Equity Crowdfunding Legal
Today the Jumpstart Our Startups Act (JOBS Act) was signed into law. Within the law are two key provisions allowing small and startup businesses to capitalize by raising funds from investors.
The first provision under Title II of the JOBS Act modifies the prohibition against general solicitation or general advertising in securities offerings. These offerings rely upon Rule 506 to allow for general solicitation and general advertising if certain criteria are met. The SEC has ninety days to implement the changes mandated by Title II of the JOBS Act.
The second provision under Title III of the JOBS Act legalizes equity crowdfunding by amending Section 4(6) of the Securities Act of 1933. The SEC has 270 days to implement the changes mandated by Title II of the JOBS Act.
These changes are designed to create job growth by stimulating new business creation. According to the Bureau of Labor Statistics, the United States has seen a 23% drop in new business creation since 2007.