So, what is the FAST Act and how will it help with securities compliance when it comes to business?
On December 4, 2015, President Barak Obama signed the FAST Act (Fixing America’s Surface Transportation) into law. The transportation law is of particular interest to businesses because it also makes several important changes to the JOBS Act and other federal securities laws with the aim of lessening the legal obligations for small businesses.
The FAST Act makes a number of changes that are intended to benefit emerging growth companies (EGCs), which are defined in the Securities Act and the Exchange Act as issuers with “total annual gross revenues” of less than $1 billion during their most recently completed fiscal year. Under existing regulations, issuers were previously required to publicly file a registration statement and all previously submitted drafts no later than 21 days before the date on which the issuer conducts a road show. Section 71001 of the FAST Act shortens that period to 15 days. EGCs with initial public offerings pending before the FAST Act became law or at any time thereafter may take advantage of the provision. If an EGC does not conduct a road show, the non-public drafts must be filed at least 15 days before the effectiveness of the registration statement.
The FAST Act also creates a grace period for EGCs that cease to meet the legal definition. Under amendments to Section 6(e)(1), an issuer that qualifies as an EGC at the time it initiates the registration process, either by submitting a draft registration statement or by filing it publicly, but which subsequently ceases to be an EGC, will continue to be treated as an EGC until the earlier of the date on which the issuer “consummates its initial public offering . . . or the end of the 1-year period beginning on the date the company ceases to be an emerging growth company.”
Finally, the FAST Act amends the JOBS Act to allow EGCs to “omit financial information for historical periods otherwise required by Regulation S-X” if it “reasonably believes [the omitted information] will not be required to be included in the [filing] at the time of the contemplated offering,” so long as the issuer amends the registration statement prior to distributing a preliminary prospectus to include all financial information required at the time of the amendment. While the law states that the provision takes effect 30 days after enactment, the SEC has indicated that will not object if EGCs apply it immediately.
Disclosure Changes for Form 10-K and Regulation S-K
The FAST Act also alters issuers’ disclosure obligations under Form 10-K and Regulation S-K. Most notably, all issuers will be authorized to submit a summary page on Form 10-K, provided that each item on the summary page includes a cross reference to the material in the 10-K. The law advises that a hyperlink would be sufficient. However, the SEC must complete an official rulemaking to implement the changes.
With regard to Regulation S-K, the FAST Act requires the SEC to further streamline the requirements relating to EGCs, accelerated filers, smaller reporting companies and other smaller issuers, as well as “eliminate duplicative, overlapping, outdated or unnecessary provisions of Regulation S-K.” Going forward, the FAST Act also requires the SEC to study how the regulation’s disclosure obligations can be further modernized and simplified.
Smaller Reporting Companies Incorporation by Reference
The FAST Act makes it easier for smaller reporting companies, defined as entities that, as of the last business day of their second fiscal quarter have a public float of less than $75 million, to update their registration statements. Specifically, the SEC is directed to amend Form S-1 to allow smaller reporting companies to incorporate by reference in a registration statement on that form any documents that the company files after the effective date of the registration statement. This provision will also require an SEC rulemaking.
Related Article: How Will Faush v. Tuesday Morning Impact New Jersey Employers
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
