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PUBLIC LAW 112–106—APR. 5, 2012

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JUMPSTART OUR BUSINESS STARTUPS ACT

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126 STAT. 306

PUBLIC LAW 112–106—APR. 5, 2012

Public Law 112–106
112th Congress
An Act
Apr. 5, 2012
[H.R. 3606]
Jumpstart Our
Business
Startups Act.
15 USC 78a note.

To increase American job creation and economic growth by improving access to
the public capital markets for emerging growth companies.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Jumpstart Our Business Startups
Act’’.
SEC. 2. TABLE OF CONTENTS.

The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I—REOPENING AMERICAN CAPITAL MARKETS TO EMERGING
GROWTH COMPANIES
Sec. 101. Definitions.
Sec. 102. Disclosure obligations.
Sec. 103. Internal controls audit.
Sec. 104. Auditing standards.
Sec. 105. Availability of information about emerging growth companies.
Sec. 106. Other matters.
Sec. 107. Opt-in right for emerging growth companies.
Sec. 108. Review of Regulation S-K.
TITLE II—ACCESS TO CAPITAL FOR JOB CREATORS
Sec. 201. Modification of exemption.
Sec.
Sec.
Sec.
Sec.
Sec.

301.
302.
303.
304.
305.

TITLE III—CROWDFUNDING
Short title.
Crowdfunding exemption.
Exclusion of crowdfunding investors from shareholder cap.
Funding portal regulation.
Relationship with State law.

TITLE IV—SMALL COMPANY CAPITAL FORMATION
Sec. 401. Authority to exempt certain securities.
Sec. 402. Study on the impact of State Blue Sky laws on Regulation A offerings.

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Sec.
Sec.
Sec.
Sec.

501.
502.
503.
504.

TITLE V—PRIVATE COMPANY FLEXIBILITY AND GROWTH
Threshold for registration.
Employees.
Commission rulemaking.
Commission study of enforcement authority under Rule 12g5–1.

TITLE VI—CAPITAL EXPANSION
Sec. 601. Shareholder threshold for registration.
Sec. 602. Rulemaking.
TITLE VII—OUTREACH ON CHANGES TO THE LAW
Sec. 701. Outreach by the Commission.

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PUBLIC LAW 112–106—APR. 5, 2012

126 STAT. 307

TITLE I—REOPENING AMERICAN CAPITAL
MARKETS
TO
EMERGING
GROWTH COMPANIES

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SEC. 101. DEFINITIONS.

(a) SECURITIES ACT OF 1933.—Section 2(a) of the Securities
Act of 1933 (15 U.S.C. 77b(a)) is amended by adding at the end
the following:
‘‘(19) The term ‘emerging growth company’ means an issuer
that had total annual gross revenues of less than
$1,000,000,000 (as such amount is indexed for inflation every
5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics, setting the threshold to the nearest
1,000,000) during its most recently completed fiscal year. An
issuer that is an emerging growth company as of the first
day of that fiscal year shall continue to be deemed an emerging
growth company until the earliest of—
‘‘(A) the last day of the fiscal year of the issuer during
which it had total annual gross revenues of $1,000,000,000
(as such amount is indexed for inflation every 5 years
by the Commission to reflect the change in the Consumer
Price Index for All Urban Consumers published by the
Bureau of Labor Statistics, setting the threshold to the
nearest 1,000,000) or more;
‘‘(B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale
of common equity securities of the issuer pursuant to an
effective registration statement under this title;
‘‘(C) the date on which such issuer has, during the
previous 3-year period, issued more than $1,000,000,000
in non-convertible debt; or
‘‘(D) the date on which such issuer is deemed to be
a ‘large accelerated filer’, as defined in section 240.12b–
2 of title 17, Code of Federal Regulations, or any successor
thereto.’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended—
(1) by redesignating paragraph (77), as added by section
941(a) of the Investor Protection and Securities Reform Act
of 2010 (Public Law 111–203, 124 Stat. 1890), as paragraph
(79); and
(2) by adding at the end the following:
‘‘(80) EMERGING GROWTH COMPANY.—The term ‘emerging
growth company’ means an issuer that had total annual gross
revenues of less than $1,000,000,000 (as such amount is indexed
for inflation every 5 years by the Commission to reflect the
change in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics, setting the
threshold to the nearest 1,000,000) during its most recently
completed fiscal year. An issuer that is an emerging growth
company as of the first day of that fiscal year shall continue
to be deemed an emerging growth company until the earliest
of—

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Applicability.
15 USC 78c note.

15 USC 77b note.

PUBLIC LAW 112–106—APR. 5, 2012

‘‘(A) the last day of the fiscal year of the issuer during
which it had total annual gross revenues of $1,000,000,000
(as such amount is indexed for inflation every 5 years
by the Commission to reflect the change in the Consumer
Price Index for All Urban Consumers published by the
Bureau of Labor Statistics, setting the threshold to the
nearest 1,000,000) or more;
‘‘(B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale
of common equity securities of the issuer pursuant to an
effective registration statement under the Securities Act
of 1933;
‘‘(C) the date on which such issuer has, during the
previous 3-year period, issued more than $1,000,000,000
in non-convertible debt; or
‘‘(D) the date on which such issuer is deemed to be
a ‘large accelerated filer’, as defined in section 240.12b–
2 of title 17, Code of Federal Regulations, or any successor
thereto.’’.
(c) OTHER DEFINITIONS.—As used in this title, the following
definitions shall apply:
(1) COMMISSION.—The term ‘‘Commission’’ means the Securities and Exchange Commission.
(2) INITIAL PUBLIC OFFERING DATE.—The term ‘‘initial public
offering date’’ means the date of the first sale of common
equity securities of an issuer pursuant to an effective registration statement under the Securities Act of 1933.
(d) EFFECTIVE DATE.—Notwithstanding section 2(a)(19) of the
Securities Act of 1933 and section 3(a)(80) of the Securities
Exchange Act of 1934, an issuer shall not be an emerging growth
company for purposes of such Acts if the first sale of common
equity securities of such issuer pursuant to an effective registration
statement under the Securities Act of 1933 occurred on or before
December 8, 2011.
SEC. 102. DISCLOSURE OBLIGATIONS.

(a) EXECUTIVE COMPENSATION.—
(1) EXEMPTION.—Section 14A(e) of the Securities Exchange
Act of 1934 (15 U.S.C. 78n–1(e)) is amended—
(A) by striking ‘‘The Commission may’’ and inserting
the following:
‘‘(1) IN GENERAL.—The Commission may’’;
(B) by striking ‘‘an issuer’’ and inserting ‘‘any other
issuer’’; and
(C) by adding at the end the following:
‘‘(2) TREATMENT OF EMERGING GROWTH COMPANIES.—
‘‘(A) IN GENERAL.—An emerging growth company shall
be exempt from the requirements of subsections (a) and
(b).
‘‘(B) COMPLIANCE AFTER TERMINATION OF EMERGING
GROWTH COMPANY TREATMENT.—An issuer that was an
emerging growth company but is no longer an emerging
growth company shall include the first separate resolution
described under subsection (a)(1) not later than the end
of—
‘‘(i) in the case of an issuer that was an emerging
growth company for less than 2 years after the date

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Time period.

