JOBS Act Initiatives
The "Jumpstart Our Business Startups (JOBS) Act," enacted by the United States Congress and signed into law by President Obama on April 5, 2012, includes several initiatives that should facilitate capital formation in the business community. The JOBS Act, among other things:
- Removes the prohibition against general solicitation and general advertising for certain securities offerings;
- Creates an exemption from registration under the Federal securities laws that permits a private company to sell securities in small amounts to large numbers of investors that are not accredited over a 12 month period in what is known as a crowdfunding transaction;
- Provides special treatment for companies that qualify as emerging growth companies in accessing the public markets for capital;
- Includes a new small public offering exemption under Regulation A+ which adjusts the limitations of existing Regulation A to better reflect current economic conditions; and
- Modifies the threshold levels of assets and number of holders of equity securities that a company may have before registering as a reporting company under the Securities Exchange Act of 1934.
Regulations with respect to the JOBS Act should be promulgated in the near term and those regulations will allow companies to better understand the scope and limitations of the JOBS Act initiatives. We await those regulations and expect that as we enter 2013, the business and investment communities will avail themselves of one or more of these JOBS Act measures to facilitate capital formation in an economy that has been slow to recover from the recession that began in 2008.