Crowdsourcing.org  Guest post by NC JOBS Team  on  Jun 13, 2013

Editor's Note: The following guest post comes to us from Mark Easley and Steve Reaser of the NC JOBS Act team. They write in to explain the North Carolina JOBS Act, which is currently being considered by state legislature. Reaser and Easley are involved with the legislation, and provide a behind-the-scenes look at how the act is progressing and its main points. Further details about the North Carolina Jump-Start Our Business Start-ups Act (NC JOBS Act) can be found on their North Carolina JOBS Act of 2013 Blog.

A safe, fair, and easy-to-implement version of investment crowdfunding may soon be a reality for North Carolina start-ups and small business.

A new intrastate investment crowdfunding exemption is moving through the North Carolina legislature. The North Carolina Jump-Start Our Business Start-ups Act of 2013 (NC JOBS Act) was passed by the NC House Commerce and Jobs Committee with near unanimous support, and is waiting for action by the House Finance Committee.

A full vote of the NC House and NC Senate will follow, and the goal is to have the Act signed into law by the Governor by the end of June. The bill is sponsored by Representatives Tom Murry, Tim D. Moffit, Phil Shepard, and Kelley E. Hastings.

A team of local entrepreneurs and investors came together and looked closely at crowdfunding exemptions that have already been implemented in Kansas and Georgia, as well as the federal JOBS Act passed last year. Working together with State Representative Tom Murry, the Secretary of State Securities Division regulators, and the State Bar Association Securities Committee, the team created the North Carolina JOBS Act of 2013 by selecting the best features of each exemption, while avoiding the problems associated with the stalled and complex federal JOBS Act.

Start-up companies and small businesses play a critical role in creating new jobs and growing the economy. Crowdfunding legislation is one part of Representative Murry’s commitment to North Carolina small business and entrepreneurs.

“I think this idea is long overdue. Crowdfunding received bipartisan support in Congress, and I expect it will get the same here in North Carolina. I’d like to thank my co-sponsors and look forward to seeing the Governor sign this into law this session,” said Representative Murry.

North Carolina entrepreneur and attorney Nick Bhargava added, “This bill will help start-ups and small business in North Carolina get the financing they need.” Bhargava (along with author Reaser) provided guidance to lawmakers and regulators about the federal JOBS Act and has applied that expertise to the NC JOBS Act.

The North Carolina approach to investment crowdfunding has been called “Brilliant!” and “worthy of support” by prominent national crowdfunding and legal expert William Carleton in his post about the bill called “5 Ways a North Carolina Bill puts the Crowd back in Crowdfunding.” The NC JOBS Act is also supported by NC Congressman Patrick McHenry, the original sponsor of the federal JOBS Act.

The Specifics

The NC JOBS Act has a number of provisions that allow start-ups and small businesses in North Carolina to raise money via equity or debt using investment crowdfunding:

• The issuer must be a North Carolina business.
• The investor must be a North Carolina resident.
• Fundraising cap: within a 12-month period issuers may raise up to $1M without audited financials, or $2M with audited financials.
• Investor cap: investors may invest no more than $2000 per issuer, unless they are accredited.
• Intermediaries: issuers may use a professional crowdfunding platform compliant with NC JOBS, but it is not required.
• Reporting: quarterly reports must be provided to all investors discussing management compensation, operating results, and financial condition.
• Solicitation: issuers are permitted to promote the offering publicly, after filing notice with the state securities regulatory agency.
• Communicating risk: issuers are required to communicate in writing the business plan, financials, use of funds, and risk factors of the offering. Investors are required to certify in writing by the time of sale that they understand the risks of unregistered securities and may lose their entire investment.
• The exemption is set to become effective immediately when passed. The state regulators may pass rules as real-world usage merits.

What this exemption is, and what it is not?   The exemption allows non-accredited North Carolina investors to buy equity or debt offerings from the North Carolina issuer provided the disclosure, reporting, registration, and limits described in the exemption are followed.

Why Is The NC JOBS Act Better than the Federal Act?  (Sooner, cheaper, simpler, angel-friendly)

Continue to full article --> here