Jumpstart Our Business Startups Act

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

History of origin

The President of the United States of America, Barack Obama , presented his Startup America initiative on January 31, 2011 . As part of this initiative, various reforms were proposed during the year to improve the access of smaller companies to new capital. The resulting bill was passed by the US House of Representatives on March 8, 2012 . The US Senate began working on the bill on March 20, 2012 and passed an amended version on March 22, 2012, which then went back to the US House of Representatives for a second vote . The US Senate changed the rules on crowdfunding so that the financial intermediaries (securities brokers or portal operators) involved in the offer of securities through crowdfunding must have approval from the US Securities and Exchange Commission.

Legal provisions

The Jumpstart Our Business Startups Act extends, among other things, the transition period for companies that are new to the US public capital market to comply with certain legal requirements.

The most important legal provisions:

  • increase the number of shareholders a company can have before it must register its securities with the US Securities and Exchange Commission and then become subject to their reporting requirements. Previously, these obligations existed from total assets of $ 10 million and from 500 shareholders of record. The law raised the threshold for the number of shareholders entered in the share register to 500 small investors as shareholders (ie no accredited investors) or 2,000 shareholders (accredited or unaccredited). According to the current regulations, a broker in whose name shares are entered in the share register (held in "street name") is only counted as one shareholder. Since a stockbroker holds these stocks for many of his customers and is still only counted as one shareholder, it was previously possible and common for a company to actually have thousands of shareholders but still not be required to sell its securities on the US Securities and Exchange Commission to register.
  • create a new exemption from the requirement to register public offerings of securities with the US Securities and Exchange Commission for certain types of minor offers of securities. This exception permits the use of Internet portals approved by the US Securities and Exchange Commission, the use of which for private placements was extremely restricted by the previous law. Within the scope of this exception, an investor can invest a total annual amount, which depends on the investor's net assets and annual income, in certain small issues. The total amount goes to 2% of net assets or annual income up to a maximum of $ 10,000 for investors with net assets or annual income of $ 100,000 or more for investors with net worth or annual income of up to $ 40,000. This exception is intended to enable crowd funding. Although there have been numerous exemptions, most types of securities offerings, particularly those on the Internet, have so far been aimed at accredited investors and a limited number of non-accredited investors because of the legal requirements for the private placement of securities. limited.
  • exempt certain companies designated as "emerging growth companies" from certain information in the securities prospectus and in current reporting for a maximum of five years after the first use of the public capital market in the USA. This includes an exemption from the obligation to have the effectiveness of the internal control system for financial reporting audited by an audit company in accordance with Section 404 of the Sarbanes-Oxley Act. So far, companies have been exempt from this obligation for a maximum of two years after they first used the US public capital market. In addition, companies with a free float with a market capitalization of less than $ 75 million (smaller public companies) have already been exempt from these provisions.
  • remove the prohibition on soliciting bids and public advertising in certain types of private placements.
  • increase the maximum amount of offers of securities under Rule 505 of Regulation D from $ 5 million to $ 50 million.
  • increase the number of shareholders a local savings bank must register its securities with with the US Securities and Exchange Commission from 500 to 2000.

Opinions about the law

The JOBS Act was supported in the US Congress by both the Republican Party and the Democratic Party. The law has been endorsed by many people in the tech and startup sectors 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 also supported the bill, believing that it will modernize nearly 100-year-old regulations by enabling the use of online services for small business investments. The "crowdfunding" rules that allow companies to sell their securities through open platforms have often been compared to the Kickstarter online model of funding 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 relaxation of investor protection regulations would expose small and inexperienced investors to the risk of investment fraud. The Consumer Federation of America described an earlier version of the law as "a dangerous and disreputable notion that compromising safeguards is the way to create jobs". Trade union organizations such as the AFL-CIO , AFSCME, and the National Education Association were also against the bill.

It has been criticized that the US House of Representatives version "would dismantle investor protection provisions," legalize questionable sales methods, "and" companies seeking access to the US public capital market of some of the key auditing requirements that the US Liberating Congress after the Enron debacle "would be a terrible package of bills that would undo essential investor protections, reduce market transparency and distort the efficient allocation of capital."

