In our June 21 post, we addressed the provisions of Section 507 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act). Section 507 directs the US Securities and Exchange Commission (SEC) to amend Rule 701 under the Securities Act of 1933 by increasing—from $5 million to $10 million—the amount of securities that an eligible company can sell under the rule during a 12-month period without being subject to the rule’s enhanced disclosure requirements.
In response to the Act’s mandate, the SEC issued a release, Exempt Offerings Pursuant to Compensatory Arrangements, Securities Act Release No. 33-10520 (July 18, 2018), under which it adopted an amendment to Rule 701(e) to increase the enhanced disclosure threshold from $5 million to $10 million. The amendment became effective on July 23, 2018. If a company commenced an offering during the current 12-month period that was continuing on the effective date of the rule amendment, it can apply the $10 million disclosure threshold to the offering.