By now you know the JOBS Act was signed into law by the President on April 5. This legislation includes six pre-existing bills, packaged together into a single piece of legislation. Each of these provisions is intended to increase access to equity capital investment for small businesses:
- H.R. 1070 — Small Company Capital Formation Act – Increases small business SEC exemption from $5 million to $50 million.
- H.R. 2167 — Private Company Flexibility and Growth Act – Raises the shareholder threshold for mandatory SEC registration from 500 to 1,000 shareholders.
- H.R. 2930 — Entrepreneur Access to Capital Act – Enables “crowdfunding” by exempting small issues of up to $1 million during a 12-month period from SEC registration requirements.
- H.R. 2940 — Access to Capital for Job Creators Act – Removes the prohibition against general solicitation or advertising if all purchasers of the securities are accredited investors. The legislation will enable offline and online forums that bring together investors with companies.
- H.R. 4088 — Capital Expansion Act – Increases the maximum number of shareholders that can invest in a community bank from 500 to 2,000.
- H.R. 3606 — Reopening American Capital Markets to Emerging Growth Companies Act – Lowers the SEC and other compliance costs for companies with revenues of less than $1 billion during its most recently completed fiscal year.
The next step in this process is for the SEC to issue regulations to implement this new law. Even for the most simple laws, drafting and issuance of regulations can be a long and tedious process; for the JOBS Act, most expect the regulatory process will last for at least a year. However, to get a jump-start on this work, the SEC has announced that it would begin accepting comments prior to issuance of draft regulations, allowing the public to provide input on implementation issues even before the SEC proposes its draft rules. To facilitate these comments, the SEC has established a series of links on its website where comments can be posted.
The SEC also will post information concerning meetings with interested parties on aspects of the JOBS Act, and meeting participants will be encouraged to submit written comments to the public file so that all interested parties have the opportunity to review and consider the views expressed.
So, while final guidance for implementation is months away, the SEC is working to speed the process by soliciting early comments, which could guide the regulation drafting process. CompTIA will be working to solicit and submit member comments from members, so your comments and concerns will certainly be appreciated.