Although the recently enacted Jumpstart Our Business Startups (JOBS) Act was introduced to the American public as legislation aimed at creating jobs, it also has the potential to take us in other directions that may prove to be every bit as important. If we were describing billiards, we’d call that a bank shot. But, as we are not, this discussion will focus on the potential benefits for banks and bank holding companies that will result from the enactment of the JOBS Act.

Among other things, the JOBS Act establishes a new category of issuer called an emerging growth company (“EGC”). Companies, including banks and bank holding companies, may qualify as EGCs if they have annual gross revenues of under $1 billion in their most recently completed fiscal year. A company may remain an EGC until the earlier of five years from completion of its initial public offering, or until it has achieved certain other milestones. In an effort to promote capital formation, the JOBS Act provides an “on-ramp” for EGCs, easing EGCs into the disclosure and compliance obligations of being a public company. An EGC may benefit from certain reduced disclosure requirements in connection with its SEC filings. After an EGC completes its IPO, it will continue to benefit from a phase-in of various executive compensation and corporate governance requirements. In addition, the JOBS Act relaxes the prohibition on general solicitation and general advertising in connection with certain private offerings. The JOBS Act also establishes various new capital raising alternatives, including Regulation A+ offerings. Finally, the JOBS Act amends the threshold for registration and modifies the deregistration threshold under the Securities Exchange Act of 1934 (the “Exchange Act”) for banks and bank holding companies.