What Do the JOBS Act, Reg D Change, and Crowdfunding Bills Actually Say? Which bill is right? Read H.R. 3606

I have noticed quite a bit of confusion in blogs when discussing crowdfunding, the JOBS Act, and other recent legislation regarding small business, startups, and emerging growth companies.  Even respected news organizations don’t get the specifics exactly right about what this legislation actually says, so I thought I would set the record straight.

President Obama is set to sign H.R. 3606 this week.  The best way to know exactly what this bill says is to read it, despite the somewhat dense language and references to other parts of U.S. law. Here is a link to the actual PDF format of H.R. 3606This is an easier to read version I put together on my site with hyperlinks to each section.  For an overview and summary of this bill and its history you can read here.  These are links directly to the information provided by Congress.  Some of the confusion has been that the legislative process involves a very confusing system where bills are introduced, amended, and sometimes added to existing bills.  That was the case with the JOBS Act and the crowdfunding provisions.  H.R. 2930 was the original crowdfunding bill that passed the U.S. House and went to the Senate, but did not actually pass the Senate.  After adding and deleting portions from various amended versions similar to H.R. 2930, the crowdfunding and other provisions were all put into one bill called H.R. 3606.  This passed the Senate and then went back to the U.S. House after amendments to be passed.  It has passed and was forwarded to the President for signature on March 27, 2012.  He is expected to sign it this week.

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“Emerging Growth Companies”- JOBS Act May Provide Eased Regulations

With H.R. 3606, or most commonly referred to as the “JOBS” Act (Bill SummaryBill Text PDF), likely to be signed into law this week by President Obama, there are some new changes that may be of help to startup and small companies.  In addition to the so-called crowdfunding exemption from securities registration which allows pooling of small amounts from investors to fund a company, the JOBS Act puts in place regulations that carve out a category called “emerging growth companies” which have an intermediate level of reporting obligations with the SEC.  It is between the level of disclosures required for a fully reporting large company and a private, non-reporting company.  This could be a very good help for these small to middle market companies to ease the burden of time and expense in being a fully reporting company.

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