Jumpstart Our Business Startups Act

The Jumpstart Our Business Startups Act (abbreviated as JOBS Act ) is a United States federal law with the aim of improving access to the public capital market in the United States to increase job creation and economic growth in the United States. It was passed in the U.S. Congress with votes from the Republican and the Democratic Party and received 5 April 2012 by the signature of the President of the United States of America, Barack Obama the force of law.

Genesis

The President of the United States of America, Barack Obama, presented on 31 January 2011 before his Startup America initiative. Under this initiative, various reforms have been proposed to improve the access of small businesses to new capital during the year. The resulting draft law was adopted on 8 March 2012 by the U.S. House of Representatives. The U.S. Senate began March 20, 2012 to deal with the bill and adopted on 22 March 2012, a modified version, which then went back to the U.S. House of Representatives for a second vote. The Senate amended the provisions on crowdfunding so that the case of an offer of securities involved through crowdfunding intermediaries (securities broker or portal operator ) must have an approval from the U.S. Securities and Exchange Commission, U.S. Securities and Exchange Commission, have.

Legislative provisions

The Jumpstart Our Business Startups Act extended, among other things, the transition period for companies that are new to the public capital market in the United States, to meet certain legal requirements.

The main legal provisions:

  • Increase the number of shareholders who can have a society before they must register with the U.S. Securities and Exchange Commission and its securities in connection subject to the reporting requirements. These obligations have been passed from total assets of $ 10 million and over 500 registered in the share register shareholders ( Shareholders of record ). The threshold for the number entered in the share register was increased by the Law on 500 small investors as shareholders (ie no accredited investors ) or 2000 shareholders ( accredited or unaccredited ). Under the current regulatory provisions is a securities broker ( broker ), registered in his name in the share register shares (held in "street name ") only counted as one shareholder. As a stockbroker holds these shares for many of its customers and is still only counted as one shareholder, it has hitherto been possible and common for a company had actually thousands of shareholders, but was still not committed its securities with the U.S. Securities and Exchange Commission to register.
  • Provide for certain types of smaller offerings of securities, a new exemption from the obligation to register public offerings of securities with the U.S. Securities and Exchange Commission. This exception allows the use of approved by the U.S. Securities and Exchange Commission Internet portals, their use was extremely limited for private placements by existing law. An investor may invest under this exception has a total annual amount, which depends on the net assets and the annual income of the investor in certain small missions. The total amount is for investors with a net worth or annual income of up to $ 40,000 of 2 % of net assets or annual income up to a maximum of $ 10,000 for investors with a net worth or annual income from $ 100,000. This exception is to allow crowdfunding. Although so far have been numerous exceptions, most were types of offers of securities, particularly those on the Internet, because of the legal provisions for the private placement of securities previously Large investors ( accredited investors ) and a restrictive number of retail investors (non- accredited investors ) limited.
  • Exempt certain, as "emerging growth companies" designated airline of certain information in the prospectus and in the ongoing coverage during a maximum of five years after the first drawdown of the U.S. public capital market. This includes an exemption from the obligation of the effectiveness of internal control over financial reporting by an auditor in accordance with Section 404 of the Sarbanes -Oxley Act to obtain review of a. Until now, enterprises were exempt after the first drawdown of the U.S. public capital market for up to two years from said obligation. In addition, companies had already been freed with a free float with a market capitalization of under $ 75 million (smaller public companies ) of these regulations.
  • Lift the ban on general solicitation process and public advertising of certain types of private placements.
  • Increase the maximum amount of offers of securities under the exemption under Rule 505 of Regulation D of 5 million to $ 50 million.
  • Increase the number of shareholders at which a local savings bank has to register their securities with the U.S. Securities and Exchange Commission, from 500 to 2000.

Opinions about the law

The JOBS Act was supported in Congress by both the Republican Party and the Democratic Party. The law was supported by many people in the technology and startup area, such as Google, Steve Case ( founder of AOL), Mitch Kapor ( founder of Lotus ) Jim Newton ( founder of TechShop ) and many other investors and entrepreneurs. The National Venture Capital Association supported the bill and argued that this almost 100 year old rules modernized with the use of online services for small business investment companies is possible. The provisions on " crowdfunding ", the companies allow their securities through open platforms for sale, were often compared to the Kickstarter online model to fund artists and designers.

Some securities regulators and consumer and investor representatives, such as the AARP, the Consumer Federation of America, the Council of Institutional Investors and others opposed the bill. Among other things, it was feared that the easing of investor protection small investors and inexperienced investors exposed to the risk of investment fraud. The Consumer Federation of America referred to an earlier version of the law as " a dangerous and disreputable idea that the weakening of protective provisions in the way of job creation ." Even union federations, such as the AFL -CIO, the AFSCME, and the National Education Association opposed the bill.

Sources

  • Law ( United States)
  • Crowdfunding
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