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PUBLIC LAW 112–106—APR. 5, 2012

126 STAT. 309

of first sale of common equity securities of the issuer
pursuant to an effective registration statement under
the Securities Act of 1933, the 3-year period beginning
on such date; and
‘‘(ii) in the case of any other issuer, the 1-year
period beginning on the date the issuer is no longer
an emerging growth company.’’.
(2) PROXIES.—Section 14(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78n(i)) is amended by inserting ‘‘, for any
issuer other than an emerging growth company,’’ after
‘‘including’’.
(3) COMPENSATION DISCLOSURES.—Section 953(b)(1) of the
Investor Protection and Securities Reform Act of 2010 (Public
Law 111–203; 124 Stat. 1904) is amended by inserting ‘‘, other
than an emerging growth company, as that term is defined
in section 3(a) of the Securities Exchange Act of 1934,’’ after
‘‘require each issuer’’.
(b) FINANCIAL DISCLOSURES AND ACCOUNTING PRONOUNCEMENTS.—
(1) SECURITIES ACT OF 1933.—Section 7(a) of the Securities
Act of 1933 (15 U.S.C. 77g(a)) is amended—
(A) by striking ‘‘(a) The registration’’ and inserting
the following:
‘‘(a) INFORMATION REQUIRED IN REGISTRATION STATEMENT.—
‘‘(1) IN GENERAL.—The registration’’; and
(B) by adding at the end the following:
‘‘(2) TREATMENT OF EMERGING GROWTH COMPANIES.—An
emerging growth company—
‘‘(A) need not present more than 2 years of audited
financial statements in order for the registration statement
of such emerging growth company with respect to an initial
public offering of its common equity securities to be effective, and in any other registration statement to be filed
with the Commission, an emerging growth company need
not present selected financial data in accordance with section 229.301 of title 17, Code of Federal Regulations, for
any period prior to the earliest audited period presented
in connection with its initial public offering; and
‘‘(B) may not be required to comply with any new
or revised financial accounting standard until such date
that a company that is not an issuer (as defined under
section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201(a))) is required to comply with such new or revised
accounting standard, if such standard applies to companies
that are not issuers.’’.
(2) SECURITIES EXCHANGE ACT OF 1934.—Section 13(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) is
amended by adding at the end the following: ‘‘In any registration statement, periodic report, or other reports to be filed
with the Commission, an emerging growth company need not
present selected financial data in accordance with section
229.301 of title 17, Code of Federal Regulations, for any period
prior to the earliest audited period presented in connection
with its first registration statement that became effective under
this Act or the Securities Act of 1933 and, with respect to
any such statement or reports, an emerging growth company
may not be required to comply with any new or revised financial

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15 USC 78l note.

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15 USC 77g note.

PUBLIC LAW 112–106—APR. 5, 2012

accounting standard until such date that a company that is
not an issuer (as defined under section 2(a) of the SarbanesOxley Act of 2002 (15 U.S.C. 7201(a))) is required to comply
with such new or revised accounting standard, if such standard
applies to companies that are not issuers.’’.
(c) OTHER DISCLOSURES.—An emerging growth company may
comply with section 229.303(a) of title 17, Code of Federal Regulations, or any successor thereto, by providing information required
by such section with respect to the financial statements of the
emerging growth company for each period presented pursuant to
section 7(a) of the Securities Act of 1933 (15 U.S.C. 77g(a)). An
emerging growth company may comply with section 229.402 of
title 17, Code of Federal Regulations, or any successor thereto,
by disclosing the same information as any issuer with a market
value of outstanding voting and nonvoting common equity held
by non-affiliates of less than $75,000,000.
SEC. 103. INTERNAL CONTROLS AUDIT.

Section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7262(b)) is amended by inserting ‘‘, other than an issuer that
is an emerging growth company (as defined in section 3 of the
Securities Exchange Act of 1934),’’ before ‘‘shall attest to’’.
SEC. 104. AUDITING STANDARDS.

Determination.

Section 103(a)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7213(a)(3)) is amended by adding at the end the following:
‘‘(C) TRANSITION PERIOD FOR EMERGING GROWTH COMPANIES.—Any rules of the Board requiring mandatory audit
firm rotation or a supplement to the auditor’s report in
which the auditor would be required to provide additional
information about the audit and the financial statements
of the issuer (auditor discussion and analysis) shall not
apply to an audit of an emerging growth company, as
defined in section 3 of the Securities Exchange Act of
1934. Any additional rules adopted by the Board after
the date of enactment of this subparagraph shall not apply
to an audit of any emerging growth company, unless the
Commission determines that the application of such additional requirements is necessary or appropriate in the
public interest, after considering the protection of investors
and whether the action will promote efficiency, competition,
and capital formation.’’.

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SEC. 105. AVAILABILITY OF INFORMATION ABOUT EMERGING GROWTH
COMPANIES.

Definition.

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(a) PROVISION OF RESEARCH.—Section 2(a)(3) of the Securities
Act of 1933 (15 U.S.C. 77b(a)(3)) is amended by adding at the
end the following: ‘‘The publication or distribution by a broker
or dealer of a research report about an emerging growth company
that is the subject of a proposed public offering of the common
equity securities of such emerging growth company pursuant to
a registration statement that the issuer proposes to file, or has
filed, or that is effective shall be deemed for purposes of paragraph
(10) of this subsection and section 5(c) not to constitute an offer
for sale or offer to sell a security, even if the broker or dealer
is participating or will participate in the registered offering of
the securities of the issuer. As used in this paragraph, the term
‘research report’ means a written, electronic, or oral communication

