Jumpstart Our Business Startups
PL 112-106 (H.R.3606), enacted 04/05/2012

126 STAT. 306 
PUBLIC LAW 112–106—APR. 5, 2012 
Public Law 112–106 
112th Congress 
An Act 
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. 
TITLE III—CROWDFUNDING 
Sec. 301. Short title. 
Sec. 302. Crowdfunding exemption. 
Sec. 303. Exclusion of crowdfunding investors from shareholder cap. 
Sec. 304. Funding portal regulation. 
Sec. 305. 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. 
TITLE V—PRIVATE COMPANY FLEXIBILITY AND GROWTH 
Sec. 501. Threshold for registration. 
Sec. 502. Employees. 
Sec. 503. Commission rulemaking. 
Sec. 504. 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. 
Jumpstart Our 
Business 
Startups Act. 
15 USC 78a note. 
Apr. 5, 2012 
[H.R. 3606] 
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126 STAT. 307 
PUBLIC LAW 112–106—APR. 5, 2012 
TITLE I—REOPENING AMERICAN CAP-
ITAL 
MARKETS 
TO 
EMERGING 
GROWTH COMPANIES 
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 Con-
sumer 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 fol-
lowing 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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126 STAT. 308 
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 fol-
lowing 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 Secu-
rities 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 registra-
tion 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 
Time period. 
15 USC 77b note. 
Applicability. 
15 USC 78c note. 
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126 STAT. 309 
PUBLIC LAW 112–106—APR. 5, 2012 
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 PRONOUNCE-
MENTS.— 
(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 effec-
tive, 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 sec-
tion 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 registra-
tion 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 
15 USC 78l note. 
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126 STAT. 310 
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 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.’’. 
(c) OTHER DISCLOSURES.—An emerging growth company may 
comply with section 229.303(a) of title 17, Code of Federal Regula-
tions, 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. 
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 COMPA-
NIES.—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 addi-
tional 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.’’. 
SEC. 105. AVAILABILITY OF INFORMATION ABOUT EMERGING GROWTH 
COMPANIES. 
(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 
Definition. 
Determination. 
15 USC 77g note. 
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126 STAT. 311 
PUBLIC LAW 112–106—APR. 5, 2012 
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 suffi-
cient 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 securi-
ties 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 Commis-
sion 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 expira-
tion 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. 
15 USC 78o–6 
note. 
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126 STAT. 312 
PUBLIC LAW 112–106—APR. 5, 2012 
SEC. 106. OTHER MATTERS. 
(a) DRAFT REGISTRATION STATEMENTS.—Section 6 of the Securi-
ties 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 confiden-
tial 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 provi-
sion of this title, the Commission shall not be compelled to 
disclose any information provided to or obtained by the Commis-
sion pursuant to this subsection. For purposes of section 552 
of title 5, United States Code, this subsection shall be consid-
ered 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 informa-
tion 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 con-
duct 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 
15 USC 78c note. 
Determination. 
Deadline. 
Public 
information. 
Deadline. 
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126 STAT. 313 
PUBLIC LAW 112–106—APR. 5, 2012 
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 stand-
ards 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. 
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 enact-
ment 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 
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 
Deadlines. 
15 USC 77d note. 
Notification. 
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126 STAT. 314 
PUBLIC LAW 112–106—APR. 5, 2012 
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 institu-
tional buyer. 
(b) CONSISTENCY IN INTERPRETATION.—Section 4 of the Securi-
ties 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 solicita-
tions, general advertisements, or similar or related activi-
ties 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 secu-
rities. 
‘‘(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 pur-
chase 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 disqualifica-
tion as defined in section 3(a)(39) of this title and does not 
Applicability. 
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126 STAT. 315 
PUBLIC LAW 112–106—APR. 5, 2012 
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 compensa-
tion, investment advice or recommendations to issuers or inves-
tors; and 
‘‘(B) the provision of standardized documents to the issuers 
and investors, so long as such person or entity does not nego-
tiate 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’’. 
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 12- 
month 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 12- 
month 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 max-
imum 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 sec-
tion 4A(b).’’. 
(b) REQUIREMENTS TO QUALIFY FOR CROWDFUNDING EXEMP-
TION.—The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended 
by inserting after section 4 the following: 
Capital Raising 
Online While 
Deterring Fraud 
and Unethical 
Non-Disclosure 
Act of 2012. 
15 USC 77a note. 
Definition. 
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126 STAT. 316 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL TRANS-
ACTIONS. 
‘‘(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 organiza-
tion (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 Commis-
sion shall, by rule, determine appropriate; 
‘‘(4) ensure that each investor— 
‘‘(A) reviews investor-education information, in accord-
ance 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 invest-
ment, 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 Commis-
sion 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 inves-
tors 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 appro-
priate, 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, deter-
mine appropriate; 
Confidentiality. 
