O SlideShare utiliza cookies para otimizar a funcionalidade e o desempenho do site, assim como para apresentar publicidade mais relevante aos nossos usuários. Se você continuar a navegar o site, você aceita o uso de cookies. Leia nosso Contrato do Usuário e nossa Política de Privacidade.
O SlideShare utiliza cookies para otimizar a funcionalidade e o desempenho do site, assim como para apresentar publicidade mais relevante aos nossos usuários. Se você continuar a utilizar o site, você aceita o uso de cookies. Leia nossa Política de Privacidade e nosso Contrato do Usuário para obter mais detalhes.
Summary of the JOBS Act The Purpose: The JOBS Act is intended to encourage a wide range of companies to raise capital. The JOBS Act includes provisions that: 1. Increase the number of shareholders a company with assets in excess of $10 million may have before being required to register with the SEC from 500 shareholders of record to 500 “unaccredited" shareholders or 2,000 total shareholders. 2. Create a new exemption whereby a company may raise up to $1 million during any 12 month period by selling securities through “crowdfunding,” (i.e. raising a small amount of money from a large number of unaccredited investors via a website (or a “funding portal”)). 3. Create a new category of issuer called an “emerging growth company” with reduced disclosure requirements and greater regulatory flexibility for a 5 year period after an IPO/registration. 4. Lift the current ban on “general solicitation” and “general advertising” in specific kinds of private placements. 5. Raise the limit for securities offerings exempted under Regulation A from $5 million to $50 million. Grow VC Group 2012
Title I: The “IPO on ramp” and EmergingGrowth Companies (EGC’s) The Goal of Title I: Title I creates the “IPO on ramp” to encourage more companies to go public. Target Audience: Title I is tailored to larger, more well established companies considering an IPO in the short/medium term. See, for example, the Manchester United IPO. Definition of an EGC: EGCs are issuers that have total annual gross revenues of less than $1 billion. “On Ramp" Incentives: EGCs are exempt from certain regulatory requirements for at most 5 years from the date of its IPO. EGC regulatory relief provisions include: - Internal controls: An EGC is not be required to have an auditor attest to the effectiveness of its internal controls (as required by SOX). - Disclosure of executive compensation: An EGC does not need to disclose certain information concerning execution compensation or to hold the "say on pay" votes. - Accounting rules: Any new GAAP accounting rules which are introduced would only apply to an EGC once and if they are also applicable to unlisted companies. - Audited Financial Statements: EGCs would be required to provide audited financial statements for the 2 yrs prior to registration rather than 3 yrs as currently required. - Research Reports: The research regime is amended in a number of important ways, including allowing underwriting banks to publish research on EGCs, removing certain “black out” periods and amending or removing certain informational barriers within banks. - Confidential submissions: An EGC’s submission of its prospectus to the SEC may be confidential until 21 days before it begins its “road show”. Grow VC Group 2012
Title II: Removing Prohibitions on “GeneralAdvertising” and “General Solicitation” Goal of Title II: To increase the potential for issuer to market offerings to new accredited investors and expand the potential pool of capital for any given offering. Prior to the JOBS Act (and until enactment of this provision): - Participants in an offering of securities pursuant to Rule 506 (i.e. “private placements” that are not registered with the SEC) are prohibited from using any form of "general solicitation" or "general advertising“. - General soliciation and general advertising includes placing advertisements about the offering on television or in newspapers, simply offering the deal to a number of people that don’t have a relationship with the issuer or offering party and, certainly, placing details about the offering on a website that is accessible by investors in the US. - Therefore, private placements in the U.S. are typically marketed to a fairly restricted number of sophisticated investors that the issuer or securities broker already knew. Following the JOBS Act: Rule 506(c) will allow issuers to offer securities by means of general solicitation/advertising (e.g. via a web platform) so long as: - The Issuer has taken reasonable steps to verify that all purchasers are accredited investors; - Each purchaser is an accredited investor; and - Other requirements are met (e.g. other recent offerings must have been done correctly; resales are limited) Impact of Title II: Securities brokers and issuers will be able to use web platforms and other means (e.g. calling accredited investors that they don’t know) to offer securities. This should allow securities brokers, in particular, to grow their client base. Grow VC Group 2012
Title III: Crowdfunding The Goal of Title III: Encourage start-ups and entrepreneurs to raise capital while still protecting investors from fraud and highly risky investments. Timeline: Implementation was expected at the start of 2013 but it might be significantly later than that as the SEC is behind in the rule-making process. Upon Implementation: Title III will exempt crowdfunding offerings from the normal registration and disclosure requirements and will create special registration and disclosure requirements for the offer or sale of securities by an issuer through a “broker or funding portal” Qualifications to be a Crowdfunding Issuer: To qualify for the crowdfunding exemption, the issuer must be a U.S. company and the aggregate amount of securities sold by the issuer within the previous 12- month period (including prior crowdfunding) cannot exceed $1 million. Investor Limits: To qualify for the crowdfunding exemption, the aggregate amount sold to any one investor by a crowdfunding issuer, including any amount sold in reliance on the exemption during the preceding 12-month period, cannot exceed: - The greater of $2,000 or 5 percent of the annual income or net worth of such investor if either the annual income or the net worth of the investor is less than $100,000; and - 10 percent of the annual income or net worth of such investor (not to exceed an aggregate amount of $100,000) if either the annual income or net worth of the investor is equal to or more than $100,000. Grow VC Group 2012