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126 STAT. 311

that includes information, opinions, or recommendations with
respect to securities of an issuer or an analysis of a security or
an issuer, whether or not it provides information reasonably sufficient upon which to base an investment decision.’’.
(b) SECURITIES ANALYST COMMUNICATIONS.—Section 15D of the
Securities Exchange Act of 1934 (15 U.S.C. 78o–6) is amended—
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following:
‘‘(c) LIMITATION.—Notwithstanding subsection (a) or any other
provision of law, neither the Commission nor any national securities
association registered under section 15A may adopt or maintain
any rule or regulation in connection with an initial public offering
of the common equity of an emerging growth company—
‘‘(1) restricting, based on functional role, which associated
persons of a broker, dealer, or member of a national securities
association, may arrange for communications between a securities analyst and a potential investor; or
‘‘(2) restricting a securities analyst from participating in
any communications with the management of an emerging
growth company that is also attended by any other associated
person of a broker, dealer, or member of a national securities
association whose functional role is other than as a securities
analyst.’’.
(c) EXPANDING PERMISSIBLE COMMUNICATIONS.—Section 5 of
the Securities Act of 1933 (15 U.S.C. 77e) is amended—
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following:
‘‘(d) LIMITATION.—Notwithstanding any other provision of this
section, an emerging growth company or any person authorized
to act on behalf of an emerging growth company may engage in
oral or written communications with potential investors that are
qualified institutional buyers or institutions that are accredited
investors, as such terms are respectively defined in section 230.144A
and section 230.501(a) of title 17, Code of Federal Regulations,
or any successor thereto, to determine whether such investors might
have an interest in a contemplated securities offering, either prior
to or following the date of filing of a registration statement with
respect to such securities with the Commission, subject to the
requirement of subsection (b)(2).’’.
(d) POST OFFERING COMMUNICATIONS.—Neither the Commission nor any national securities association registered under section
15A of the Securities Exchange Act of 1934 may adopt or maintain
any rule or regulation prohibiting any broker, dealer, or member
of a national securities association from publishing or distributing
any research report or making a public appearance, with respect
to the securities of an emerging growth company, either—
(1) within any prescribed period of time following the initial
public offering date of the emerging growth company; or
(2) within any prescribed period of time prior to the expiration date of any agreement between the broker, dealer, or
member of a national securities association and the emerging
growth company or its shareholders that restricts or prohibits
the sale of securities held by the emerging growth company
or its shareholders after the initial public offering date.

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15 USC 78o–6
note.

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PUBLIC LAW 112–106—APR. 5, 2012

SEC. 106. OTHER MATTERS.

Public
information.
Deadline.

Determination.
Deadline.

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15 USC 78c note.

(a) DRAFT REGISTRATION STATEMENTS.—Section 6 of the Securities Act of 1933 (15 U.S.C. 77f) is amended by adding at the
end the following:
‘‘(e) EMERGING GROWTH COMPANIES.—
‘‘(1) IN GENERAL.—Any emerging growth company, prior
to its initial public offering date, may confidentially submit
to the Commission a draft registration statement, for confidential nonpublic review by the staff of the Commission prior
to public filing, provided that the initial confidential submission
and all amendments thereto shall be publicly filed with the
Commission not later than 21 days before the date on which
the issuer conducts a road show, as such term is defined in
section 230.433(h)(4) of title 17, Code of Federal Regulations,
or any successor thereto.
‘‘(2) CONFIDENTIALITY.—Notwithstanding any other provision of this title, the Commission shall not be compelled to
disclose any information provided to or obtained by the Commission pursuant to this subsection. For purposes of section 552
of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section
552. Information described in or obtained pursuant to this
subsection shall be deemed to constitute confidential information for purposes of section 24(b)(2) of the Securities Exchange
Act of 1934.’’.
(b) TICK SIZE.—Section 11A(c) of the Securities Exchange Act
of 1934 (15 U.S.C. 78k–1(c)) is amended by adding at the end
the following new paragraph:
‘‘(6) TICK SIZE.—
‘‘(A) STUDY AND REPORT.—The Commission shall conduct a study examining the transition to trading and
quoting securities in one penny increments, also known
as decimalization. The study shall examine the impact
that decimalization has had on the number of initial public
offerings since its implementation relative to the period
before its implementation. The study shall also examine
the impact that this change has had on liquidity for small
and middle capitalization company securities and whether
there is sufficient economic incentive to support trading
operations in these securities in penny increments. Not
later than 90 days after the date of enactment of this
paragraph, the Commission shall submit to Congress a
report on the findings of the study.
‘‘(B) DESIGNATION.—If the Commission determines that
the securities of emerging growth companies should be
quoted and traded using a minimum increment of greater
than $0.01, the Commission may, by rule not later than
180 days after the date of enactment of this paragraph,
designate a minimum increment for the securities of
emerging growth companies that is greater than $0.01
but less than $0.10 for use in all quoting and trading
of securities in any exchange or other execution venue.’’.
SEC. 107. OPT-IN RIGHT FOR EMERGING GROWTH COMPANIES.

(a) IN GENERAL.—With respect to an exemption provided to
emerging growth companies under this title, or an amendment
made by this title, an emerging growth company may choose to

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forgo such exemption and instead comply with the requirements
that apply to an issuer that is not an emerging growth company.
(b) SPECIAL RULE.—Notwithstanding subsection (a), with
respect to the extension of time to comply with new or revised
financial accounting standards provided under section 7(a)(2)(B)
of the Securities Act of 1933 and section 13(a) of the Securities
Exchange Act of 1934, as added by section 102(b), if an emerging
growth company chooses to comply with such standards to the
same extent that a non-emerging growth company is required to
comply with such standards, the emerging growth company—
(1) must make such choice at the time the company is
first required to file a registration statement, periodic report,
or other report with the Commission under section 13 of the
Securities Exchange Act of 1934 and notify the Securities and
Exchange Commission of such choice;
(2) may not select some standards to comply with in such
manner and not others, but must comply with all such standards to the same extent that a non-emerging growth company
is required to comply with such standards; and
(3) must continue to comply with such standards to the
same extent that a non-emerging growth company is required
to comply with such standards for as long as the company
remains an emerging growth company.

Notification.

SEC. 108. REVIEW OF REGULATION S-K.

(a) REVIEW.—The Securities and Exchange Commission shall
conduct a review of its Regulation S-K (17 CFR 229.10 et seq.)
to—
(1) comprehensively analyze the current registration
requirements of such regulation; and
(2) determine how such requirements can be updated to
modernize and simplify the registration process and reduce
the costs and other burdens associated with these requirements
for issuers who are emerging growth companies.
(b) REPORT.—Not later than 180 days after the date of enactment of this title, the Commission shall transmit to Congress a
report of the review conducted under subsection (a). The report
shall include the specific recommendations of the Commission on
how to streamline the registration process in order to make it
more efficient and less burdensome for the Commission and for
prospective issuers who are emerging growth companies.

TITLE II—ACCESS TO CAPITAL FOR JOB
CREATORS

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SEC. 201. MODIFICATION OF EXEMPTION.

(a) MODIFICATION OF RULES.—
(1) Not later than 90 days after the date of the enactment
of this Act, the Securities and Exchange Commission shall
revise its rules issued in section 230.506 of title 17, Code
of Federal Regulations, to provide that the prohibition against
general solicitation or general advertising contained in section
230.502(c) of such title shall not apply to offers and sales
of securities made pursuant to section 230.506, provided that
all purchasers of the securities are accredited investors. Such
rules shall require the issuer to take reasonable steps to verify

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Deadlines.

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Applicability.

