide market value of the voting and non-voting common equity held by its nonaffiliates of $700 million or more)

Below is an example of the revised cover sheet presentation on a Form 10-Q as provided in the Final Rule, with call-outs to highlight the new changes.

Additional changes included in the rule are inflation-adjusted threshold for the definition of an emerging growth company, and an adjustment to the dollar amounts in Regulation Crowdfunding.

If you have any questions about this ruling, or whether non-emerging companies are required to use this updated cover page, we encourage you to engage your legal counsel.

If you would like to read the entirety of the SEC Final Rule, click here.