Jobs Act of 2012

Jumpstart Our Business Startups Act of 2012

The Jumpstart Our Business Startups Act of 2012 (JOBS) was created to spur small business growth by relaxing federal securities regulations to make it easier for companies to raise capital and eventually go public (Lynch, 2013). The act also includes provisions for startups to raise funds through online crowdfunding. Crowdfunding is the practice of funding a project or venture by raising any small amounts of money from a large number of epeople, typically via the Internet (Prive, 2012). The Act was passed with bipartisan support and signed into law by President Barack Obama on April 5, 2012. As a result of the JOBS Act, IPO’s of companies with less than $1 in gross revenues are subject to greatly reduced disclosure and “gun jumping” requirements (Venulex Legal Summaries). Furthermore, the cost that would typically be assessed for a small business to comply with SEC compliance as part of the Sarbanes-Oxley Act has been eliminated,

JOBS Act Highlights

* Public Solicitation are allowed in connection with private offerings under Rule 506 if Regulation D under the Securities Act of 1933.

* The threshold of 500 record equity holders for registration in increased to 2,000 record holders in order to promote the ability of highly successful private companies to avoid public company regulation.

* Scaled financial disclosure requires 2 years of audited financial statements instead of 3 years.

* Confidential file draft resignation statements with the SEC comment process outside of public eye.

* Investor and analyst communication measures relax rules regarding who may arrange for communication between analysts and potential IPO investors.

* Dodd-Frank Act compliance exemptions for say-on-pay, say-on-frequency, golden parachute, pay ratio and pay versus performance.

* The Sarbanes-Oxley requirement that an independent registered public accounting firm attest to an issuer’s internal control over...