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that purchasers of the securities are accredited investors, using
such methods as determined by the Commission. Section
230.506 of title 17, Code of Federal Regulations, as revised
pursuant to this section, shall continue to be treated as a
regulation issued under section 4(2) of the Securities Act of
1933 (15 U.S.C. 77d(2)).
(2) Not later than 90 days after the date of enactment
of this Act, the Securities and Exchange Commission shall
revise subsection (d)(1) of section 230.144A of title 17, Code
of Federal Regulations, to provide that securities sold under
such revised exemption may be offered to persons other than
qualified institutional buyers, including by means of general
solicitation or general advertising, provided that securities are
sold only to persons that the seller and any person acting
on behalf of the seller reasonably believe is a qualified institutional buyer.
(b) CONSISTENCY IN INTERPRETATION.—Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is amended—
(1) by striking ‘‘The provisions of section 5’’ and inserting
‘‘(a) The provisions of section 5’’; and
(2) by adding at the end the following:
‘‘(b) Offers and sales exempt under section 230.506 of title
17, Code of Federal Regulations (as revised pursuant to section
201 of the Jumpstart Our Business Startups Act) shall not be
deemed public offerings under the Federal securities laws as a
result of general advertising or general solicitation.’’.
(c) EXPLANATION OF EXEMPTION.—Section 4 of the Securities
Act of 1933 (15 U.S.C. 77d) is amended—
(1) by striking ‘‘The provisions of section 5’’ and inserting
‘‘(a) The provisions of section 5’’; and
(2) by adding at the end the following:
‘‘(b)(1) With respect to securities offered and sold in compliance
with Rule 506 of Regulation D under this Act, no person who
meets the conditions set forth in paragraph (2) shall be subject
to registration as a broker or dealer pursuant to section 15(a)(1)
of this title, solely because—
‘‘(A) that person maintains a platform or mechanism
that permits the offer, sale, purchase, or negotiation of
or with respect to securities, or permits general solicitations, general advertisements, or similar or related activities by issuers of such securities, whether online, in person,
or through any other means;
‘‘(B) that person or any person associated with that
person co-invests in such securities; or
‘‘(C) that person or any person associated with that
person provides ancillary services with respect to such securities.
‘‘(2) The exemption provided in paragraph (1) shall apply to
any person described in such paragraph if—
‘‘(A) such person and each person associated with that
person receives no compensation in connection with the purchase or sale of such security;
‘‘(B) such person and each person associated with that
person does not have possession of customer funds or securities
in connection with the purchase or sale of such security; and
‘‘(C) such person is not subject to a statutory disqualification as defined in section 3(a)(39) of this title and does not

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have any person associated with that person subject to such
a statutory disqualification.
‘‘(3) For the purposes of this subsection, the term ‘ancillary
services’ means—
‘‘(A) the provision of due diligence services, in connection
with the offer, sale, purchase, or negotiation of such security,
so long as such services do not include, for separate compensation, investment advice or recommendations to issuers or investors; and
‘‘(B) the provision of standardized documents to the issuers
and investors, so long as such person or entity does not negotiate the terms of the issuance for and on behalf of third
parties and issuers are not required to use the standardized
documents as a condition of using the service.’’.

TITLE III—CROWDFUNDING
SEC. 301. SHORT TITLE.

This title may be cited as the ‘‘Capital Raising Online While
Deterring Fraud and Unethical Non-Disclosure Act of 2012’’ or
the ‘‘CROWDFUND Act’’.

Definition.

Capital Raising
Online While
Deterring Fraud
and Unethical
Non-Disclosure
Act of 2012.
15 USC 77a note.

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SEC. 302. CROWDFUNDING EXEMPTION.

(a) SECURITIES ACT OF 1933.—Section 4 of the Securities Act
of 1933 (15 U.S.C. 77d) is amended by adding at the end the
following:
‘‘(6) transactions involving the offer or sale of securities
by an issuer (including all entities controlled by or under
common control with the issuer), provided that—
‘‘(A) the aggregate amount sold to all investors by
the issuer, including any amount sold in reliance on the
exemption provided under this paragraph during the 12month period preceding the date of such transaction, is
not more than $1,000,000;
‘‘(B) the aggregate amount sold to any investor by
an issuer, including any amount sold in reliance on the
exemption provided under this paragraph during the 12month period preceding the date of such transaction, does
not exceed—
‘‘(i) the greater of $2,000 or 5 percent of the annual
income or net worth of such investor, as applicable,
if either the annual income or the net worth of the
investor is less than $100,000; and
‘‘(ii) 10 percent of the annual income or net worth
of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either
the annual income or net worth of the investor is
equal to or more than $100,000;
‘‘(C) the transaction is conducted through a broker
or funding portal that complies with the requirements of
section 4A(a); and
‘‘(D) the issuer complies with the requirements of section 4A(b).’’.
(b) REQUIREMENTS TO QUALIFY FOR CROWDFUNDING EXEMPTION.—The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended
by inserting after section 4 the following:

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15 USC 77d–1.

‘‘SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL TRANSACTIONS.

Regulations.

‘‘(a) REQUIREMENTS ON INTERMEDIARIES.—A person acting as
an intermediary in a transaction involving the offer or sale of
securities for the account of others pursuant to section 4(6) shall—
‘‘(1) register with the Commission as—
‘‘(A) a broker; or
‘‘(B) a funding portal (as defined in section 3(a)(80)
of the Securities Exchange Act of 1934);
‘‘(2) register with any applicable self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange
Act of 1934);
‘‘(3) provide such disclosures, including disclosures related
to risks and other investor education materials, as the Commission shall, by rule, determine appropriate;
‘‘(4) ensure that each investor—
‘‘(A) reviews investor-education information, in accordance with standards established by the Commission, by
rule;
‘‘(B) positively affirms that the investor understands
that the investor is risking the loss of the entire investment, and that the investor could bear such a loss; and
‘‘(C) answers questions demonstrating—
‘‘(i) an understanding of the level of risk generally
applicable to investments in startups, emerging
businesses, and small issuers;
‘‘(ii) an understanding of the risk of illiquidity;
and
‘‘(iii) an understanding of such other matters as
the Commission determines appropriate, by rule;
‘‘(5) take such measures to reduce the risk of fraud with
respect to such transactions, as established by the Commission,
by rule, including obtaining a background and securities
enforcement regulatory history check on each officer, director,
and person holding more than 20 percent of the outstanding
equity of every issuer whose securities are offered by such
person;
‘‘(6) not later than 21 days prior to the first day on which
securities are sold to any investor (or such other period as
the Commission may establish), make available to the Commission and to potential investors any information provided by
the issuer pursuant to subsection (b);
‘‘(7) ensure that all offering proceeds are only provided
to the issuer when the aggregate capital raised from all investors is equal to or greater than a target offering amount,
and allow all investors to cancel their commitments to invest,
as the Commission shall, by rule, determine appropriate;
‘‘(8) make such efforts as the Commission determines appropriate, by rule, to ensure that no investor in a 12-month period
has purchased securities offered pursuant to section 4(6) that,
in the aggregate, from all issuers, exceed the investment limits
set forth in section 4(6)(B);
‘‘(9) take such steps to protect the privacy of information
collected from investors as the Commission shall, by rule, determine appropriate;

Deadline.

