The Jobs Act passed the Senate today and will be signed by the President soon. This bill will have a major impact on funding by private companies and IPO’s. Here are the relevant changes:
Easing capital formation for private companies
The Act contains a number of provisions designed to ease capital raising for private companies, including:
· Sold through a broker-dealer,
· Offered or sold over a national securities exchange, or
· Sold to a "qualified purchaser"
The JOBS Act creates a category of issuer called an "emerging growth company", which is a company that has under $1.0 billion in revenue.
Such a company will remain an emerging growth company until the earliest of
Under the JOBS ACT emerging growth companies:
· investments banks will be permitted to publish research during the pendency of public offering, even if they act as underwriters
· the research analyst conflict of interest rules related to marketing of IPOs and "three way" communication between research, investment banking and management will not apply
· there will be no post pricing quiet period or booster shot restrictions on research reports or other communications