On March 22, the JOBS (Jumpstart Our Business Startups) Act passed the U.S. Senate in a 73 to 26 vote. Since the Senate amended the version that passed the House, the bill now has to go back to the House of Representatives for another vote. President Obama has already indicated that he would sign this Act into law.
Among other things, the JOBS Act aims to facilitate investment by non-accredited individuals into startups. However, the last minute amendments to the crowdfunding provisions of the JOBS Act placed restrictions on the ability to raise capital by startups. One of such changes is the introduction of investment caps. According to the version of the bill passed by the Senate last week, individuals making less than $40,000 per year can only invest 2% of their annual income in startups, whereas those earning over $100,000 can only invest 10%.
These changes to the bill show that there is a tension between the growing need of startups for capital and the necessity to regulate crowdfunding to prevent fraud. It is unclear whether the House of Representatives will approve the current version of the Act.
Let’s wait and see what happens next.
The text of the Act and the amendments are available here: http://thomas.loc.gov/cgi-bin/bdquery/D?d112:3:./temp/~bssUuSy::
Read a good summary and discussion of the Act and the latest amendments here: http://www.avc.com/a_vc/2012/03/the-jobs-bill.html
This article is not a legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga. Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.