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Jobs Act

March 21, 2019

The JOBS Act (short for Jumpstart Our Business Startups) was signed into law by President Barack Obama on April 5, 2012. The Act requires the SEC to write rules and issue studies on capital formation, disclosure, and registration requirements. The JOBS Act (often called the Crowdfund Act) caps fundraising efforts at $1 million and requires that startups maintain records and provide certain disclosures to would-be backers. The bill passed with bipartisan support.

The goal of the act was to make it easier for startups and small businesses to register with the SEC and issue securities. The biggest change brought about by the JOBS act was requiring the SEC to create and implement new laws allowing small businesses to get capital funding from individuals without an IPO.

Under the Act, companies seeking crowdfunding are called Emerging Growth Companies (EGC). To qualify as an EGC, the company must have total gross revenues of less than $1 billion during its most recently completed fiscal year. A company cannot qualify as an EGC if they sold common stock before December 8, 2011.

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