The JOBS Act of 2012
Section I. History
The JOBS Act of 2012, formally the Jumpstart Our Business Startups Act, is a law intended, among other objectives, to encourage funding of United States small businesses by easing various securities regulations. It was enacted with bipartisan support from Congress, and was signed into law by President Barack Obama on April 5, 2012. Titles II, III, and IV of the JOBS Act provide specific exemptions from federal registration under the Securities Act of 1933.
Title III of the JOBS Act
On May 16, 2016, Title III regulations became effective and allow small businesses and private startups to raise capital through designated internet Crowdfunding Portals for up to a maximum of $1,000,000 (currently $1,070,000) in a 12-month period.
NOTE: Our portal provides only Title III offerings.
Section II. Title III of the JOBS Act (Regulation Crowdfunding)
Title III, referred to as “Regulation Crowdfunding” (17 CFR 227.100-503), effective May 16, 2016, is the latest exemption from the federal securities registration process. Regulation Crowdfunding allows an issuing company to offer and sell securities through a registered Intermediary/Crowdfunding Portal in compliance with the following Rules, Regulations, and provisions:
- The total amount of securities sold to all Investors by the Issuer in reliance on the Regulation Crowdfunding exemption shall not exceed $1,070,000 in a 12-month period;
- The total amount of securities sold to any Investor by all Issuers in reliance on the Regulation Crowdfunding exemption during a 12-month period shall not exceed:
- The greater of $2,200 or 5 percent of the lesser of the investor’s annual income or net worth if either the investor’s annual income or net worth is less than $107,000; or
- Ten (10) percent or the lesser of the investor’s annual income or net worth, not to exceed an amount sold of $107,000, if both the investor’s annual income and net worth are equal to or more than $107,000.
- A person’s annual income and net worth may be calculated jointly with that person’s spouse; however, when such a joint calculation is used, the aggregate investment of the investor spouses may not exceed the limit that would apply to an individual investor at that income or net worth level.
- Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth. For purposes of crowdfunding, the value of your primary residence is not included in your net worth calculation. In addition, any mortgage or other loan on your home does not count as a liability up to the fair market value of your home. If the loan is for more than the fair market value of your home (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test.
For examples and further guidelines on Investor Limitations and Calculating net worth, please see Crowdfunding Investor Guidelines located on the Education page of this portal.
- An Issuer offering and selling securities in reliance on the Title III Regulation Crowdfunding exemption may rely on the efforts of a registered Crowdfunding Portal to ensure that the aggregate amount of securities purchased by an Investor in offerings pursuant to the Regulation Crowdfunding exemption will not cause the Investor to exceed the designated limit, provided that the Issuer does not know that the Investor has exceeded the Investor limits or would exceed the Investor limits as a result of purchasing securities in the Issuer’s offering.
- The transaction is conducted through a Crowdfunding Portal that complies with the requirements in the Title III Regulation Crowdfunding exemption and the transaction is conducted exclusively through that same Crowdfunding Portal.
- An Issuer shall not conduct an Offering or concurrent offerings in reliance on the Regulation Crowdfunding exemption using more than one portal.
- The Issuer complies with the Issuer requirements in the Regulation Crowdfunding exemption.
- The Regulation Crowdfunding exemption shall not apply to transactions involving the offer or sale of securities by any Issuer that:
- Is not organized under, and subject to, the laws of a State or territory of the United States or the District of Columbia;
- Is subject to the requirement to file reports pursuant to the Securities Exchange Act of 1934;
- Is an investment company, as defined in the Investment Company Act of 1940 (15 United States Code 80a-3), or is excluded from the definition of investment company by section 3(b) or section 3(c) of that Act.
- Is not eligible to offer or sell securities because of a disqualification as specified in SEC regulations; (17 CFR 227.503(a));
- Has sold securities in reliance on the Regulation Crowdfunding exemption and has not filed with the SEC and provided to investors, certain required reports during the immediately preceding two years; or
- Has no specific business plan or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies.
- For calculating aggregate amounts offered and sold under the Regulation Crowdfunding exemption and determining whether an Issuer has previously sold securities under Title 17 CFR 227.201(t)(3), the term “issuer” includes all entities controlled by or under common control with the issuer and any predecessors of the issuer.
- The term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the entity, whether through the ownership of voting securities, by contract or otherwise.
For further information on investing or making an offering under Title III on our crowdfunding platform, please see our Crowdfunding Investor Guidelines, Issuer Disclosure Requirements, and the SEC website investor.gov.