Pub. 3 2012 Issue 2

www.wvbankers.org 22 T he Jumpstart our Business Startups Act (JOBS Act or Act) was enacted on April 5, 2012 with the objective of increasing job creation within the United States and for stimulating economic and private company growth by facilitating greater access to capital while also reducing regulatory burden. Key Provisions of the JOBS Act By Christopher S. Nice, CPA, CISA, Member Arnett & Foster, P.L.L.C. Key Provisions of the JOBS Act Title Brief Summary Expected Implementation Timetable Title I – Reopening American Capital Markets to Emerging Growth Companies The Act establishes the Emerging Growth Company IPO “on ramp.” Effective immediately Title II – Access to Capital for Job Creators The Act lifts the ban on general solicitation and advertising for SEC Regulation D, Rule 506 offerings and Rule 144A offerings. Certain rules required within 90 days of enactment of the Act Title III – Crowdfunding Registration exemption for limited size offerings to be sold in small amounts to a large number of investors. Certain rules required within 270 days of the enactment of the Act Title IV – Small Company Capital Formation The Act increases the amount of capital that can be raised under SEC Regulation A from $5 million to $50 million. No deadline for rules Title V – Private Company Flexibility and Growth The Act 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. Effective Immediately Title VI – Capital Expansion The Act raises the threshold for mandatory registration from 500 shareholders of record to 2,000 shareholders of record and raises the thresholds for a non-listed bank or bank holding company (BHC) to terminate its registration from 300 shareholders of record to 1,200 shareholders of record. Rules required within one year of enactment of the Act Pre JOBS Act EGC Three years of audited financial statements Two years of audited financial statements Five years of selected financial data Two years of selected financial data Comply with new accounting standards as an issuer Comply with new accounting standards in the same timeframe for a private company Registration statement is publicly filed Confidential treatment of the registration statement is available Title I – Reopening American Capital Markets to Emerging Growth Companies Effective immediately, a new category of issuer was created by Title I of the JOBS Act – the Emerging Growth Company (EGC). A company may be considered an EGC if the compa- ny’s total annual gross revenues were less than $1 billion during its most recently completed fiscal year. Creation of a new class of company allows for a company that meets the definitions of an EGC to be offered certain modified triggers for not only initial public registration but also certain subsequent reporting requirements. A company that is an EGC will remain one until five years after its IPO or at such time as one of the following events occur: • Has annual revenues exceeding $1 billion; • Issues more than $1 billion in nonconvertible debt over a rolling three year period; or • Becomes a large accelerated filer Changes to the initial public offering (IPO) registration process for an EGC are as follows:  JOBS Act — continued on page 24