J. Kardis II, Robert K. Smith, and Barry Spatzer
On April 5, 2012, the President
signed into law the Jumpstart Our Business Startups (JOBS) Act (H.R. 3606),
which incorporates several initiatives aimed at easing the regulatory burdens
of traditional IPOs and private placements and generally facilitating access to
the capital markets. The JOBS Act is a sweeping piece of legislation and is
enormously relevant to capital markets participants. Companies and their legal
and financial advisors who are considering various financing alternatives
should consider the benefits of this legislation when structuring potential
capital raising transactions.
The JOBS Act combines several pieces of stand-alone legislation previously
approved by the House of Representatives in late 2011. The JOBS Act also
creates a new category of issuers known as "Emerging Growth
Companies" ("EGCs"), which will enjoy certain relaxed
restrictions on offering communications and graduated integration (the IPO
"on-ramp" provisions) into SEC reporting and governance requirements.
In particular, Congress sought to make it more attractive for EGCs to go public
by significantly reducing certain financial reporting and SEC disclosure
requirements for these smaller, emerging companies for a specified period of
time (thereby presumably saving the company substantial compliance costs).
Title I of the JOBS Act relaxes certain offering, disclosure and compliance
requirements for a class of companies categorized as EGCs. An EGC is defined as
any issuer with less than $1 billion in revenues for its most recently
completed fiscal year.
Among others, Title I of the JOBS Act provides the following relief for
Audited Financial Statements: An EGC will need to provide no more than two
years of audited financial statements in its IPO registration statement. In any
other registration statement, periodic or other report filed with the SEC, an
EGC will not need to present selected financial data for any period prior to
the earliest year for which audited financial statements were provided for its
IPO. [footnoted omitted]
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Phillip J. Kardis II is a
partner at K&L Gates. Mr. Kardis has a broad range of experience in
assisting clients with complex corporate, securities and financing
transactions, especially transactions involving mortgage REITS and financial
assets (such mortgage loans, servicing rights, auto loans, and SBA Loans),
including public offerings (debt and equity), private placements, private
equity, asset-back secured lending, joint ventures and other investment
vehicles, mergers and acquisitions, asset-backed securitizations, going private
transactions, REIT conversions, and debt offerings. He has represented several
Wall Street investment banks, mortgage and specialty auto finance companies,
REITs, broker-dealers and a variety of technology companies. Mr. Kardis also
advises companies on compliance with Regulation AB and is a frequent speaker on
Regulation AB matters.
Robert K. Smith is of counsel in the firm's Washington, D.C. office. He
focuses his practice on corporate and securities matters, including a broad
range of capital markets activities (including representing both issuers and
underwriters in securities offerings, including IPOs), securities regulatory
and compliance advice, corporate governance matters, restatements, merger and
acquisition transactions and general corporate matters.
Barry Spatzer focuses his practice on securities offerings, mergers and
acquisitions, and other general corporate matters.