Insights
SEC finalizes rules implementing inflation adjustments for JOBS Act
ARTICLE | October 06, 2022
Authored by RSM US LLP
The SEC has adopted final rules, Inflation Adjustments under Titles I and III of the Jobs Act, for inflation adjustments for annual gross revenue for the determination of an emerging growth company (EGC) and for the crowdfunding exception as required by the Jumpstart Our Business Startups (JOBS) Act.
Every five years, to reflect the changes in inflation, the SEC is required to index to inflation the annual gross revenue amount to determine the EGC status of an entity. The amendment has increased annual gross revenue for this purpose from $1,070,000,000 to $1,235,000,000.
The SEC is also required to adjust, for inflation, the dollar amounts used in connection with the crowdfunding exception at least once every five years.
The following sets out the inflation adjusted amounts in Rule 100 of Regulation Crowdfunding for offering maximum and investment limits:
| Regulation Crowdfunding Rule | Prior Amount | Inflation-adjusted amount |
|---|---|---|
| Threshold for assessing investor’s annual income or net worth to determine investment limits (Rules 100(a)(2)(i) and 100(a)(2)(ii)) | $107,000 | $124,000 |
| Lower threshold of Regulation Crowdfunding securities permitted to be sold to an investor if annual income or net worth is less than $124,000 (Rule 100(a)(2)(i)) | $2,200 | $2,500 |
| Maximum amount that can be sold to an investor under Regulation Crowdfunding in a 12-month period (Rule 100(a)(2)(ii)) | $107,000 | $124,000 |
The following sets out the inflation-adjusted amounts in Rule 201(t) of Regulation Crowdfunding for financial statement requirements:
| Regulation Crowdfunding Rule | Prior Amount | Inflation-adjusted amount |
|---|---|---|
| 201(t)(1) | $107,000 | $124,000 |
| 201(t)(2) | $535,000 | $618,000 |
| 201(t)(3) | $1,070,000 | $1,235,000 |
No further changes were made to the Regulation Crowdfunding offering limit which remains at $5,000,000.
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This article was written by RSM US LLP and originally appeared on 2022-10-06.
2022 RSM US LLP. All rights reserved.
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