On April 5, President Obama signed the JOBS Act (Jumpstart Our Business Startups) into law. The Act makes sweeping changes to federal securities laws and reduces certain burdens associated with raising capital for smaller companies. Several of these changes could present opportunities to many bank holding companies. Greg Fryer and Molly Callaghan, members of Verrill Dana's Securities Law Group, have posted an article about the new JOBS Act.
A few important highlights from the article: For bank holding companies that currently are not publicly reporting entities, the increase in the threshold for SEC periodic reporting (allowing 2,000 holders of record) permits greater flexibility to raise capital without incurring the costs of SEC mandatory reporting. As a result, the JOBS Act opens up some intriguing new possibilities:
- Perhaps of greatest immediate interest are the provisions that soon will allow a company to use general advertising in Rule 506 offerings aimed solely at so-called “accredited investors.”
- Most of the publicity about the Act centers on the “crowdfunding” provisions: essentially a mini public offering conducted through a registered “portal” and/or registered broker-dealer, with strict dollar limits on the amount of securities purchased by any one investor.
- The Act also increases the maximum size of Regulation A offerings, which may make this under-utilized exemption more attractive to issuers, particularly bank holding companies.