The JOBS Act or the Jumpstart Our Business Startups Act has been on the books since April 5th, 2012. This law directed the SEC (Securities and Exchange Commission) to write specific rules on capital formation, registration and disclosure to further protect investors.
Not all parts of the JOBS Act immediately came into effect. In fact, Title lll of the Act, also known as Reg CF just came into effect on May 16th, 2016. Title III will allow companies to raise up to a million dollars within a year. However, there are strict stipulations and obligations that the business has to be very careful to follow.
The Scope
There are different components of the Act ranging from emerging growth companies to crowdfunding and access to capital for job creators. There are also sections that outline a small entity compliance guide as well as both registration and deregulation.
The Results
Most investors and private companies have mixed reviews about the impact of the JOBS Act. There is a general agreement that there is more communication between businesses and investors and that some of the barriers to small business going public have been removed.
Specifically, issues such as the confidentiality filing of Title IV Reg A+ are seen as highly beneficial to small businesses. This allows the company to test the waters without risking information and data about the company becoming public and possibility with the risk of damage to the reputation of the business.
Crowdfunding has also become increasingly popular, particularly with entrepreneurs. This also provides investors with the opportunity to become involved early in a business. It can be used to generate interest in the venture capital sector that was not possible prior to the Act being put in place.
