Today President Obama signed into law the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act includes provisions that ease the IPO process and subsequent public reporting obligations for emerging growth companies ("EGCs"), loosen restrictions on pre-IPO EGC research, direct the SEC to deregulate publicity restrictions around private offerings and increase the shareholder threshold requiring a private company to begin public reporting.
For an overview of the JOBS Act, see our March 26 memorandum The JOBS Act: Implications for Capital Markets Professionals, Pre-IPO Companies and Private Offerings. Our March 23 memorandum provides a summary of implications of the JOBS Act for private funds and our March 28 memorandum discusses implications of the JOBS Act for broker-dealers. Our April 5 memorandum explains how the JOBS Act reduces executive compensation disclosure burdens for EGCs, and increases the flexibility for private companies to issue equity compensation without triggering public company reporting obligations.
The JOBS Act is the most significant Congressional relaxation in memory of restrictions around the IPO process and public company reporting obligations, and interpretive questions are expected as implementation of the law begins. Below are links to guidance relating to some questions that have already arisen. We will continue to provide updates, and we welcome our clients and friends to contact us with specific questions.
Private Offerings Before Required SEC Rulemaking
The JOBS Act requires the SEC to amend Rule 506 and Rule 144A by July 4, 2012 to permit advertising and other forms of “general solicitation” in offerings where the only purchasers are accredited investors and qualified institutional buyers, respectively. Together with a group of other law firms, we have prepared a set of Q&As that reflect our current understanding of the rules of the road for transactions prior to the SEC's adoption of implementing regulations. To read the Q&As please follow this link.
SEC Guidance on Confidential Filings by EGCs
The SEC issued instructions today explaining how an EGC can make a confidential IPO registration statement filing. For the SEC’s guidance please follow this link.