Section 401 of the Jumpstart Our Business Startups Act, or JOBS Act (expected to be signed into law by President Obama on April 5, 2012) permits securities offerings of up to $50 million in any 12-month period under a new exemption to be established by the SEC under Section 3(b) of the Securities Act of 1933. Regulation A (the small public offering exemption) provides the current exemption under Section 3(b), which is capped at $5 million and is not available to Exchange Act reporting companies. The $5 million cap is arguably one of the biggest disadvantages of a Regulation A offering.
Securities issued under the new $50 million exemption may be sold publicly and will not be considered restricted securities. The new exemption requires the SEC to issue implementing rules regarding delivery of the offering statement and other information about the issuer to investors. Issuers must file audited financial statements annually and may solicit interest in the offering before filing an offering statement, subject to additional rules to be set by the SEC. The JOBS Act does not set a deadline for this rulemaking.