SEC Doubles Private Company Reporting Exemption for Stock Offerings

July 26, 2018

In an amended rule issued on July 18, the Securities and Exchange Commission (“SEC”) expanded its reporting exemption for stock compensation distributed by private entities. Published as Release No. 33-10520, Rule 701 — Exempt Offerings Pursuant to Compensatory Arrangements, the amendment increases the threshold from $5 million to $10 million for stock offerings excluded from the SEC’s reporting requirements. Only private companies and foreign companies already exempt from the agency’s reporting rules are eligible for the exemption.

SEC chairman Jay Clayton said the reporting threshold was raised to keep pace with the country’s rapidly evolving economy. Clayton also noted that the SEC must ensure that its regulatory framework mirrors changes in the marketplace.

Release No. 33-10520 takes effect upon its publication in the Federal Register.