The JumpStart Our Business Startups Act of 2012, commonly known as the JOBS Act, sought to make it easier for smaller companies to access the public capital markets by relaxing restrictions on pre-IPO communications and allowing "emerging growth companies" (companies with less than $1 billion in annual turnover) to pursue limited private discussions with institutional or accredited investors to gauge their interests in a potential IPO, known as "testing the waters." The provision was intended to allow companies to gain a better sense of whether to pursue an offering without violating pre-IPO communications restrictions.
The SEC has announced it is considering giving all companies access to "testing the waters" benefits. Bill Hinman, SEC Division of Corporation Finance, stated that there is no specific timeline to put such plans into effect for all companies but that the agency does not expect implementation to take an "inordinate time."
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