On November 15, 2007, the Securities and Exchange Commission adopted rules to modernize and improve the capital-raising, reporting and disclosure requirements for smaller companies in response to recommendations made by the SEC's Advisory Committee on Smaller Public Companies in its final report. The final rules:

  • Amend Rule 144 under the Securities Act of 1933 substantially as proposed by reducing the holding periods for the resale of restricted securities and raising the thresholds for Form 144 filings for affiliates' sales. For reporting companies, the holding periods under Rule 144 have been reduced from one year to six months for limited sales by affiliates and from two years to six months for unlimited sales by non-affiliates. For non-reporting companies, the holding period for limited sales by affiliates under Rule 144 remains one year, while the hold period for unlimited sales by non-affiliates has been reduced from two years to one year. The thresholds for affiliates' sales that trigger Form 144 filing requirements from 500 shares or $10,000 to 5,000 shares or $50,000.
  • Make scaled disclosure regulations available to a new expanded category of "smaller reporting companies" with less than $75 million in public equity float (or, for companies without a calculable public equity float, with revenues of less than $50 million) and eliminate current "SB" forms.
  • Create two new exemptions for compensatory employee stock options so that the registration requirements under Section 12(g) of the Securities Exchange Act of 1934 will not be triggered solely by a company's compensation decisions.

The SEC's press release on the adoption of these important rule amendments is here.

At its meeting yesterday, the SEC also adopted rules that would eliminate the U.S. GAAP reconciliation requirement for foreign private issuers that prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The SEC's press release regarding the use of IFRS is here.

The full text of the SEC's rules should be released within the next few weeks. The final rules, when available, will be posted on the SEC's site at  http://sec.gov/rules/final.shtml.