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SMALL BUSINESS NEWS

18 April  2012

 

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Making Life Easier For Small Businesses

"JOBS Act of 2012"

On April 5 President Obama signed the "Jump Start Our Business Startup (JOBS) Act of 2012".  The law is business growth.  The key features of the law includes:

Redefined the definition of Emerging Growth Companies:  Defines an emerging growth company as having less than $1,000,000,000 in gross annual revenues.

Allowing Small Businesses to Harness “Crowdfunding”:  startups and small businesses will be allowed to raise up to $1 million annually from many small-dollar investors through web-based platforms.  All crowdfunding must occur through platforms that are registered with a self-regulatory organization and regulated by the SEC.

Expanding “Mini Public Offerings”:  Small business can raise up to $50 million in an IPO while being exempt from certain SEC requirements.  This threshold was previously $5 million under Regulation A of the Securities Act of 1933. 

Creating an “IPO On-Ramp”:  It extends the time small companies have to comply with certain Sarbanes-Oxley auditing requirements from 2 years to a maximum of 5 years, or less if during the on-ramp period a company achieves $1 billion in gross revenue, $700 million in public float, or issues more than $1 billion in non-convertible debt in the previous three years.

Do not need to  present more than 2 years of audited financial statements for an IPO registration.  Do not have to 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.

Emerging companies are not subject to the Internal Control Evaluation and Report requirement of the Sarbanes-Oxley Act of 2002 (Section 404(b)).

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.  A road show means an offer that contains a presentation regarding an offering by one or more members of the issuing company.

Changed Auditing Standards:  Emerging growth companies are not subject to 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) as defined in section 3 of the Securities Exchange Act of 1934.

Other Benefits include:  Small Business Tax Extenders Act of 2012 - Amends the Internal Revenue Code to extend through 2012:

(1) the 100% exclusion from gross income of gain from the sale or exchange of certain small business stock;

(2) the five-year carryback of the general business tax credits of eligible small businesses;

(3) the offset against the alternative minimum tax (AMT) of general business tax credits;

(4) the reduction (from seven to five years) in the recognition period for the built-in gains of S corporations;

(5) the increased expensing allowance for depreciable business assets, including computer software;

(6) the special tax rule for long-term contract accounting;

(7) the increased tax deduction for small business start-up expenditures; and

(8) the tax deduction for health insurance premiums in computing self-employment taxable income.

Sources:
Regulation A 

Section 3(b) of the Securities Act of 1933 
The Small Business Extenders Act of 2012
The Small Business Startup Support Act of 2012
Jump Start America Act of 2012
The Securities Act of 1993
The Securities Exchange Act of 1934
Investor Protection and Securities Reform Act of 2010
Sarbanes-Oxley Act of 2002
Code of Federal Regulation (CFR) 17 230-433

By Tim Miller

 

 

 

 

 

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