Key takeaways

• Last week, the SEC adopted final rule amendments, mandated by the JOBS Act and the FAST Act, implementing changes to the requirements for registration, termination of registration and suspension of reporting under Sections 12(g) and 15(d) of the Exchange Act.
• Among other things, the amendments (1) reflect a higher threshold - 2,000 holders of record or 500 holders of record that are not “accredited investors” - for registration, termination of registration and suspension of reporting; and (2) provide flexibility in calculating securities “held of record” for purposes of determining registration requirements under Exchange Act Section 12(g) by permitting the exclusion of certain securities held by employees and other persons who receive them under employee compensation plans (or in exchange for such securities) and establishing a non-exclusive safe harbor for determining securities “held of record” for purposes of Rule 12g5-1.
• Notably, the final rules are more favorable than the SEC’s proposed rules in that securities received in an unregistered exchange for previously exempt securities continue to be entitled to use the exemption. Companies that are considering thresholds for registration, termination of registration and suspension of reporting should consider these revised rules carefully.