Publications

On April 5, 2012, the U.S. Congress enacted The Jumpstart Our Business Startups Act (the “JOBS Act”), a package of capital access reforms intended, among other things, to facilitate the ability of companies to raise capital in private offerings without registration with the Securities and Exchange Commission (the “SEC”).  The JOBS Act directed the SEC to amend its rules to permit (1) general solicitation or general advertising in connection with offerings of securities under Rule 506 of Regulation D (“Rule 506”) under the Securities Act of 1933, as amended (the “Securities Act”), provided that all purchasers of the securities are accredited investors and that the issuer has taken reasonable steps to verify that all purchasers of the securities are accredited investors and (2) offers of securities under Rule 144A under the Securities Act to persons other than qualified institutional buyers (“QIBs”), including by means of general solicitation or general advertising, provided that the securities are sold only to persons whom the seller and any person acting on behalf of the seller reasonably believes is a QIB.

On August 29, 2012, the SEC proposed rules (the “Proposed Rules”) to implement these changes to Rule 506 and Rule 144A.  The SEC will seek public comments on the Proposed Rules and any comments must be received on or before October 5, 2012.  Following the review of comments by the SEC, the final rules will be issued.  Issuers are not able to avail themselves of the Proposed Rules until final rules are enacted and effective.  Since Rule 506 offerings and Rule 144A offerings are widely used by U.S and foreign issuers to access the capital markets, we anticipate that the final rules, assuming that they are substantially similar to the Proposed Rules, will allow for greater flexibility in the capital raising process by relaxing existing regulatory requirements on publicity.