Over the past month the SEC has provided guidance regarding the Jumpstart Our Business Startups Act of 2012, or JOBS Act, which became law on April 5, 2012. The most recent guidance is in the form of Frequently Asked Questions on Title I, available May 3, 2012, as a supplement to prior FAQs on Title I issued April 16, 2012. Title I of the JOBS Act provides scaled disclosure provisions for emerging growth companies, including, among other things, (i) two years of audited financial statements in the registration statement for an initial public offering of common equity securities, (ii) the smaller reporting company version of Item 402 of Regulation S-K, and (iii) no requirement for Sarbanes-Oxley Act Section 404(b) auditor attestations of internal control over financial reporting. Title I also enables emerging growth companies to use test-the-waters communications with Qualified Institutional Buyers and institutional accredited investors, and liberalizes the use of research reports on emerging growth companies. The FAQs clarify how an issuer can qualify as an emerging growth company, applicable dates for qualification and registration, and various reporting and disclosure requirements.
On April 11, 2012, the SEC issued FAQs to provide guidance regarding Title V and Title VI of the JOBS Act. These titles provide for an increase in the number of holders of record that triggers periodic reporting requirements with the SEC under the Exchange Act. The FAQs provide information regarding how issuers can terminate a not yet effective registration process, or alternatively deregister an effective registration, if the issuer no longer meets the registration requirements as a result of the increase in the threshold of shareholders of record. The FAQs further clarify that an issuer may exclude from the holders of record calculation persons who received securities pursuant to an employee compensation plan in transactions exempted from registration requirements, even though the Commission has not yet revised the definition of “held of record” as required by the new law.
Also on April 11, 2012, the SEC requested public comments before proposing any rulemaking under the JOBS Act.
Finally, on April 10, 2012, the SEC issued FAQs to provide guidance regarding the confidential submission of registration statements for review pursuant to new Securities Act Section 6(e). Section 6(e) provides that an emerging growth company may confidentially submit to the Commission a draft registration statement for confidential, non-public review prior to public filing. The FAQs clarify which registration statements are eligible for submission, among other specific requirements.
