The Securities and Exchange Commission’s Regulation Crowdfunding implements the new registration exemption available to companies seeking to raise capital – allowing for the sale of securities without registration to both accredited and non-accredited investors.
The Regulation Crowdfunding final rules now in effect establish the following basic requirements:
- Sales must be made through a registered securities broker or a registered funding portal.
- The maximum offering amount is $1,000,000 in a 12-month period. Investors are limited on the amount of investment based on their net worth and annual income.
- There are a series of disclosures and educational materials to be provided to the investors and detailed written disclosures are required of the issuer, including independently reviewed or audited financial statements.
Regulation Crowdfunding includes many more details and requirements. Potential issuers and investors need to heed all the requirements of Regulation Crowdfunding to take advantage of this new securities law exemption.