Jobs Act 101Crowdfunding for Private Companies – Crowdfunding Lawyers
Sometimes, a private company seeking to raise capital may not want to go public. In such circumstances, the company should consider an exempt offering. Even though the SEC has not created the final rules for equity crowdfunding, intrastate and accredited crowdfunding provide manageable capital raising options for companies. Companies should remember that the intrastate and accredited crowdfunding exemptions do not exempt the issuer from the antifraud provisions or broker dealer registration provisions of the federal securities laws.
This means that an issuer is liable for false or misleading statements, whether oral or written in connection with its offering even if the offering is exempt from SEC registration. Read More
Crowdfunding Platforms to Watch in 2015
It has been more than a year and the SEC has not finalized its rules with respect to equity crowdfunding under the Title III of the JOBS Act which would allow an issuer to raise up to $1 million from the sale of securities from non-accredited investors through online funding portals.
Despite this equity and intrastate crowdfunding have progressively marched forward with four viable crowdfunding platforms including the intrastate crowdfunding platform, partnership or fund model, broker-dealer and, lending platforms. Read More
SEC Releases Regulation A Proposals
On December 18, 2013, the Securities and Exchange Commission (the “SEC”) voted to propose rules intended to increase access to capital for smaller companies.
The SEC’s proposal is based upon Regulation A. Regulation A is an existing exemption from registration for small offerings of securities up to $5 million within a 12-month period. As proposed, Regulation would enable companies to offer and sell up to $50 million of securities within a 12-month period without filing a registration statement.
“This proposal is intended to help increase access of smaller companies to capital,” said SEC Chair Mary Jo White. “In shaping this proposal, we sought to develop an effective, workable path to raising capital that, very importantly, also builds in necessary investor protections.” Read More
Rule 506(C) Verification of Accredited Investor Status
Rule 506(c) of Regulation D of the Securities Act became effective on September 23, 2013. The rule fundamentally changes how private placements are conducted, by allowing issuers to engage in general solicitation and advertising of their private placements if specific requirements are met.
The SEC has confirmed that the Rule 506(c) exemption will not be forgiving for issuers who engage in general solicitation but fail to comply with its requirements.Even one sale to a non-accredited investor in s private placement will prevent the issuer from relying upon the exemption, making it a time bomb for issuers who fail to adopt proper compliance methods Read More
Embracing Equity Crowdfunding l Jobs Act 101
Recently the Securities and Exchange Commission (“SEC”) published its new rules for equity crowdfunding offerings, called “Regulation Crowdfunding,” or “Reg CF” for short. The rules have yet to be finalized, and the Commission is currently asking for public comment on the 585-page document. Ever since the JOBS Act was signed into law in April 2012, market participants and observers have anticipated the release of the new regulation.
Issuers and small business advocates hope equity crowdfunding will make access to capital easier for startups; state regulators and industry watchdogs fear it will open the floodgates to fraud.
There has, however, been general agreement on one thing: that equity crowdfunding will be very popular for both public companies and private companies in going public transactions.
Are they right? The rules and regulations governing Crowdfunding suggest that they may not be. In order to take advantage of crowdfunding, issuers will have a lot of hoops to jump through that may outweigh many of the benefits. Read More