- JOBS Act -- Will It Make Capital More Accessible for My Business?
- April 10, 2012 | Authors: C. Alex Frutos; Kevin A. Jones; Shakeeb U. Mir
- Law Firm: Jackson Walker L.L.P. - Dallas Office
After being approved by Congress with wide bipartisan support, on April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the "JOBS Act"). The JOBS Act is an amalgamation of various bills the combined impact of which is intended to provide entrepreneurs, start-ups and small businesses increased access to the capital markets while at the same time provide average investors increased investment opportunities. The JOBS Act considerably alters the regulations surrounding public and private security offerings and, for certain issuers with revenues of less than $1 billion, reduces the burden of certain periodic reporting obligations.
The JOBS Act impacts capital raising and public company registration and reporting in a multitude of ways, including facilitating initial public offerings ("IPOs") for a new category of so-called emerging growth companies (companies with less than $1 billion in total gross revenues), expanding private offering exemptions and capital-raising options, increasing the amount of information available about emerging growth companies, and significantly increasing shareholder record thresholds that trigger public company registration under the Securities Exchange Act of 1934 (the "Exchange Act"). The JOBS Act accomplishes this through six titles as follows:
- Title I-eases the IPO process and ongoing public disclosure of new public companies.
- Title II-allows general solicitation and advertising in offerings under Rule 506 of Regulation D.
- Title III-creates a new registration exemption for "crowdfunding."
- Title IV-creates a new exemption for public offerings of $50 million or less.
- Titles V & VI-increases the shareholder threshold for reporting under the Exchange Act.