Pub. 3 2012 Issue 2

www.wvbankers.org 24 Pre JOBS Act EGC Comply with new accounting standards Comply with new accounting standards in the same timeframe for a private company Five years of selected financial data Selected financial data is only required for those years starting with the earliest audited period included in the EGC’s initial registration statement Compliance with Section 404 (b) of the Sarbanes- Oxley Act of 2002 (auditor attestation on internal control over financial reporting) for accelerated filers No auditor attestation is required, however, the EGC must still comply with Section 404 (a) of the Sarbanes Oxley Act of 2002 Compliance with future Public Company Accounting Oversight Board (PCAOB) regulations Exempt from prospective PCAOB regulations regarding auditor rotation and changes in auditor reporting as well as future regulations unless the SEC determines it is in the best interest of the public that the EGC comply Compliance with current and future compensation disclosures EGC may comply with the abbreviated compensation disclosure requirements available to a smaller reporting company and provides exemption for certain current and prospective disclosures Changes for an EGC subsequent to an IPO registration are as follows: Title II – Access to Capital for Job Creators In order to facilitate access to capital for job creators, Title II of the Act requires the SEC to remove the ban on general solicita- tion/advertising in offerings that are exempt from registration under Rule 506 of Regulation D if all of the investors are either accredited, or under Rule 144a, all of the investors are quali- fied institutional buyers. Title III – Crowdfunding The intent of Title III of the JOBS Act is to allow for a wider pool of smaller investors with fewer restrictions than those previously available prior to the enactment. This process is commonly referred to as “crowdfunding” and can be per- formed in a variety of ways with the Internet being the most common form. Title III contains two specific limitations on crowdfunding. The first limitation, assuming the issuer has met certain requirements, is that the issuer would be per- mitted to sell up to $1 million of securities in any rolling 12 month period. An investor is also limited to purchasing up to $2,000 or a percentage of the investor’s annual income or net worth up to a maximum of $100,000. Title IV – Small Company Capital Formation While the objective of Title III of the JOBS Act is to allow for a wider pool of investors, Title IV provides for an increase in the exemption under Regulation A to increase the total amount of capital that can be raised by a small company from $5 million to $50 million. The SEC will be establishing rules and taking further action as part of the implementation of this portion of the Act. The United States Comptroller Gen- eral is further required to study the impact Title IV may have on Blue Sky Laws. Title V – Private Company Flexibility and Growth The Securities Act of 1934 required an issuer with more than $10 million in assets and shareholders of 500 or more to reg- ister with the SEC. One of the more significant provisions of the Act is the increase in the mandatory registration threshold from 500 shareholders to 2,000 shareholders, as long as there are less than 500 non-accredited investors. Title VI – Capital Expansion Title VI of the Act increases the mandatory registration from 500 shareholders of record to 2,000 shareholders of record for a bank or BHC. No limitation on the number of non-accredited investors applies. Also, Title VI of the Act raises the threshold for terminating a registration from 300 shareholders to 1,200 shareholders of record for a bank or BHC. Depending on your bank’s strategic plan, the JOBS Act may allow for greater ease in entering the capital markets or on the flip side, it may result in reduced regulatory costs by provid- ing you a path for terminating your existing registration. Visit www.whitehouse.gov to obtain a copy of the Act. The SEC Division of Corporation Finance has also issued guidance relating to the JOBS Act at www.sec.gov .  Christopher Nice is a P.L.L.C. Member of Arnett & Foster, P.L.L.C., Certi- fied Public Accountants, in Charleston, West Virginia. ACertified Public Accountant andCertified Information SystemAuditor, Mr. Nice has over fifteen years experience in providing audit and consulting services in the financial institutions industry. Mr. Nice can be contacted at 800-642-3601 or through email: chris.nice@afnetwork.com.  JOBS Act — continued from page 22