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Time period.

Confidentiality.

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126 STAT. 317

‘‘(10) not compensate promoters, finders, or lead generators
for providing the broker or funding portal with the personal
identifying information of any potential investor;
‘‘(11) prohibit its directors, officers, or partners (or any
person occupying a similar status or performing a similar function) from having any financial interest in an issuer using
its services; and
‘‘(12) meet such other requirements as the Commission
may, by rule, prescribe, for the protection of investors and
in the public interest.
‘‘(b) REQUIREMENTS FOR ISSUERS.—For purposes of section 4(6),
an issuer who offers or sells securities shall—
‘‘(1) file with the Commission and provide to investors
and the relevant broker or funding portal, and make available
to potential investors—
‘‘(A) the name, legal status, physical address, and
website address of the issuer;
‘‘(B) the names of the directors and officers (and any
persons occupying a similar status or performing a similar
function), and each person holding more than 20 percent
of the shares of the issuer;
‘‘(C) a description of the business of the issuer and
the anticipated business plan of the issuer;
‘‘(D) a description of the financial condition of the
issuer, including, for offerings that, together with all other
offerings of the issuer under section 4(6) within the preceding 12-month period, have, in the aggregate, target
offering amounts of—
‘‘(i) $100,000 or less—
‘‘(I) the income tax returns filed by the issuer
for the most recently completed year (if any); and
‘‘(II) financial statements of the issuer, which
shall be certified by the principal executive officer
of the issuer to be true and complete in all material
respects;
‘‘(ii) more than $100,000, but not more than
$500,000, financial statements reviewed by a public
accountant who is independent of the issuer, using
professional standards and procedures for such review
or standards and procedures established by the
Commission, by rule, for such purpose; and
‘‘(iii) more than $500,000 (or such other amount
as the Commission may establish, by rule), audited
financial statements;
‘‘(E) a description of the stated purpose and intended
use of the proceeds of the offering sought by the issuer
with respect to the target offering amount;
‘‘(F) the target offering amount, the deadline to reach
the target offering amount, and regular updates regarding
the progress of the issuer in meeting the target offering
amount;
‘‘(G) the price to the public of the securities or the
method for determining the price, provided that, prior to
sale, each investor shall be provided in writing the final
price and all required disclosures, with a reasonable opportunity to rescind the commitment to purchase the securities;

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126 STAT. 318

‘‘(H) a description of the ownership and capital structure of the issuer, including—
‘‘(i) terms of the securities of the issuer being
offered and each other class of security of the issuer,
including how such terms may be modified, and a
summary of the differences between such securities,
including how the rights of the securities being offered
may be materially limited, diluted, or qualified by the
rights of any other class of security of the issuer;
‘‘(ii) a description of how the exercise of the rights
held by the principal shareholders of the issuer could
negatively impact the purchasers of the securities being
offered;
‘‘(iii) the name and ownership level of each existing
shareholder who owns more than 20 percent of any
class of the securities of the issuer;
‘‘(iv) how the securities being offered are being
valued, and examples of methods for how such securities may be valued by the issuer in the future,
including during subsequent corporate actions; and
‘‘(v) the risks to purchasers of the securities
relating to minority ownership in the issuer, the risks
associated with corporate actions, including additional
issuances of shares, a sale of the issuer or of assets
of the issuer, or transactions with related parties; and
‘‘(I) such other information as the Commission may,
by rule, prescribe, for the protection of investors and in
the public interest;
‘‘(2) not advertise the terms of the offering, except for
notices which direct investors to the funding portal or broker;
‘‘(3) not compensate or commit to compensate, directly or
indirectly, any person to promote its offerings through communication channels provided by a broker or funding portal, without taking such steps as the Commission shall, by rule, require
to ensure that such person clearly discloses the receipt, past
or prospective, of such compensation, upon each instance of
such promotional communication;
‘‘(4) not less than annually, file with the Commission and
provide to investors reports of the results of operations and
financial statements of the issuer, as the Commission shall,
by rule, determine appropriate, subject to such exceptions and
termination dates as the Commission may establish, by rule;
and
‘‘(5) comply with such other requirements as the Commission may, by rule, prescribe, for the protection of investors
and in the public interest.
‘‘(c) LIABILITY FOR MATERIAL MISSTATEMENTS AND OMISSIONS.—
‘‘(1) ACTIONS AUTHORIZED.—
‘‘(A) IN GENERAL.—Subject to paragraph (2), a person
who purchases a security in a transaction exempted by
the provisions of section 4(6) may bring an action against
an issuer described in paragraph (2), either at law or
in equity in any court of competent jurisdiction, to recover
the consideration paid for such security with interest
thereon, less the amount of any income received thereon,
upon the tender of such security, or for damages if such
person no longer owns the security.

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Deadline.
Reports.

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‘‘(B) LIABILITY.—An action brought under this paragraph shall be subject to the provisions of section 12(b)
and section 13, as if the liability were created under section
12(a)(2).
‘‘(2) APPLICABILITY.—An issuer shall be liable in an action
under paragraph (1), if the issuer—
‘‘(A) by the use of any means or instruments of
transportation or communication in interstate commerce
or of the mails, by any means of any written or oral
communication, in the offering or sale of a security in
a transaction exempted by the provisions of section 4(6),
makes an untrue statement of a material fact or omits
to state a material fact required to be stated or necessary
in order to make the statements, in the light of the circumstances under which they were made, not misleading,
provided that the purchaser did not know of such untruth
or omission; and
‘‘(B) does not sustain the burden of proof that such
issuer did not know, and in the exercise of reasonable
care could not have known, of such untruth or omission.
‘‘(3) DEFINITION.—As used in this subsection, the term
‘issuer’ includes any person who is a director or partner of
the issuer, and the principal executive officer or officers, principal financial officer, and controller or principal accounting
officer of the issuer (and any person occupying a similar status
or performing a similar function) that offers or sells a security
in a transaction exempted by the provisions of section 4(6),
and any person who offers or sells the security in such offering.
‘‘(d) INFORMATION AVAILABLE TO STATES.—The Commission
shall make, or shall cause to be made by the relevant broker
or funding portal, the information described in subsection (b) and
such other information as the Commission, by rule, determines
appropriate, available to the securities commission (or any agency
or office performing like functions) of each State and territory
of the United States and the District of Columbia.
‘‘(e) RESTRICTIONS ON SALES.—Securities issued pursuant to
a transaction described in section 4(6)—
‘‘(1) may not be transferred by the purchaser of such securities during the 1-year period beginning on the date of purchase,
unless such securities are transferred—
‘‘(A) to the issuer of the securities;
‘‘(B) to an accredited investor;
‘‘(C) as part of an offering registered with the Commission; or
‘‘(D) to a member of the family of the purchaser or
the equivalent, or in connection with the death or divorce
of the purchaser or other similar circumstance, in the
discretion of the Commission; and
‘‘(2) shall be subject to such other limitations as the
Commission shall, by rule, establish.
‘‘(f) APPLICABILITY.—Section 4(6) shall not apply to transactions
involving the offer or sale of securities by any issuer that—
‘‘(1) is not organized under and subject to the laws of
a State or territory of the United States or the District of
Columbia;

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126 STAT. 320

Time period.
Notice.
Federal Register,
publication.

