JOBS Act - Launchopedia

The “Jumpstart Our Business Startups” (“JOBS”) Act, passed by overwhelming bipartisan congressional majorities in both chambers and signed into law by President Obama in April, 2012. The JOBS Act contains seven sections, or “titles” aimed at facilitating different aspects of the development and success of the all-important business startups and growth companies that create the vast majority of new employment in our country. Title III legalizes and regulates securities-based crowdfunding. Actual implementation of the securities-based crowdfunding authorized in the JOBS Act awaits rule-making by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), called for within 270 days of passage of the JOBS Act but realistically hoped for sometime in 2013.¹

Issuer

Kentucky Windag

FundingSage

Definitioner

JOBS

Jumpstart our Business Startups Act

Majority

The percentage defining the level of shareholders that must approve significant company actions such as borrowing money, or acquiring or merging with another business; typically defined to be 50.1% or greater.⁶

SEC

The United States Securities and Exchange Commission charged with regulating all sales of corporate securities.⁷

Securities and Exchange Commission (SEC)

The United States Securities and Exchange Commission charged with regulating all sales of corporate securities.⁷

Securities

Includes all types of equity and debt instruments and rights in and to them.³

Crowdfunding

“Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”), rather than the alternative pattern of larger amounts from a smaller number of supporters. Charities and philanthropies have traditionally employed both fundraising strategies (soliciting both the general populace, or crowd, as well as fewer wealthier donors), while businesses have usually taken the route involving fewer and larger supporters. Today’s internet has vastly increased the ability of fundraisers to communicate information, solicit and receive financial support from anyone on-line. Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing, and have never been illegal in the U.S. In contrast, soliciting funds in return for a ownership interest or expectation of repayment, are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and have been until now governed (and effectively prevented) by federal and state securities law. One of the most significant parts (Title III) of the federal “Jumpstart Our Business Startups”, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding”, subject to a variety of regulations and restrictions.¹

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