1 This article focuses on those provisions of the JOBS Act which will likely have the most significant impact on foreign private issuers. Accordingly, this e-bulletin does not discuss the JOBS Act provisions on crowdfunding, which permit domestic issuers to avoid registration under the US Securities Act of 1933 while raising up to $1 million of capital from investors, whether sophisticated or not, through certain approved channels, or the new offering exemption modelled on Regulation A, which permits issuers to raise up to $50 million in capital during any 12-month period without triggering registration under the Securities Act.
2 However, as discussed below, an EGC who chooses to avail itself of the exemption from compliance with new or revised accounting standards may not selectively take advantage of this exemption by complying with some, but not all, new or revised standards.
3 "Initial public offering date" under the JOBS Act is the date of the first sale of common equity securities of an issuer pursuant to an effective registration statement under the US Securities Act of 1933.
4 Consistent with the SEC's existing policy for all issuers, comment letters relating to the registration statement and the EGC's responses remain confidential until no earlier than 20 days after the effective date of the IPO registration statement.
5 On 8 December 2011 the SEC indicated that it will generally not permit a foreign private issuer to use the confidential review process created expressly for foreign private issuers if such foreign private issuer proposes to list its securities only on a US exchange. A foreign private issuer proposing to undertake concurrent listings on a US exchange and a foreign exchange should, unless indicated otherwise by the staff of the SEC, be able to continue using these confidential review procedures. (See Herbert Smith LLP Corporate e-Bulletin, "US SEC limits availability of confidential review process for initial registration statements of foreign private issuers", 19 December 2011.)
6 The SEC has clarified that the term "new or revised" financial accounting standards refers to any update by the US Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
7 An issuer becomes a "large accelerated filer" when (i) the worldwide market value of its outstanding common equity in the hands of non-affiliates is in aggregate equal to or greater than $700 million (as measured on the last day of the issuer's fiscal year); (ii) the issuer has been publicly reporting to the SEC for at least 12 months; and (iii) the issuer has filed at least one annual report with the SEC; and (iv) the issuer is not eligible to use the requirements for smaller companies set out under the Exchange Act for its annual and quarterly reports.
8 The JOBS Act does, however, renumber Section 4(2) of the Securities Act as Section 4(a)(2) as a result of the other amendments to Section 4 discussed in this e-bulletin.
9 Further, the JOBS Act excludes certain categories of holders from the definition of "holder of record", including holders receiving securities via employee compensation plans in transactions exempted from registration under the Securities Act. For banks and bank holding companies, the holder of record threshold is 2,000 persons, with no limit on the number of non-AIs.
10 Operators of private funds trading commodity interests and that rely on certain exemptions from regulation promulgated by the Commodity Futures Trading Commission ("CFTC") should be mindful that the JOBS Act only applies to the "federal securities laws" and that restrictions on general solicitation and general advertising under the CFTC rules may still be applicable to such funds.