Deadline.
15 USC 77d note.

Consultation.

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15 USC 77d note.
Deadline.

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‘‘(2) is subject to the requirement to file reports pursuant
to section 13 or section 15(d) of the Securities Exchange Act
of 1934;
‘‘(3) is an investment company, as defined in section 3
of the Investment Company Act of 1940, or is excluded from
the definition of investment company by section 3(b) or section
3(c) of that Act; or
‘‘(4) the Commission, by rule or regulation, determines
appropriate.
‘‘(g) RULE OF CONSTRUCTION.—Nothing in this section or section
4(6) shall be construed as preventing an issuer from raising capital
through methods not described under section 4(6).
‘‘(h) CERTAIN CALCULATIONS.—
‘‘(1) DOLLAR AMOUNTS.—Dollar amounts in section 4(6) and
subsection (b) of this section shall be adjusted by the Commission not less frequently than once every 5 years, by notice
published in the Federal Register to reflect any change in
the Consumer Price Index for All Urban Consumers published
by the Bureau of Labor Statistics.
‘‘(2) INCOME AND NET WORTH.—The income and net worth
of a natural person under section 4(6)(B) shall be calculated
in accordance with any rules of the Commission under this
title regarding the calculation of the income and net worth,
respectively, of an accredited investor.’’.
(c) RULEMAKING.—Not later than 270 days after the date of
enactment of this Act, the Securities and Exchange Commission
(in this title referred to as the ‘‘Commission’’) shall issue such
rules as the Commission determines may be necessary or appropriate for the protection of investors to carry out sections 4(6)
and section 4A of the Securities Act of 1933, as added by this
title. In carrying out this section, the Commission shall consult
with any securities commission (or any agency or office performing
like functions) of the States, any territory of the United States,
and the District of Columbia, which seeks to consult with the
Commission, and with any applicable national securities association.
(d) DISQUALIFICATION.—
(1) IN GENERAL.—Not later than 270 days after the date
of enactment of this Act, the Commission shall, by rule, establish disqualification provisions under which—
(A) an issuer shall not be eligible to offer securities
pursuant to section 4(6) of the Securities Act of 1933,
as added by this title; and
(B) a broker or funding portal shall not be eligible
to effect or participate in transactions pursuant to that
section 4(6).
(2) INCLUSIONS.—Disqualification provisions required by
this subsection shall—
(A) be substantially similar to the provisions of section
230.262 of title 17, Code of Federal Regulations (or any
successor thereto); and
(B) disqualify any offering or sale of securities by a
person that—
(i) is subject to a final order of a State securities
commission (or an agency or officer of a State performing like functions), a State authority that supervises or examines banks, savings associations, or credit
unions, a State insurance commission (or an agency

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or officer of a State performing like functions), an
appropriate Federal banking agency, or the National
Credit Union Administration, that—
(I) bars the person from—
(aa) association with an entity regulated
by such commission, authority, agency, or
officer;
(bb) engaging in the business of securities,
insurance, or banking; or
(cc) engaging in savings association or
credit union activities; or
(II) constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct within the
10-year period ending on the date of the filing
of the offer or sale; or
(ii) has been convicted of any felony or misdemeanor in connection with the purchase or sale of
any security or involving the making of any false filing
with the Commission.
SEC. 303. EXCLUSION OF CROWDFUNDING INVESTORS FROM SHAREHOLDER CAP.

(a) EXEMPTION.—Section 12(g) of the Securities Exchange Act
of 1934 (15 U.S.C. 78l(g)) is amended by adding at the end the
following:
‘‘(6) EXCLUSION FOR PERSONS HOLDING CERTAIN SECURITIES.—The Commission shall, by rule, exempt, conditionally
or unconditionally, securities acquired pursuant to an offering
made under section 4(6) of the Securities Act of 1933 from
the provisions of this subsection.’’.
(b) RULEMAKING.—The Commission shall issue a rule to carry
out section 12(g)(6) of the Securities Exchange Act of 1934 (15
U.S.C. 78c), as added by this section, not later than 270 days
after the date of enactment of this Act.

Regulations.

15 USC 78l note.

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SEC. 304. FUNDING PORTAL REGULATION.

(a) EXEMPTION.—
(1) IN GENERAL.—Section 3 of the Securities Exchange Act
of 1934 (15 U.S.C. 78c) is amended by adding at the end
the following:
‘‘(h) LIMITED EXEMPTION FOR FUNDING PORTALS.—
‘‘(1) IN GENERAL.—The Commission shall, by rule, exempt,
conditionally or unconditionally, a registered funding portal
from the requirement to register as a broker or dealer under
section 15(a)(1), provided that such funding portal—
‘‘(A) remains subject to the examination, enforcement,
and other rulemaking authority of the Commission;
‘‘(B) is a member of a national securities association
registered under section 15A; and
‘‘(C) is subject to such other requirements under this
title as the Commission determines appropriate under such
rule.
‘‘(2) NATIONAL SECURITIES ASSOCIATION MEMBERSHIP.—For
purposes of sections 15(b)(8) and 15A, the term ‘broker or
dealer’ includes a funding portal and the term ‘registered broker
or dealer’ includes a registered funding portal, except to the
extent that the Commission, by rule, determines otherwise,

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Deadline.
15 USC 78c note.