Title III: Crowdfunding (con’t) Website Portal and Broker Registration: A "funding portal" is defined as any person engaged in the business of effecting securities transactions for the account of others pursuant to the crowdfunding exemption that does not: - Offer investment advice or recommendations; - Solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal; - Compensate employees, agents, or other third parties for such solicitation or based on the sale of securities displayed or references on its website or portal; - Hold, manage, possess, or otherwise handle investor funds or securities; or - Engage in other activities determined by the SEC. Grow VC Group 2012
Title III: Crowdfunding (con’t)Broker/Funding Portal Requirements: The intermediary broker or funding portal is required to:1. Register with the SEC and any applicable self-regulatory organization (FINRA);2. Provide disclosures related to risks and other investor education materials required by the SEC;3. Ensure that each investor reviews and acknowledges investor-education information, including knowledge of the risks of such investment;4. Take measures to reduce the risk of fraud with respect to such transactions, including obtaining background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer whose securities are offered by such person;5. Not later than 21 days prior to the first day on which securities are sold to any investor (or period of time set by the SEC), make the issuer’s disclosure available to the SEC and to potential investors;6. Provide the offering proceeds to the issuer only once the fundraising target is reached, allow investors to cancel their commitments; and ensure that no investor exceeds the individual investor limits in a 12- month period; and7. Not compensate promoters, finders, or lead generators for providing the broker or funding portal with the personal identifying information of any potential investor. Grow VC Group 2012
Title III: Crowdfunding (con’t)Crowdfunding Issuer Registration and Disclosure Requirements: To make a crowdfunding offering, an issuer must:1. File with the SEC and disclose to investors and the relevant broker or funding portal prospectus information regarding the issuers business description, business plan, financial condition, prior crowdfunding offerings within the preceding year, and pricing of securities and valuation.2. Not advertise the terms of the offering, except for notices which direct investors to the funding portal or broker;3. Not compensate or commit to compensate, directly or indirectly, any person to promote its offerings through communication channels provided by a broker or funding portal (though certain exceptions apply); and4. Provide annual disclosure regarding the results of operations and financial statements of the issuer in accordance with rules to be issued by the SECNote: Issuers will be liable (presumably along with funding portals and broker-dealers) for any material misstatements or omissions from the disclosure they provide to the market. - This could increase the risk associated with crowdfunding significantly, as investor law suits are expensive and time consuming. Grow VC Group 2012
Title IV: Small Company Capital Formations(Regulation A) Title IVs Purpose: To help small issuers, such as venture-capital backed companies, gain access to funding without the costs and delays associated with the full-scale securities registration process. Current Law: Regulation A exempts from SEC registration offerings of up to $5 million if the offering meets certain requirements. Provision: Title IV would increase the offering threshold under Regulation A to $50 million if the issuances meet certain conditions, including filing an audited financial statement. Timing: It is unclear when the SEC will fully implement Title IV, but mid-2013 seems likely. Title IV:1. Provides that the aggregate amount of securities issued under the exemption shall not exceed $50 million in any 12 month period. The SEC may increase this amount every two yrs.2. Permits an issuer to market the deal before it files its prospectus with the SEC.3. Requires issuers to file audited financial statements with the SEC annually.4. Relates only to equity securities, debt securities, debt convertible into equity and guarantees of these securities.5. Does not relieve issuers or others involved in the offering from liability/risk of shareholder suits for material misstatements or omissions in the information provided to investors.Note: The SEC may also implement “bad actor” provisions, specific disclosure requirements, and other requirements for the new Regulation A. Grow VC Group 2012
TITLE V -- Private Company Flexibility and Growth Title IVs Purpose: The perception in the business community has been that the reporting requirements and obligations of being a public company is expensive and constrains the activities of companies forced to register with the SEC. Provision: A company had been required to register with the SEC if it had more than 500 shareholders of record and $10 m in assets. The threshold has been changed to $10 m in assets plus 500 “unaccredited" shareholders of record or 2,000 total shareholders of record. Exceptions and Exemptions: - Beneficial holders (i.e. ultimate holders, perhaps those holding through a fund) must be counted as record holders if the issuer knows or has reason to know that the form of ownership of securities is being used to circumvent the record holder calculation. - An issuer can exclude from its calculation of holders of record those holders that received shares through an employee compensation plan, whether or not those holders are current employees. - Securities issued under the crowdfunding exemption are excluded from the threshold/registration requirement. Note: Title VI applies a similar principal to bank and bank holding companies. Such entities must register if they have have total assets of more than $10 million and a class of equity security held of record by 2,000 or more persons. There is no distinction made regarding the number of “unaccredited” shareholders. Grow VC Group 2012
Effective Dates of the JOBS ActTitle I (Creation of EGCs; “IPO on ramp”) Largely effective on enforcementTitle II (Amendments to General The SEC had been schedule to proposeSolicitation/Advertising) new rules by 4 July but did not do so until 29 August. Final rules not likely before end of 1st quarter 2013.Title III (Crowdfunding) The SEC is required to adopt new rules by 31 December but most expect these changes to be implement in mid/late 2013Title IV (Increasing Reg A offerings to up to Not yet effective, date unclear.$50 million)Title V (Increased thresholds for Largely effective on enforcement.registration with SEC)Title VI (Increased thresholds for Largely effective on enforcement.registration with SEC for banks) Grow VC Group 2012