Thanks to regulatory changes enacted by the JOBS Act, startups, beginning this Monday, September 23, startups may disclose their fundraising information to the public, rather than to accredited investors alone.
The changes were outlined in an email blast recently sent out to founders on AngelList, with the news freshly arriving in people’s inboxes.
President Obama signed the JOBS Act into law on April 5, 2012, after passing Congress with rare bipartisan support. Backed overwhelmingly by Silicon Valley, and supported by entrepreneurs across the country, the law rewrites and eases a number of regulatory requirements that currently burden emerging companies.
In addition to allowing startups to disclose their fundraising information (and ambitions) to the general public, the JOBS Act facilitates a number of changes that will likely prove a boon to a stagnant economy, including:
- Increasing from 500 to 2,000 the number of shareholders a company may have before disclosing its common stock to the SEC.
- Extend from two years to five years the period of exemption allowed for publicly traded startups to comply with the perfectly titled Section 404 of the Sarbanes-Oxley Act, the costliest and most controversial measure of the regulatory act.
- Provide simplified regulatory requirements for fundraising rounds up to $50 million, from a previous limit of $5 million.
Many of these changes have gone into effect already, or, like the public fundraising provision, will take effect soon. Also stipulated in the act is a much-touted measure allowing non-accredited investors to crowdfund companies; however, specific regulations governing this change have repeatedly faced delays.