Capital Markets Client Alerts Emerging Companies
On March 31, 2017, the Securities and Exchange Commission (“SEC”) issued a Final Rule adopting technical amendments to conform certain rules and forms that do not reflect amendments to the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) included in the Jumpstart Our Business Startups Act (“JOBS Act”).
Effective April 12, 2017, the cover pages to a number of SEC forms were updated to include two additional boxes to check to indicate:
( 1 ) whether the filer is an emerging growth company (“EGC”); and
(2) if an EGC, whether the company has elected not to use the extended transition period for complying with any new or revised financial accounting standards.
The Final Rule revises 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. All reporting companies, not just EGCs, must include these additional check boxes on the amended forms.
While these technical amendments make it easier for reporting companies to identify themselves as EGCs and provide notice of the company’s election regarding the extended transition period, the Final Rule created some ambiguity regarding how companies should identify their filer status. On the amended cover pages of certain SEC forms, companies are instructed to “[i]ndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.” The use of the singular “check mark” and the conjunction “or” seems to imply that an EGC need only check the EGC box, however, identifying as an EGC is not mutually exclusive to a reporting company’s filer status. The Final Rule does not speak to this issue, but after inquiring with the SEC, Wyrick Robbins was advised that reporting companies should check two boxes if they are an EGC—the reporting company’s filer status and the EGC box.
The SEC’s release adopting the Final Rule may be viewed here.
The SEC has posted amended forms to its website, including Forms S-1, S-3, and 8-K. The SEC has not yet updated Forms 10-K and 10-Q, and it is uncertain when the SEC will make those updated forms available. In the meantime, reporting companies should refer to the Final Rule for the amended language that should appear in the cover pages of those forms that have not yet been updated on the SEC’s website.