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JOBS Act - Explained

What is the Jobs Act?

Written by Jason Gordon

Updated at April 13th, 2022

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Table of Contents

What is the Jumpstart Our Business Startups Act (JOBS) Act?What is Included in the JOBS Act?Academic Research on the JOBS Act

What is the Jumpstart Our Business Startups Act (JOBS) Act?

Jumpstart Our Business Startups Act, commonly referred to as the acronym JOBS Act, is an act of the United States Congress that reduced regulatory requirements for small businesses from some provisions of the U.S Securities law. 

The bill allowed startup companies to have a less-strict set of disclosure for an initial public offering (IPO) and legitimized the soliciting of capital through crowdfunding over the internet.

Before the enactment of the JOBS Act, the Securities and Exchange Commission (SEC) had declared crowdfunding illegal. Also, all companies required to have minimum gross revenue of one billion dollars, and further give full disclosure on governance and internal controls before going public.

Back to: Entrepreneurship

What is Included in the JOBS Act?

The 2008 financial crisis was followed by a decrease in small business activity, and consequently, increased levels of U.S unemployment rates. Several congresspersons sponsored different pieces of legislation in an attempt to revitalize the economy and spur growth following the depression.

The bills that were tabled before the house included the following;

  1.  Small Company Capital Formation (H.R. 1070)
  2.  Access to Capital for Job Creators (H.R. 2940)

III. Private Company Flexibility and Growth (H.R. 2167)

  1.  Capital Expansion (H.R. 4088)
  2.  Entrepreneur Access to Capital (H.R. 2930), which inspired two other bills;

VI.CROWDFUND (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure) Act (S.1970) and Democratizing Access to Capital Act (S.1791).

The current Jumpstart Our Business Startups Act (JOBS Act), is a culmination of all the above bills and their revisions combined, and each of these bills has a corresponding title in the final draft of the JOBS Act as follows:

Title I - Reopening American Capital Markets to Emerging Growth Companies

Title II - Access to Capital for Job Creators

Title III Crowdfunding.Title IV - Small Company Capital Formation.

Title V - Private Company Flexibility and Growth.

Title VI - Capital Expansion.And a seventh title was included that mandates the Securities and Exchange Commission (SEC) to conduct studies and provide guidelines on capital formation, core disclosure, and registration requirements for the emerging growth companies;

Title VII - Outreach on Changes to the Law or Commission.The final draft received bipartisan support and passed the Senate on March 22, and later the House on March 27. Consequently, the JOBS Act was signed into law by President Barack Obama on April 5, 2012, at the white house rose garden.


jobs act jumpstart our business startups act

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