On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act (the JOBS Act or the Act), which is intended to stimulate economic growth by helping smaller and emerging growth companies access the U.S. capital markets. The JOBS Act amends various provisions of, and adds new sections to, the Securities Act of 1933 (the 1933 Act) and the Securities Exchange Act of 1934 (the 1934 Act), as well as provisions of the Sarbanes-Oxley Act of 2002. While the JOBS Act is focused on easing regulatory requirements for issuers, the Act also is likely to impact broker-dealers involved in raising capital for these issuers.
Emerging Growth Companies
The JOBS Act relaxes provisions of the federal securities laws pertaining to public offerings and public companies considered to be “emerging growth companies.” An emerging growth company generally means an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. (§ 101) Such a company qualifies for exemptions from various disclosure and internal control requirements, particularly those added by the Sarbanes-Oxley Act of 2002, that would otherwise apply to it when registering an issue of securities. The JOBS Act also permits an emerging growth company to submit a draft registration statement to the U.S. Securities and Exchange Commission (SEC) staff for confidential nonpublic review and conduct a road show before any filings are made, so long as a registration statement is filed with the SEC not more than 21 days after the issuer conducts a road show. (§ 106)...
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