United States

An overview of the JOBS Act

INSIGHT ARTICLE

An overview of the JOBS Act summarizes the legislation recently signed by the President to stimulate the growth of small to midsized companies through facilitated access to capital. Our summary briefly discusses six sections of the Act:

Reopening American capital markets to emerging growth companies
Title I designates a new category of issuer – an "emerging growth company," which can conduct an initial public offering of stock while being exempt for up to five years from certain financial disclosure and governance requirements.

Access to capital for job creators
Title II lifts the ban on general solicitation and advertising for Regulation D, Rule 506 and Rule 144A offerings.

Crowdfunding
Title III establishes a registration exemption for limited-size offerings to be sold in small amounts to a large number of investors.

Small company capital formation
Title IV increases the amount of capital that can be raised under Regulation A from $5 million to $50 million.

Private company flexibility and growth
Title V raises the threshold for mandatory registration from 500 shareholders of record to 2,000 shareholders of record as long as there are less than 500 non-accredited investors.

Capital expansion
Title VI raises the threshold for mandatory registration from 500 shareholders of record to 2,000 shareholders of record (with no limitation on the number of non-accredited investors) for a bank or bank holding company and raises the threshold for a bank or bank holding company to terminate its registration from 300 shareholders of record to 1,200 shareholders of record.