Time period. 
Deadline. 
Regulations. 
15 USC 77d–1. 
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126 STAT. 317 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(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 func-
tion) 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 pre-
ceding 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 oppor-
tunity to rescind the commitment to purchase the securi-
ties; 
Time period. 
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126 STAT. 318 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(H) a description of the ownership and capital struc-
ture 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 securi-
ties 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 commu-
nication channels provided by a broker or funding portal, with-
out 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 Commis-
sion 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. 
Deadline. 
Reports. 
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126 STAT. 319 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(B) LIABILITY.—An action brought under this para-
graph 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 cir-
cumstances 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, prin-
cipal 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 securi-
ties 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 Commis-
sion; 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; 
Time period. 
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126 STAT. 320 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(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 Commis-
sion 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 appro-
priate 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, estab-
lish 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 per-
forming like functions), a State authority that super-
vises or examines banks, savings associations, or credit 
unions, a State insurance commission (or an agency 
Deadline. 
15 USC 77d note. 
Consultation. 
Deadline. 
15 USC 77d note. 
Time period. 
Notice. 
Federal Register, 
publication. 
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126 STAT. 321 
PUBLIC LAW 112–106—APR. 5, 2012 
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 viola-
tion of any law or regulation that prohibits fraudu-
lent, 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 mis-
demeanor 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 SHARE-
HOLDER 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
SECURI-
TIES.—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. 
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, 
Definition. 
15 USC 78l note. 
Regulations. 
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126 STAT. 322 
PUBLIC LAW 112–106—APR. 5, 2012 
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 securi-
ties 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 dis-
played 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. 
(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 subpara-
graphs (D) and (E), respectively; and 
(2) by inserting after subparagraph (B) the following: 
‘‘(C) section 4(6);’’. 
(b) CLARIFICATION OF THE PRESERVATION OF STATE ENFORCE-
MENT 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 Secu-
rities 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 
15 USC 77r note. 
Deadline. 
15 USC 78c note. 
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126 STAT. 323 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(ii) unlawful conduct by a broker, dealer, funding 
portal, or issuer.’’. 
(c) NOTICE FILINGS PERMITTED.—Section 18(c)(2) of the Securi-
ties 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 SECURI-
TIES.—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 para-
graphs (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 exam-
ination 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 reg-
istered 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 terri-
tories of the United States.’’. 
(2) STATE FRAUD AUTHORITY.—Section 18(c)(1) of the Securi-
ties Act of 1933 (15 U.S.C. 77r(c)(1)) is amended by striking 
‘‘or dealer’’ and inserting ‘‘, dealer, or funding portal’’. 
TITLE IV—SMALL COMPANY CAPITAL 
FORMATION 
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.— 
Definition. 
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126 STAT. 324 
PUBLIC LAW 112–106—APR. 5, 2012 
‘‘(1) SMALL ISSUES EXEMPTIVE AUTHORITY.—The Commis-
sion’’; 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 reli-
ance on the exemption added in accordance with this para-
graph 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 busi-
ness 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, under-
writers, 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 condi-
tions 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 securi-
ties exempted under paragraph (2) to make available to inves-
tors and file with the Commission periodic disclosures regarding 
the issuer, its business operations, its financial condition, its 
Records. 
Applicability. 
Time period. 
Regulations. 
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126 STAT. 325 
PUBLIC LAW 112–106—APR. 5, 2012 
corporate governance principles, its use of investor funds, and 
other appropriate matters, and also may provide for the suspen-
sion 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 deter-
mines 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)’’. 
SEC. 402. STUDY ON THE IMPACT OF STATE BLUE SKY LAWS ON REGU-
LATION 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. 
TITLE V—PRIVATE COMPANY 
FLEXIBILITY AND GROWTH 
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’’. 
Time period. 
Reports. 
Deadline. 
15 USC 77d. 
Deadlines. 
Review. 
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126 STAT. 326 
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 subpara-
graph (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.’’. 
SEC. 503. COMMISSION RULEMAKING. 
The Securities and Exchange Commission shall revise the defi-
nition of ‘‘held of record’’ pursuant to section 12(g)(5) of the Securi-
ties 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. 
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. 
(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 
Deadline. 
Deadline. 
Recommenda- 
tions. 
15 USC 78l note. 
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126 STAT. 327 
PUBLIC LAW 112–106—APR. 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. 
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. 
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. 
Approved April 5, 2012. 
Web posting. 
Small business. 
Women. 
Veterans. 
Minorities. 
15 USC 78d note. 
Deadline. 
15 USC 78l note. 
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