On April 5, 2012, the “Jumpstart Our Business Startups Act” (JOBS Act) became law. The JOBS Act aims to reduce certain capital raising restrictions currently faced by many companies, both by loosening regulations governing private securities offerings and by easing the road to public securities offerings for so-called “emerging growth companies.” The JOBS Act implements sweeping changes to various aspects of the Securities Act of 1933, as amended (Securities Act), the Securities Exchange Act of 1934, as amended (Exchange Act), and other laws and regulations.
Although much of the JOBS Act became effective immediately, significant rulemaking and guidance from the Securities and Exchange Commission (SEC) and other regulatory agencies will be necessary to fully implement the JOBS Act. The true effect of the JOBS Act will depend in large part on the choices the SEC makes in designing these rules and regulations. As we highlight in more detail below, the staff of the SEC has already begun addressing questions raised by the JOBS Act to provide initial guidance on how companies can take advantage of those provisions of the JOBS Act that are immediately effective within the context of existing SEC rules and practice. These interim measures will ultimately be replaced by new and updated rules that are required to be adopted under the JOBS Act.
As the first in a series dedicated specifically to the JOBS Act and its impact on the capital raising process, this Client Alert provides an initial overview of the most significant aspects of the JOBS Act and highlights what they mean for smaller and emerging companies.