The JOBS Act: Two Months Later
Only two months ago, President Obama signed the Jumpstart Our Business Startups Act into law, and in that very short time we have seen the transformation of the way in which IPOs are done with the fast-track implementation of Title I's provisions for "emerging growth companies." Whether Title I's permissive "on-ramp" provisions for emerging growth company IPOs actually encourages more companies to go public ― particularly in the face of the current market headwinds ― remains to be seen. In any event, the Corp Fin Staff has worked hard to provide some practical guidance very quickly in order to ease the transition to the post-JOBS Act world of offerings.
At the same time, we are 60 days into the 90-day timeframe that the JOBS Act specifies in Title II for the adoption of rules permitting general solicitation and general advertising in Rule 506 offerings when sales are only to accredited investors (along with comparable revisions to Rule 144A), and we have not yet seen any proposed rule changes; however, there is perhaps still time for proposals to be issued with a short comment period, or the SEC could decide to adopted "interim final rules" given the very short rulemaking deadline.
On the crowdfunding front under Title III, we have all been reminded that the exemption is not operative today, rather it is only effective upon SEC rulemaking due by the end of the year. Of all of the provisions of the JOBS Act, crowdfunding continues to capture the imagination of many, although there has emerged some skepticism as to whether the exemption, with all of the conditions contemplated by the statute and to be ultimately fleshed out by the SEC, could actually emerge as a viable means for conducting very small offerings, or whether it might end up like current Regulation A, which is rarely used today due to the difficulties of conducting offerings under that exemption.
Speaking of Regulation A, the new Section 3(b)(2) exemption contemplated by Title IV is also not operative until the SEC acts on the mandated rulemaking, and to date we haven't heard much word on when that might take place. Given the other JOBS Act-mandated rulemaking with short deadlines and the still unfinished Dodd-Frank Act rules, I have got to think that Regulation A+ may get put on the back-burner for now. Finally, the Corp Fin Staff's guidance on Titles V and VI clarified the immediate effectiveness of those changes to the Exchange Act registration thresholds, making avoidance of registration a reality for those issuers (bank holding companies and regular issuers) who exceeded the old holder-of-record thresholds but not the new thresholds at the end of their last fiscal year.
Upon reflection, it seems that quite a bit has been accomplished under the JOBS Act in just a couple of months, but of course much more remains to be done. More importantly, those of us who have policed and worried about Section 5 for all of these years are now starting to get used to the brave new world of securities laws after the JOBS Act.
More on our "Proxy Season Blog"
We continue to post new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
- Activist Project: Repealing Classified Boards in S&P 500 Companies
- Money Managers Increasing Activism on Governance: But Quietly
- The Impact of Majority Withhold Votes
- 2012 U.S. Season Preview: E&S Proposals
- GRId Information to Change When Proxy Filed
- Shareholder Proposals: Trends from Recent Proxy Seasons
Deal Cube Tournament: Round One; 9th Match
As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
- Dave Lynn