JOBS ActLegal Compliance Resource
July 17, 2012 — 1,040 views
The U.S. Jumpstart Our Business Startups Act or JOBS Act succeeded in dramatically reshaping a number of financing laws and guidelines in the hopes of stimulating the nation's economy and promoting small business growth.
The bill legalized crowdfunding, or crowd financing, as it is often referred to as. The term describes the action of asking a group of people to help collectively fund a project. The most often used example would be Kickstarter, a company designed to support artists and startup operations. Essentially, the new ruling allowed for greater funding accessibility for emerging growth companies.
The new act offered limited accreditation to an investor and removed general solicitation and advertising prohibitions that were conducted under Rule 506 in the Securities Act of 1933, according to Foley & Lardner LLP. Rule 144A substantially increased the liquidity of securities and sidestepped many of the issues previously impacting the Securities Act of 1933. Restricted securities or hold control securities are required to have approval from the U.S. Securities and Exchange Commission under Rule 144.
The complicated issues of the JOBS Act require careful understanding of legal precedence and finance law.