Congress Passes NSBA-Supported JOBS Act

March 28, 2012

On Tuesday, the U.S. House of Representatives approved the Senate-amended version of Jump-Start Our Business Start-ups Act (H.R. 3606 or “JOBS” Act) by a margin of 380-41, addressing one of NSBA’s top priority issues. The bill, which will ease securities regulations on small businesses making it much easier for them to raise capital through public capital markets, will now head to the President’s desk to be signed into law.

The bill originally passed the House along a wide bipartisan basis (390-23) and was then approved with amendments by the Senate last week, also on a bipartisan basis (73-26.) Prior to passage in the Senate, however, an amendment offered by Sen. Jeff Merkley (D-Ore.) and supported by Sens. Michael Bennet (D-Colo.), Mary Landrieu (D-La.) and Scott Brown (R-Mass.), among others, was adopted 64-35, . This so-called “crowdfunding” amendment (S.Amdt. 1884), will insert the Senate’s version of crowdfunding legislation into the bill, and among other things, require crowdfunding intermediaries to register with the Securities and Exchange Commission (SEC). The original House-passed version of H.R. 3606 did not contain such language.

The final bill includes the following provisions:

  • A provision that would, among other things, effectively amend Regulation A by increasing the aggregate offering amount of all securities sold within the prior 12-month period from $5 million to $50 million;
  • A provision (as inserted by the Senate) that would create a crowdfunding exemption;
  • A provision that would allow for general solicitation or general advertising to find investors, provided that all purchasers of the securities are accredited investors;
  • A provision that would raise the shareholder threshold for mandatory registration under the Securities Exchange Act of 1934 from 500 to 1000 shareholders;
  • A provision that would create an “IPO Onramp” making it easier for small- and medium-sized companies to raise money through capital markets by reducing costs associated with going public and phasing in certain regulatory obligations over time; and
  • A provision that would: (1) amend the securities laws and raise the threshold for mandatory shareholder registration from 500 to 2,000 shareholders for all banks and bank holding companies, and (2) amend U.S. securities laws to raise the deregistration threshold from 300 to 1,200 shareholders.

This bill was also supported by the administration.

This pro-growth, NSBA-supported legislation will positively transform the ability of small businesses to raise capital and help alleviate the disproportionate burden of compliance placed on small firms.

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