The JOBS Act has made funding small businesses easier and has opened up the world of investing to more people. Whether you are a small business owner, a first-time investor, or an experienced investor, the JOBS Act may create new opportunities for you.
Contact BMI Capital today to get started in investing, to find funding for your startup, or to raise capital to grow your business. We have 30 years of combined experience in helping investors and businesses. Contact us today.
What Is the JOBS Act?
The Jumpstart Our Business Startups (JOBS) Act is a law that encourages the funding of small businesses by lifting some securities regulations. The act makes it legal for small businesses to use crowdfunding to raise capital, lowers reporting and disclosure requirements, and allows more companies to offer stock without going through SEC registration. It was intended to make it easier for small companies to raise capital and grow their businesses.
The Sarbanes-Oxley Act was passed in 2002 after the failure of Enron and the devastating fallout created because of it. This act is meant to protect investors by holding the board of directors accountable for the accounting and financial records of the company. The JOBS Act allows smaller businesses to forgo some of these restrictions set in Sarbanes Oxley.
What Exactly Did the JOBS Act Change?
The JOBS Act is designed to make it easier for smaller businesses to raise capital without being bound by some of the laws that are required by large businesses. This is a list of some of the biggest changes that were made with the passing of the JOBS Act.
- The JOBS Act only applies to privately held companies that have less than $1 billion in revenue. These companies are being called an “Emerging Growth Company.”
- These emerging growth companies do not have to give shareholders the right to vote on executive orders.
- They are required to only provide two years of audited financial statements for initial public offering.
- They are not required to hire an independent auditing firm to provide an opinion on financial controls.
- They are allowed to provide analysts’ research to prospective investors and the public before and after the public offering.
- Emerging growth companies may advertise and solicit potential investors.
- The companies are allowed to use crowdfunding to raise capital.
- The company may now have up to 2,000 shareholders before they are required to register with the SEC. This number was previously 500.
Why Did the Government Pass the JOBS Act?
President Obama passed the JOBS Act in 2012. After the financial crisis in 2008, the government found it necessary to make changes to help encourage economic growth throughout the country. The JOBS Act was one of the laws passed during this time.
Contact BMI Capital
If you are interested in growing your business or are just starting one, BMI Capital can help you find investors and raise capital. With the passing of the JOBS Act, we now have more options. Contact us today for assistance, we can help you better understand how the JOBS Act affects your business and how we can help you grow.