The JOBS Act and its Impact on Foreign Private Issuers

On 5 April 2012, President Obama signed the Jumpstart Our Business Startups Act (the "JOBS Act"). Its stated purpose is to increase American job creation and economic growth by improving access to the US public capital markets for "Emerging Growth Companies" (companies with less than $1 billion in annual revenues). The JOBS Act also eases existing restrictions on communications with potential investors in US private placements and allows non-SEC reporting companies to have a significantly higher number of existing shareholders without triggering registration under the US Securities Exchange Act of 1934.

Our e-bulletin discusses the aspects of the JOBS Act most likely to impact foreign private issuers, including non-US investment funds. Certain provisions of the JOBS Act, including those in relation to the relaxation of standards for Emerging Growth Companies, are effective immediately. Other provisions will require further rulemaking, guidance and interpretation from the US Securities and Exchange Commission (the "SEC") in the coming weeks and months.  The objectives of the JOBS Act are ambitious, but it remains to be seen to what extent the regulatory changes adopted by the JOBS Act will be reflected in practice.