Browse Definitions :
Definition

JOBS Act (Jumpstart Our Business Startups Act)

Contributor(s): Ivy Wigmore

The JOBS Act (Jumpstart Our Business Startups Act) is legislation that eases regulatory restrictions for new businesses to make it easier for startups to get established. 

The intention of the Act is to encourage more business startups, foster their success, and as a result, create more jobs and stimulate the economy. As stated in the bill, which passed as H.R. 3606, the purpose is “to increase American job creation and economic growth by improving access to the public capital markets for emerging growth companies.”

The main provisions of the JOBS Act:

  • Businesses are not required to register their common stock with the SEC (Securities Exchange Commission) until they have 500 unaccredited shareholders or a total of 2,000 accredited and unaccredited shareholders. Previously, that requirement went into effect when a business had a total of 500 shareholders of record. A non-accredited investor is one that does not meet the SEC’s standard for accreditation: A net worth of $1 million and an annual income of $200,000, or $300,000 in combination with a spouse’s income. This provision allows a startup to collect smaller sums of money from a larger pool of investors.
  • Certain types of small initial public offerings (IPO) are no longer required to register with the SEC. Restrictions are loosened on government-registered Internet-based “funding portals.” This provision was created to enable crowdfunding. Conditions include a limit on the amount an investor can contribute, up to the lesser of either 10 percent of income or $10,000.
  • Emerging growth companies are not bound by some regulatory and disclosure requirements – in particular, some stipulations of Section 404 of the Sarbanes-Oxley Act -- in their initial public filing and for a period of five years after that, up from two. SOX Section 404 mandates that all publicly-traded companies must establish internal controls and procedures for financial reporting and must document, test and maintain those controls and procedures to ensure their effectiveness.
  • Small businesses are now allowed to advertise seeking investors.
  • Companies can raise $50 million in share sales, up from a $5 million limit, before being required to register with the SEC, to enable more fundraising under less complex regulation.
  • Community banks are permitted to have 2,000 shareholders, up from 500.

 

The JOBS Act was signed into effect by President Barack Obama on April 5, 2012.

This was last updated in June 2012

Continue Reading About JOBS Act (Jumpstart Our Business Startups Act)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • payload (computing)

    In computing, a payload is the carrying capacity of a packet or other transmission data unit. The term has its roots in the ...

  • passphrase

    A passphrase is a string of characters longer than the usual password (which is typically from four to 16 characters long) that ...

  • Web application firewall (WAF)

    A Web application firewall (WAF) is a firewall that monitors, filters or blocks traffic to and from a Web application. WAFs are ...

SearchHealthIT

SearchDisasterRecovery

SearchStorage

  • computational storage

    Computational storage is defined as an architecture that couples compute with storage in order to reduce data movement. In doing ...

  • data deduplication

    Data deduplication -- often called intelligent compression or single-instance storage -- is a process that eliminates redundant ...

  • public cloud storage

    Public cloud storage, also called storage-as-a-service or online storage is a service model that provides data storage on a ...

Close