On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act (the “JOBS Act”), which includes a number of measures that ease significant regulatory restraints on capital formation, primarily with respect to growth stage companies. Summarized below are the major changes included within the JOBS Act, some of which impact private funds.
First, the JOBS Act creates a transitional “on-ramp” for emerging growth companies to encourage them to pursue IPOs by phasing in compliance measures over time following their IPOs. Second, it amends the Securities Act of 1933, as amended (the “Securities Act”), to permit companies to conduct offerings to raise up to $50 million through a “mini-registration” process similar to that allowed under Regulation A. The legislation also modifies the triggers for SEC reporting obligations under Section 12(g) of the Securities Exchange Act of 1934, as amended. Finally, the JOBS Act directs the SEC to update its regulations to repeal the prohibition against “general solicitation and general advertising” in connection with certain private placements to accredited investors or qualified institutional buyers, and provides an exemption under the Securities Act for “crowdfunding” offerings.
Together, the measures contained in the JOBS Act may make a significant difference for emerging companies in the United States. Certain portions of the JOBS Act, such as Title I which creates the regulatory “on-ramp” described above, are effective immediately. Title II, however, directing the SEC to amend its rules to remove the ban on general solicitation and general advertising, will only become effective upon adoption of final rules by the SEC.
See H.R. 3606, available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr3606enr/pdf/BILLS-112hr3606enr.pdf; see also The JOBS Act (Mar. 26, 2012), David Lynn, Anna Pinedo, available at http://www.mofo.com/files/Uploads/Images/120326-The-JOBS-Act.pdf; Raising Capital in the Internet Age— the Ban on General Solicitation and Advertising in Private Offerings (Aug. 25, 2011), John Hempill, Luke Bagley, available at http://nvcatoday.nvca.org/index.php/from-our-sponsors/raisingcapital-in-the-internet-agethe-ban-ongeneral-solicitation-and-advertising-inprivate-offerings.html.