On April 5, 2012, President Obama signed into law the Jumpstart
Our Business Startups Act, better known as the JOBS Act. The JOBS
Act is intended to help smaller and new companies raise capital,
and, to accomplish this goal, institutes fundamental changes to
existing securities laws in the areas of fundraising and emerging
growth companies (EGCs).
Changes to Laws Governing Fundraising
The JOBS Act relaxes or entirely removes restrictions on private
fundraising, including limitations concerning how and to whom
private companies may market their Rule 144A securities offerings.
It also raises the limit for securities offerings exempted under
Rule 505 of Regulation D from $5 million to $50 million, thereby
allowing for larger fundraising efforts. The JOBS Act broadly
permits the previously limited allowance for "crowd
funding," that is, the use of online platforms to raise up to
$1 million in capital from numerous small investors over a 12-month
period.
