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A map summarizing key provisions of the Jumpstart Our Business Startups (JOBS) Act of 2012.
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the JOBS Act or Act) was signed into law by President Obama (see Legal Update, President Obama Signs JOBS Act (www.practicallaw.com/0-518-7417)). The JOBS Act makes wide-ranging changes to the federal securities laws and rules governing the US capital formation process.
The primary goal of the JOBS Act is to expand and ease methods of capital raising by, and relax the regulatory burden on, smaller companies. The rationale is that encouraging the growth and development of smaller companies and startups will lead to additional job creation.
Several of the provisions of the JOBS Act are immediately effective, but many provisions require the SEC to issue, or amend, implementing rules or regulations within 90 days to a year after the date of enactment. In addition, the Act requires the SEC to conduct several studies examining particular issues before taking additional actions. The full impact of the JOBS Act may not be known for over a year.
A number of current and former SEC members, such as SEC Chairman Mary Schapiro, SEC Commissioner Luis Aguilar and former SEC Chief Accountant Lynn Turner, have criticized the JOBS Act for gutting investor protections that they believe will increase the likelihood of securities fraud. The effect of the JOBS Act on capital raising will depend in large part on the choices the SEC makes in designing regulations to implement the Act.
The JOBS Act includes a number of reforms and other changes to the federal securities laws. For a summary of the key JOBS Act reforms and provisions, including highlights of important practical implications of the new legislation, see the following Practice Notes:
For a chart showing the dates that key reforms to the federal securities laws made by the JOBS Act become effective, see JOBS Act: Effective Dates of Provisions Chart (www.practicallaw.com/4-518-7585).
For a chart showing how the provisions of the JOBS Act apply to foreign private issuers (www.practicallaw.com/1-382-3481) (FPIs), see JOBS Act and FPIs: How the JOBS Act Applies to Foreign Companies Chart (www.practicallaw.com/4-519-0489).
PLC Legal Updates on New Rulemaking and Guidance
On-ramp to the Capital Markets for Emerging Growth Companies
Regulation D and Rule 144A General Solicitation
Exemption for Certain Securities (Small Company Capital Formation)
Shareholder Thresholds for Exchange Act Registration