Monday, April 16, 2012

Corp Fin Issues Guidance on JOBS Act Title I

The SEC’s Division of Corporation Finance has issued frequently asked questions for companies anticipating using Title I of the Jumpstart Our Business Startups (JOBS) Act. Title I contains scaled disclosure obligations for emerging growth companies. Prior JOBS Act guidance issued by Corp Fin includes: procedures for confidential submissions, FAQ regarding the confidential submission process, and FAQ on Exchange Act registration and deregistration.

The new Title I FAQ contains 17 Q&As covering a range of topics, including how a company determines its status as an emerging growth company for purposes of the revenue test and effective date. The FAQ also states that with the exception of the new accounting standards, an emerging growth company may follow some or all of the new scaled disclosure provisions. There is an extensive discussion about how to apply the accounting standards, including the guidance contained in SAB Topic 11M.

With respect to Regulation S-K and Regulation S-X, an emerging growth company may comply with JOBS Act Title I in registration statements, periodic reports, and proxy statements, even if these provisions are inconsistent with existing Commission rules. The FAQ observed, for example, that while an emerging growth company’s CEO and CFO must provide the certifications required by Sarbanes-Oxley Act Section 906, compliance with JOBS Act Sections 102(c) and 103 would comply with Exchange Act Sections 13(a) and 15(d). The FAQ also covers use of Title I by foreign private issuers generally, and by Canadian issuers under the Multi-Jurisdictional Disclosure System.

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