May 31, 2012

Our Mini-Theme: The JOBS Act

Jeffrey W. Rubin

The JOBS Act, signed by President Obama on April 5th, promises significant changes to the ways in which many private companies raise capital and creates an "IPO on-ramp" for a new category of company, an "emerging growth company." Business lawyers, private companies, and the investor community are quickly coming up to speed regarding the JOBS Act, the opportunities it presents, and the questions it raises. This issue of Business Law Today examines the JOBS Act from a number of different perspectives.

First, in "The JOBS Act--An Overview: What Every Business Lawyer Should Know," I review some of the lead-up to the JOBS Act, and then present a summary of the principal provisions of the act. The other articles in this issue focus on specific topics. In "The JOBS Act: Easing Exempt Offering Restrictions," Elizabeth M. Dunshee and David M. Lynn discuss the provisions of the JOBS Act eliminating the restrictions on general solicitation and general advertising in connection with Rule 506 and Rule 144A offerings; establishing a new offering exemption under Securities Act Section 3(b) to permit companies to offer and sell up to $50 million in securities within a 12-month period; and increasing the holders of record threshold before a private company is required to register under the Exchange Act. In "Crowdfunding: Its Practical Effect May Be Unclear Until SEC Rulemaking is Complete," Yoichiro Taku discusses the new JOBS Act offering exemption for crowdfunding, which involves a company raising capital by selling securities to a large number of investors whose individual investments are limited in amount. In "IPO On-Ramp: The Emerging Growth Company," Bonnie J. Roe discusses this new category of issuer designated by the JOBS Act, and the accommodations provided to such companies in connection with their IPOs and subsequent reporting. The JOBS Act relaxes a number of restrictions on research at the time of an Emerging Growth Company's initial public offering. Dana G. Fleischman focuses on these changes in "JOBS Act on Research: Strong Buy?" In addition to affecting many smaller companies, the JOBS Act may also have implications under the Investment Company Act. Martin E. Lybecker discusses some of these considerations in "The Effect of the JOBS Act on Private Investment Companies: Foreseen Consequences?" Finally, a number of the changes effected by the JOBS Act may be relevant to foreign companies. In "The JOBS Act for Foreigners," Daniel Bushner discusses some of the implications for foreign companies and foreign investors.

The Federal Regulation of Securities Committee is very pleased to be taking a role in connection with the JOBS Act. As one of the largest committees in the Business Law Section, Fed Regs is the principal ABA committee dealing with the SEC and federal securities law matters. In addition to presenting CLE programs and publishing an Annual Review of Federal Securities Regulation in The Business Lawyer, the Committee covers the full range of federal securities law topics. Our subcommittees focus on issues of importance to practitioners in connection with the activities of many of the divisions of the SEC, including the Division of Corporation Finance (the Disclosure and Continuous Reporting Subcommittee; the Securities Registration Subcommittee; the Proxy Statements and Business Combinations Subcommittee; the Employee Benefits, Executive Compensation and Section 16 Subcommittee; the Small Business Issuers Subcommittee; and the International Securities Matters Subcommittee), the Division of Trading and Markets (the Trading and Markets Subcommittees), the Division of Investment Management (the Investment Companies and Investment Advisers Subcommittee; and the Hedge Funds Subcommittee) and Enforcement (the Civil Litigation and SEC Enforcement Matters Subcommittee). We also follow developments at FINRA, through our FINRA Corporate Financing Rules Subcommittee. In addition, we have a number of other very active task forces and subcommittees, including our Securities Law Opinions Subcommittee. Often working with the Legal Opinions Committee, the subcommittee has been a standard-setter in identifying and establishing customary practice in this area.

One of our principal activities has been the submission of comment letters to the SEC that express the views of securities law practitioners and have helped to make SEC rulemaking more informed and more effective. In connection with the JOBS Act, we recently submitted a pre-rulemaking comment letter relating to the elimination of general solicitation and general advertising restrictions in Rule 506 and Rule 144A transactions. In addition, at the 2012 Spring Meeting, we co-sponsored two programs dealing with JOBS Act provisions in " Perspectives on Regulatory Reform for Small and Mid-Sized Companies: Change is in the Air "  and " Current Securities Law Issues for Small Business " . We welcome the membership of all business lawyers interested in federal securities regulation. 

We are also very pleased that this issue of Business Law Today and our other JOBS Act initiatives represent a collaborative effort by a number of Business Law Section Committees. We are indebted to the Middle Market and Small Business Committee (chaired by Greg Yadley), the Private Equity and Venture Capital Committee (chaired by Mark Danzi), the Corporate Governance Committee(chaired by John Stout), and the State Regulation of Securities Committee (chaired by Shane Hansen), for their extremely valuable contributions and support. In addition to the extraordinary efforts by the authors of the articles in this issue to prepare and present cogent discussions of the JOBS Act so soon after enactment, we also very much appreciate the efforts of the many who commented on the articles, including Cathy Dixon, Carol McGee, John Murphy, and Ann Yvonne Walker.

Our next meetings will be held in conjunction with the ABA Annual Meeting at the Marriott Downtown in Chicago, from August 3rd through August 5th, and in Washington, D.C., at the Ritz-Carlton on November 16th and 17th. We hope to see you there.

Jeffrey W. Rubin