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The SEC Is Changing a Lot of Rules Due to the JOBS Act…

Last Friday, the SEC adopted some new rules regarding emerging growth...
David N. Feldman is a partner at Duane Morris LLP, where he concentrates his practice on corporate and securities law and mergers and acquisitions, as well as general representation of public and private companies, entrepreneurs, investors, and private equity and venture capital firms. Mr. Feldman also advises small businesses with regard to alternatives to traditional financing through initial public offerings. His popular blog at www.DavidFeldmanBlog.com, focusing on entrepreneurship and the regulatory environment, has been recognized by LexisNexis as a Top 25 corporate law blog, and his videos appear on his YouTube channel, The Entrepreneur’s Advocate. Mr. Feldman is a 1985 graduate of the University of Pennsylvania Law School, where he was managing editor of the student newspaper, the Penn Law Forum, and a graduate of the Wharton School of the University of Pennsylvania. He has served as chair of the board of Wharton’s global alumni association.
David N. Feldman is a partner at Duane Morris LLP, where he concentrates his practice on corporate and securities law and mergers and acquisitions, as well as general representation of public and private companies, entrepreneurs, investors, and private equity and venture capital firms. Mr. Feldman also advises small businesses with regard to alternatives to traditional financing through initial public offerings. His popular blog at www.DavidFeldmanBlog.com, focusing on entrepreneurship and the regulatory environment, has been recognized by LexisNexis as a Top 25 corporate law blog, and his videos appear on his YouTube channel, The Entrepreneur’s Advocate. Mr. Feldman is a 1985 graduate of the University of Pennsylvania Law School, where he was managing editor of the student newspaper, the Penn Law Forum, and a graduate of the Wharton School of the University of Pennsylvania. He has served as chair of the board of Wharton’s global alumni association.

No, it’s not April 1 anymore so this is serious… but actually, it’s no big deal. Last Friday, the SEC adopted some rules mandated by the Jumpstart Our Business Startups (JOBS) Act of 2012. Among them: implementing the use of the term “emerging growth company” (EGC) throughout its registration and periodic reporting forms. The JOBS Act created the new status and gave a bunch of goodies to them in terms of lower disclosure and compliance obligations as part of the JOBS Act “IPO On-Ramp” concept.

What does this mean? Anyone doing an SEC filing better check this release first. Essentially, the cover page of most forms the SEC uses now adds a “check the box” line to say if you are an EGC. The last time I remember a change like this was in 2005, when every public company had to add a check the box item declaring whether or not they are a shell company. This allowed the SEC to track more specific data in the reverse merger space.

One assumes we will now begin to see reports from the SEC indicating how many companies actually take advantage of EGC status. It appears that many are, without question. Just another, just about final I think, piece of the JOBS Act puzzle getting completed as issuers and financiers begin to really benefit from the new panoply of financing options and easing of the regulatory burden brought about back in 2012.