As of March 28, 2012, both the U.S. Senate and House of Representatives have passed the Jumpstart Our Business Startups Act (JOBS Act) and the bill now only awaits President Obama’s signature before it is enacted into federal law. The JOBS Act is a combination of six separate bills and, if enacted, will have a significant impact on the offering and private placement provisions of the Securities Act of 1933 (Securities Act) and Securities Exchange Act of 1934 (Exchange Act).
The JOBS Act, as conveyed by Congress, is designed to stimulate the American economy and restore opportunities for America’s primary job creators: small businesses, startups and entrepreneurs. If enacted, the JOBS Act would modify current securities laws with regard to private offerings in two significant ways: It would remove the prohibition on general solicitation and advertisement by issuers relying on Rule 506 of Regulation D under the Securities Act; it would also increase the investor thresholds provided by Section 12(g) of the Exchange Act that trigger public company reporting requirements. These provisions will fundamentally change the way private funds are offered and sold.