As most of us already know, on March 27, 2012, the House passed the JOBS Act. The JOBS Act does a variety of things, all of which (at least theoretically) are good for small business and capital raising. Among other things, the JOBS Act increases the threshhold number of shareholders a company may have before it is required to become reporting, it outlines a framework for crowdfunding, and it introduces the concept of an Emerging Growth Company.
But, in my opinion, the single most important part of the JOBS Act is that it eliminates the prohibition on general solicitation and advertising for 506 offerings. Remember that Regulation D, Rule 506 offerings are “covered securities” under NSMIA, which means states are required to follow federal law with respect to the exemption. So now, not only is general solicitation allowed, but the states have no choice but to also allow it.
There are some caveats. All investors must be accredited investors, and it looks like the SEC is going to come up with guidelines as to how an issuer must confirm that all investors are accredited. And this isn’t effective yet, the SEC has 90 days to implement specific rules on general solicitation. But this aspect of the JOBS Act has the potential to change the way private placements are conducted.