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provided that a national securities association shall only
examine for and enforce against a registered funding portal
rules of such national securities association written specifically
for registered funding portals.’’.
(2) RULEMAKING.—The Commission shall issue a rule to
carry out section 3(h) of the Securities Exchange Act of 1934
(15 U.S.C. 78c), as added by this subsection, not later than
270 days after the date of enactment of this Act.
(b) DEFINITION.—Section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)) is amended by adding at the end the
following:
‘‘(80) FUNDING PORTAL.—The term ‘funding portal’ means
any person acting as an intermediary in a transaction involving
the offer or sale of securities for the account of others, solely
pursuant to section 4(6) of the Securities Act of 1933 (15 U.S.C.
77d(6)), that does not—
‘‘(A) offer investment advice or recommendations;
‘‘(B) solicit purchases, sales, or offers to buy the securities offered or displayed on its website or portal;
‘‘(C) compensate employees, agents, or other persons
for such solicitation or based on the sale of securities displayed or referenced on its website or portal;
‘‘(D) hold, manage, possess, or otherwise handle
investor funds or securities; or
‘‘(E) engage in such other activities as the Commission,
by rule, determines appropriate.’’.
SEC. 305. RELATIONSHIP WITH STATE LAW.

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15 USC 77r note.

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(a) IN GENERAL.—Section 18(b)(4) of the Securities Act of 1933
(15 U.S.C. 77r(b)(4)) is amended—
(1) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively; and
(2) by inserting after subparagraph (B) the following:
‘‘(C) section 4(6);’’.
(b) CLARIFICATION OF THE PRESERVATION OF STATE ENFORCEMENT AUTHORITY.—
(1) IN GENERAL.—The amendments made by subsection
(a) relate solely to State registration, documentation, and
offering requirements, as described under section 18(a) of Securities Act of 1933 (15 U.S.C. 77r(a)), and shall have no impact
or limitation on other State authority to take enforcement
action with regard to an issuer, funding portal, or any other
person or entity using the exemption from registration provided
by section 4(6) of that Act.
(2) CLARIFICATION OF STATE JURISDICTION OVER UNLAWFUL
CONDUCT OF FUNDING PORTALS AND ISSUERS.—Section 18(c)(1)
of the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) is amended
by striking ‘‘with respect to fraud or deceit, or unlawful conduct
by a broker or dealer, in connection with securities or securities
transactions.’’ and inserting the following: ‘‘, in connection with
securities or securities transactions
‘‘(A) with respect to—
‘‘(i) fraud or deceit; or
‘‘(ii) unlawful conduct by a broker or dealer; and
‘‘(B) in connection to a transaction described under
section 4(6), with respect to—
‘‘(i) fraud or deceit; or

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‘‘(ii) unlawful conduct by a broker, dealer, funding
portal, or issuer.’’.
(c) NOTICE FILINGS PERMITTED.—Section 18(c)(2) of the Securities Act of 1933 (15 U.S.C. 77r(c)(2)) is amended by adding at
the end the following:
‘‘(F) FEES NOT PERMITTED ON CROWDFUNDED SECURITIES.—Notwithstanding subparagraphs (A), (B), and (C),
no filing or fee may be required with respect to any security
that is a covered security pursuant to subsection (b)(4)(B),
or will be such a covered security upon completion of the
transaction, except for the securities commission (or any
agency or office performing like functions) of the State
of the principal place of business of the issuer, or any
State in which purchasers of 50 percent or greater of the
aggregate amount of the issue are residents, provided that
for purposes of this subparagraph, the term ‘State’ includes
the District of Columbia and the territories of the United
States.’’.
(d) FUNDING PORTALS.—
(1) STATE EXEMPTIONS AND OVERSIGHT.—Section 15(i) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o(i)) is
amended—
(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and
(B) by inserting after paragraph (1) the following:
‘‘(2) FUNDING PORTALS.—
‘‘(A) LIMITATION ON STATE LAWS.—Except as provided
in subparagraph (B), no State or political subdivision
thereof may enforce any law, rule, regulation, or other
administrative action against a registered funding portal
with respect to its business as such.
‘‘(B) EXAMINATION AND ENFORCEMENT AUTHORITY.—
Subparagraph (A) does not apply with respect to the examination and enforcement of any law, rule, regulation, or
administrative action of a State or political subdivision
thereof in which the principal place of business of a registered funding portal is located, provided that such law,
rule, regulation, or administrative action is not in addition
to or different from the requirements for registered funding
portals established by the Commission.
‘‘(C) DEFINITION.—For purposes of this paragraph, the
term ‘State’ includes the District of Columbia and the territories of the United States.’’.
(2) STATE FRAUD AUTHORITY.—Section 18(c)(1) of the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) is amended by striking
‘‘or dealer’’ and inserting ‘‘, dealer, or funding portal’’.

Definition.

TITLE IV—SMALL COMPANY CAPITAL
FORMATION

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SEC. 401. AUTHORITY TO EXEMPT CERTAIN SECURITIES.

(a) IN GENERAL.—Section 3(b) of the Securities Act of 1933
(15 U.S.C. 77c(b)) is amended—
(1) by striking ‘‘(b) The Commission’’ and inserting the
following:
‘‘(b) ADDITIONAL EXEMPTIONS.—

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‘‘(1) SMALL ISSUES EXEMPTIVE AUTHORITY.—The Commission’’; and
(2) by adding at the end the following:
‘‘(2) ADDITIONAL ISSUES.—The Commission shall by rule
or regulation add a class of securities to the securities exempted
pursuant to this section in accordance with the following terms
and conditions:
‘‘(A) The aggregate offering amount of all securities
offered and sold within the prior 12-month period in reliance on the exemption added in accordance with this paragraph shall not exceed $50,000,000.
‘‘(B) The securities may be offered and sold publicly.
‘‘(C) The securities shall not be restricted securities
within the meaning of the Federal securities laws and
the regulations promulgated thereunder.
‘‘(D) The civil liability provision in section 12(a)(2) shall
apply to any person offering or selling such securities.
‘‘(E) The issuer may solicit interest in the offering
prior to filing any offering statement, on such terms and
conditions as the Commission may prescribe in the public
interest or for the protection of investors.
‘‘(F) The Commission shall require the issuer to file
audited financial statements with the Commission
annually.
‘‘(G) Such other terms, conditions, or requirements as
the Commission may determine necessary in the public
interest and for the protection of investors, which may
include—
‘‘(i) a requirement that the issuer prepare and
electronically file with the Commission and distribute
to prospective investors an offering statement, and any
related documents, in such form and with such content
as prescribed by the Commission, including audited
financial statements, a description of the issuer’s business operations, its financial condition, its corporate
governance principles, its use of investor funds, and
other appropriate matters; and
‘‘(ii) disqualification provisions under which the
exemption shall not be available to the issuer or its
predecessors, affiliates, officers, directors, underwriters, or other related persons, which shall be
substantially similar to the disqualification provisions
contained in the regulations adopted in accordance
with section 926 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (15 U.S.C. 77d note).
‘‘(3) LIMITATION.—Only the following types of securities
may be exempted under a rule or regulation adopted pursuant
to paragraph (2): equity securities, debt securities, and debt
securities convertible or exchangeable to equity interests,
including any guarantees of such securities.
‘‘(4) PERIODIC DISCLOSURES.—Upon such terms and conditions as the Commission determines necessary in the public
interest and for the protection of investors, the Commission
by rule or regulation may require an issuer of a class of securities exempted under paragraph (2) to make available to investors and file with the Commission periodic disclosures regarding
the issuer, its business operations, its financial condition, its

Regulations.

