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Apr 05, 2012

JOBS Act Signed Into Law

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Today, President Obama signed the Jumpstart Our Business Startups Act, also known as the JOBS Act. The Act will ease the rules for IPOs, and reduce compliance burdens post IPO, for Emerging Growth Companies, a new category of issuers that have less than $1 billion in annual gross revenue and meet certain other requirements. Separately, the Act will permit enhanced publicity for Rule 144A and other private offerings, raise the maximum number of shareholders for private companies, and facilitate crowdfunding and offerings of $50 million or less.

Under the Act, an Emerging Growth Company can confidentially submit registration statements to the SEC prior to the completion of its IPO. The SEC has announced a process for these submissions. They should be delivered to the SEC in the form of text-searchable PDF files on CD/DVDs, or as paper copies, accompanied by a transmittal letter confirming the company's status as an Emerging Growth Company. Offerings by foreign private issuers eligible for confidential submission will also use this process. This is a temporary process until the SEC implements a system for electronic transmission of confidential submissions.

Confidential Submission of Registration Statements Announcement

Some of the changes that the Act makes to existing law become effective immediately upon enactment, while others will need to await implementation by SEC rule-making. The following table summarizes when the various changes to existing law brought about by the Act will become effective: 

Change in Existing Law

Effectiveness

Changes in Offering Process for IPOs by Emerging Growth Companies

Immediately

Reporting and Other Requirements Reduced for Emerging Growth Companies

Immediately

Liberalization of Publicity for Rule 144A Offerings and Regulation D Private Placements Under Rule 506

By SEC Rule
(within 90 days)

Higher Maximum Number of Shareholders for Private Companies and Bank Holding Companies

Immediately

Crowdfunding

By SEC Rule
(within 270 days)

Offerings of $50 Million or Less

By SEC Rule
(no deadline
)

Authors and Contributors

Matthew Bersani

Partner

Capital Markets

+852 2978 8096

+852 2978 8096

Hong Kong

Robert Ellison

Partner

Capital Markets

+55 11 3702 2220

+55 11 3702 2220

São Paulo

Jason Lehner

Partner

Capital Markets

+1 416 360 2974

+1 416 360 2974

Toronto