In our previous blog series on “Crowdfunding: Is It Right for My Business?”, we discussed Title III of the Jumpstart Our Business Startups Act (JOBS Act), popularly known as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012),” which would exempt crowdfunded securities from the federal registration requirement.
On October 30, 2015, the Securities and Exchange Commission (“SEC”) finally voted to adopt final rules related to the offer and sale of securities through crowdfunding under Section 4(a)(6) of the Securities Act of 1933, as mandated by Title III of the JOBS Act. For the SEC press release, click here. The Act exempts crowdfunded securities from the federal registration requirement for up to $1 million during a 12-month period (with different thresholds for amounts sold to individual investors, depending on the annual income or net worth of such investors) when the transaction is conducted through an intermediary that is either a broker or a funding portal and provided that certain conditions are met.
The final rules and forms will be effective 180 days after they are published in the Federal Register. The forms enabling funding portals to register with the SEC will be effective January 29, 2016.
We will update as soon as the rules and forms become publicly available. Stay tuned.
This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.
Steps have been taken to verify the contents of this article prior to publication. However, readers should not, and may not, rely on this article. Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.
About the Author
Shawn McBride – R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Office, P.L.L.C., which helps clients in legal issues related to starting companies, joint ventures, raising capital from and negotiating with investors and outside General Counsel functions. Shawn can be contacted at: (214) 418-0258; firstname.lastname@example.org, or www.mcbrideattorneys.com.
 15 U.S.C. § 77d(a)(6).