Time period.

Applicability.

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corporate governance principles, its use of investor funds, and
other appropriate matters, and also may provide for the suspension and termination of such a requirement with respect to
that issuer.
‘‘(5) ADJUSTMENT.—Not later than 2 years after the date
of enactment of the Small Company Capital Formation Act
of 2011 and every 2 years thereafter, the Commission shall
review the offering amount limitation described in paragraph
(2)(A) and shall increase such amount as the Commission determines appropriate. If the Commission determines not to
increase such amount, it shall report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate on its reasons for not increasing the amount.’’.
(b) TREATMENT AS COVERED SECURITIES FOR PURPOSES OF
NSMIA.—Section 18(b)(4) of the Securities Act of 1933 (as amended
by section 303) (15 U.S.C. 77r(b)(4)) is further amended by inserting
after subparagraph (C) (as added by such section) the following:
‘‘(D) a rule or regulation adopted pursuant to section
3(b)(2) and such security is—
‘‘(i) offered or sold on a national securities
exchange; or
‘‘(ii) offered or sold to a qualified purchaser, as
defined by the Commission pursuant to paragraph (3)
with respect to that purchase or sale;’’.
(c) CONFORMING AMENDMENT.—Section 4(5) of the Securities
Act of 1933 is amended by striking ‘‘section 3(b)’’ and inserting
‘‘section 3(b)(1)’’.

Deadlines.
Review.

15 USC 77d.

SEC. 402. STUDY ON THE IMPACT OF STATE BLUE SKY LAWS ON REGULATION A OFFERINGS.

The Comptroller General shall conduct a study on the impact
of State laws regulating securities offerings, or ‘‘Blue Sky laws’’,
on offerings made under Regulation A (17 CFR 230.251 et seq.).
The Comptroller General shall transmit a report on the findings
of the study to the Committee on Financial Services of the House
of Representatives, and the Committee on Banking, Housing, and
Urban Affairs of the Senate not later than 3 months after the
date of enactment of this Act.

Reports.
Deadline.

TITLE V—PRIVATE COMPANY
FLEXIBILITY AND GROWTH

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SEC. 501. THRESHOLD FOR REGISTRATION.

Section 12(g)(1)(A) of the Securities Exchange Act of 1934 (15
U.S.C. 78l(g)(1)(A)) is amended to read as follows:
‘‘(A) within 120 days after the last day of its first fiscal
year ended on which the issuer has total assets exceeding
$10,000,000 and a class of equity security (other than an
exempted security) held of record by either—
‘‘(i) 2,000 persons, or
‘‘(ii) 500 persons who are not accredited investors (as such
term is defined by the Commission), and’’.

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PUBLIC LAW 112–106—APR. 5, 2012

SEC. 502. EMPLOYEES.

Section 12(g)(5) of the Securities Exchange Act of 1934 (15
U.S.C. 78l(g)(5)), as amended by section 302, is amended in subparagraph (A) by adding at the end the following: ‘‘For purposes of
determining whether an issuer is required to register a security
with the Commission pursuant to paragraph (1), the definition
of ‘held of record’ shall not include securities held by persons who
received the securities pursuant to an employee compensation plan
in transactions exempted from the registration requirements of
section 5 of the Securities Act of 1933.’’.
15 USC 78l note.

SEC. 503. COMMISSION RULEMAKING.

The Securities and Exchange Commission shall revise the definition of ‘‘held of record’’ pursuant to section 12(g)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(5)) to implement the
amendment made by section 502. The Commission shall also adopt
safe harbor provisions that issuers can follow when determining
whether holders of their securities received the securities pursuant
to an employee compensation plan in transactions that were exempt
from the registration requirements of section 5 of the Securities
Act of 1933.
SEC. 504. COMMISSION STUDY OF ENFORCEMENT AUTHORITY UNDER
RULE 12G5–1.
Deadline.
Recommendations.

The Securities and Exchange Commission shall examine its
authority to enforce Rule 12g5–1 to determine if new enforcement
tools are needed to enforce the anti-evasion provision contained
in subsection (b)(3) of the rule, and shall, not later than 120 days
after the date of enactment of this Act transmit its recommendations
to Congress.

TITLE VI—CAPITAL EXPANSION
SEC. 601. SHAREHOLDER THRESHOLD FOR REGISTRATION.

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(a) AMENDMENTS TO SECTION 12 OF THE SECURITIES EXCHANGE
ACT OF 1934.—Section 12(g) of the Securities Exchange Act of
1934 (15 U.S.C. 78l(g)) is further amended—
(1) in paragraph (1), by amending subparagraph (B) to
read as follows:
‘‘(B) in the case of an issuer that is a bank or a bank
holding company, as such term is defined in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841), not
later than 120 days after the last day of its first fiscal year
ended after the effective date of this subsection, on which
the issuer has total assets exceeding $10,000,000 and a class
of equity security (other than an exempted security) held of
record by 2,000 or more persons,’’; and
(2) in paragraph (4), by striking ‘‘three hundred’’ and
inserting ‘‘300 persons, or, in the case of a bank or a bank
holding company, as such term is defined in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841), 1,200
persons’’.
(b) AMENDMENTS TO SECTION 15 OF THE SECURITIES EXCHANGE
ACT OF 1934.—Section 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(d)) is amended, in the third sentence, by
striking ‘‘three hundred’’ and inserting ‘‘300 persons, or, in the
case of bank or a bank holding company, as such term is defined

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in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C.
1841), 1,200 persons’’.
SEC. 602. RULEMAKING.

Not later than 1 year after the date of enactment of this
Act, the Securities and Exchange Commission shall issue final
regulations to implement this title and the amendments made
by this title.

Deadline.
15 USC 78l note.

TITLE VII—OUTREACH ON CHANGES TO
THE LAW
SEC. 701. OUTREACH BY THE COMMISSION.

The Securities and Exchange Commission shall provide online
information and conduct outreach to inform small and medium
sized businesses, women owned businesses, veteran owned
businesses, and minority owned businesses of the changes made
by this Act.

Web posting.
Small business.
Women.
Veterans.
Minorities.
15 USC 78d note.

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Approved April 5, 2012.

LEGISLATIVE HISTORY—H.R. 3606:
HOUSE REPORTS: No. 112–406 and Pt. 2 (Comm. on Financial Services).
CONGRESSIONAL RECORD, Vol. 158 (2012):
Mar. 7, 8, considered and passed House.
Mar. 15, 19–22, considered and passed Senate, amended.
Mar. 27, House concurred in Senate amendment.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2012):
Apr. 5, Presidential remarks.

Æ

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