Changes in the JOBS Act

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Changes in the JOBS Act

Some businesses in Texas may be concerned about how they may be affected by the Jumpstart Our Business Startups Act. Though the JOBS Act is intended to make capital formation easier for smaller companies, there may be some important implications for larger organizations as well.

The Act will obligate the Securities and Exchange Commission to create a new exemption that will allow a limited number of offerings without the need to register with the SEC. In addition, the SEC will be required to remove prohibitions on solicitation and advertising from accredited investors.

The JOBS Act is also expected to have an effect on crowdfunding regulations. Previously, crowdfunding endeavors did not offer securities, such as an ownership interest, to people who contributed money and were not required to do so. The JOBS Act will limit the amount of money companies are able to have crowdfunded to $1 million in a 12-month period. In addition, the act will limit the amount of money investors are able to contribute based on their income. For example, someone that earns less than $100,000 a year will be limited to contributing either the greater of 5 percent of their net worth or annual income or $2,000.

If someone is concerned about how recent legislation may affect their business with respect to regulation compliance, they may wish to consult their situation with an attorney. An attorney might be able to review the individual circumstances of a given company and look for ways to optimize its operations under the securities law in question. In some cases, it may be possible to reduce the potential for business interruptions as much as possible.

Source: SEC, “What are the new exemptions mandated by the JOBS Act?”, Jan. 19, 2015


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