On April 5, 2012, the President signed into law the Jumpstart Our Business Startups (JOBS) Act (H.R. 3606), which incorporates several initiatives aimed at easing the regulatory burdens of traditional IPOs and private placements and generally facilitating access to the capital markets. The JOBS Act is a sweeping piece of legislation and is enormously relevant to capital markets participants. Companies and their legal and financial advisors who are considering various financing alternatives should consider the benefits of this legislation when structuring potential capital raising transactions.
Background
The JOBS Act combines several pieces of stand-alone legislation previously approved by the House of Representatives in late 2011 (See our Client Alert dated February 8, 2012). The JOBS Act also creates a new category of issuers known as “Emerging Growth Companies” (“EGCs”), which will enjoy certain relaxed restrictions on offering communications and graduated integration (the IPO “onramp” provisions) into SEC reporting and governance requirements. In particular, Congress sought to make it more attractive for EGCs to go public by significantly reducing certain financial reporting and SEC disclosure requirements for these smaller, emerging companies for a specified period of time (thereby presumably saving the company substantial compliance costs).
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