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
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
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!
