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SEC Investor Bulletin: Crowdfunding for Investors. Crowdfunding under federal law became legal on May 16, 2016, but efforts to prep potential investors and intermediaries have been in the works for much longer. On February 16, 2016, the Office of Investor Education and Advocacy of the Securities and Exchange Commission (“SEC”) issued “Investor Bulletin: Crowdfunding for Investors” [1] to educate investors about…
It is official—federal crowdfunding finally goes into effect on May 16, 2016. Title III of the JOBS Act, also referred to as the “CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012),” exempts up to $1 million crowdfunded securities from the federal registration requirement when the transaction is conducted through an intermediary that is either…
Allowing More Access to Capital? Proposed Amendments to Rule 504 of Regulation D. As we explained in our previous blog post on exempt offerings under Regulation D, Rule 504 of Regulation D currently provides an exemption for offerings up to $1,000,000 in a 12-month period.[1] Although Rule 504 allows general solicitation in certain limited situations, a major downside to Rule…
We’ve covered crowdfunding extensively in our previous posts “Crowdfunding: Is It Right for My Business,” “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Rules,” and “An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption.” As crowdfunding gains popularity, not only has it proved to be a process of…
More on the Rules for an Offering in a Single State Rule 147 Intrastate Exemption: Proposed Amendments. The proposed amendments would: (1) eliminate the current restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state; and (2) redefine what it means to be an “intrastate offering” and ease some of the issuer…
October was a busy month for the Securities and Exchange Commission (SEC). On October 30, 2015, the day the agency finally voted to adopt the crowdfunding final rules, it also issued proposed rules to amend: (1) Rule 147, which currently provides a safe harbor for compliance with the intrastate exemption; and (2) Rule 504 of Regulation D, which provides an…
Texas Crowdfunding Portal Registration and Activities. As we mentioned previously, an offering conducted under the crowdfunding exemption must be made exclusively through an Internet website operated by a registered general dealer or registered TCP. Local Character. Just like crowdfunding issuers, a TCP must be an entity formed and authorized to do business in Texas.[1] A TCP should be physically located…
How Should the Offering Be Conducted? Must Use a website. An offering conducted under the crowdfunding exemption must be made exclusively through an Internet website operated by a registered general dealer or registered TCP.[1] Such website must meet the following requirements: A disclaimer that access to the website and offers and sales of the securities are limited to Texas residents;…
Who Is Eligible? Texas Formation. Texas crowdfunding exemption is only available if the issuer is a Texas entity that has filed a certificate of formation with the Texas Secretary of State and is authorized to do business in Texas.[1] This means that sole proprietor, general partnerships, or joint ventures would not be eligible to use the exemption, as those types…
In our previous blog series titled “Crowdfunding: Is It Right for My Business?”, we discussed Title III of the 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…