Individual evidence

  1. ^ Startup America . Archived from the original on March 31, 2012. Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved April 5, 2012. @1@ 2Template: Webachiv / IABot / www.whitehouse.gov
  2. ^ On One-Year Anniversary of Startup America Initiative President Obama Sends Startup America Legislative Agenda to Congress . Retrieved April 5, 2012.
  3. ^ US House Journal, 112th Cong, 2nd sess, Mar. 8, 2012 .
  4. ^ Congressional Record, Senate proceedings, 112th congress, 2nd session, Mar. 20, 2012 2012, pp. S1817 et seq.
  5. ^ Lisa Mascaro: JOBS Act clears Senate, back to House for final passage , Miami Herald. March 22, 2012. Archived from the original on March 25, 2012 Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. . @1@ 2Template: Webachiv / IABot / www.miamiherald.com 
  6. ^ Congressional Record, 112th Cong., 2d session, Mar. 19, 2012 . GPO, p. S1806.
  7. ^ A b David Feldman: Summary of JOBS Bill and Update . Archived from the original on March 24, 2012. Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved March 19, 2012. @1@ 2Template: Webachiv / IABot / www.reversemergerblog.com
  8. ↑ HR 3606, 112th Cong., Ti. 1 (PDF; 167 kB) Accessed March 19, 2012.
  9. ↑ Section 12 (g) of the Securities Exchange Act of 1934 (PDF; 871 kB) Retrieved May 23, 2012.
  10. ↑ SEC Rule 12g-1, 17 CFR 240.12g-1 . Archived from the original on March 5, 2012. Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved May 23, 2012. @1@ 2Template: Webachiv / IABot / ecfr.gpoaccess.gov
  11. ↑ HR 3606, 112th Cong., Sec. 501 (PDF; 167 kB) Retrieved on March 19, 2012.
  12. ↑ Jim Hamilton: House Panel Advances Bills Raising 500-Shareholder Threshold for Public Companies and Community Banks (Oct. 11, 2011) . Retrieved March 23, 2012.
  13. ↑ a b c d e David Grant: What does the JOBS Act actually do? , Christian Science Monitor. Retrieved May 23, 2012. 
  14. ↑ Small Biz Jobs Act Is a Bipartisan Bridge Too Far . In: Bloomberg , March 18, 2012. Retrieved May 23, 2012. 
  15. ↑ Jennifer Liberto: House to pass bipartisan bill aimed at start-ups , CNN. March 8, 2012. Retrieved May 23, 2012. 
  16. ^ Bipartisanship, new businesses and new jobs, with a little help from your friends Thursday, March 15, 2012
  17. ↑ Chloe Albanesius: Obama Signs JOBS Act to Boost Startups , PC Magazine. April 5, 2012. Retrieved May 23, 2012. 
  18. ^ JJ Colao: Breaking Down The JOBS Act: Inside The Bill That Would Transform American Business , Forbes. April 5, 2012. Retrieved May 23, 2012. 
  19. ^ A b c "Organizations and Individuals Critical of Anti-investor Provisions in the House JOBS Act and Companion Senate Bills" , Consumer Federation of America.
  20. ^ "Public Interest Groups Oppose Anti-Investor 'Capital Formation' Bills" , Consumer Federation of America open letter to Sen. Johnson and Rep. Shelby.
  21. ↑ William Samuel, American Federation of Labor and Congress of Industrial Organizations, Open letter to Sen. Johnson and Rep. Shelby ( Memento of the original from May 5, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 150 kB), February 29, 2012 @1@ 2Template: Webachiv / IABot / www.aflcio.org
  22. ↑ Kathleen Pender, "Financial regulations gutted in new bill" , San Francisco Chronicle
  23. ^ Statement of Professor John C. Coffee, Jr., Adolf A. Berle Professor of Law, Columbia University Law School, at Hearings Before the Senate Committee on Banking, Housing and Urban Affairs, "Spurring Job Growth Through Capital Formation While Protecting Investors" (December 1, 2011) Washington, DC, p.1
  24. ↑ Gail Collins, "The Senate Overachieves" , The New York Times , March 15, 2012, p. A35
  25. ^ "They Have Very Short Memories" (editorial), The New York Times , March 10, 2012, p. SR10