On November 15, the Securities and Exchange Commission adopted three rules aimed at modernizing disclosure requirements and capital raising activities of smaller public companies.

The three sets of rules are:

Smaller Reporting Company Regulatory Relief and Simplification

The final rules, among other things

  •  replace the current "small business issuer" category with a new expanded category of "smaller reporting companies" having less than $75 million in public equity float; Attorney Advertising
  • expand eligibility for the SEC’s scaled disclosure and reporting requirements for smaller companies by allowing the newly defined category of smaller reporting companies to use the scaled disclosure requirements; 
  • move 12 non-financial scaled disclosure item requirements from Regulation S-B into Regulation S-K (the scaled disclosure requirements will only be available to smaller reporting companies); 
  • amend financial statement requirements in Item 310 of Regulation S-B into new Article 8 of Regulation S-X, and amend these requirements to provide a scaled disclosure option for smaller reporting companies, requiring two years of balance sheet data instead of one year; and
  • permit smaller reporting companies to elect to comply with scaled financial disclosure and non-financial disclosure on an item-by-item basis. 

The effective date for these rules will be 30 days after their publication in the Federal Register.

Revisions to Rule 144 and Rule 145 of the Securities Act

The amendments to Rule 144 of the Securities Act include:

  • shortening the holding period for restricted securities of reporting companies to six months; 
  • substantially simplifying compliance with Rule 144 of the Securities Act for non-affiliates by allowing non-affiliates of reporting companies to freely resell restricted securities after satisfying a six-month holding period (subject only to the public information requirement of Rule 144(c) of the Securities Act until the securities have been held for one year); and 
  • for affiliates' sales, revising the manner of sale requirements for equity securities and eliminating them for debt securities and relaxing the volume limitations for debt securities.

The amendments to Rule 145 of the Securities Act: 

  • eliminate the presumptive underwriter provision except with respect to transactions involving blank check or shell companies; and 
  • revise the resale provisions of Rule 145(d) of the Securities Act.

These amendments will be effective 60 days after their publication in the Federal Register.

Exemption of Compensatory Employee Stock Options from Registration under Section 12(g) of the Exchange Act

The two amendments to Exchange Act Rule 12h-1: 

  • provide an exemption for private non-reporting issuers from Exchange Act Section 12(g) registration for compensatory employee stock options issued under employee stock option plans; and 
  • provide an exemption for issuers that are required to file reports under the Exchange Act pursuant to Exchange Act Section 13 or Section 15(d) from Exchange Act Section 12(g) registration for compensatory employee stock options.

The exemptions will apply only to an issuer's compensatory employee stock options and will not extend to the class of securities underlying those options.

These amendments will be effective as soon as they are published in the Federal Register.

The full text of the detailed releases concerning these items will be posted to the SEC website as soon as possible.  http://www.sec.gov/news/press/2007/2007-233.htm