Way back on October 31st, 2015, the SEC released their final – and long awaited – new Regulation A+ Crowdfunding rules to be placed into effect 180 days after they were published in the Federal Register (which took place on November 16th, 2015). That means it’s official: these rules became effective May 16th, 2016 – and will now open up non-accredited investors to equity crowdfunding and approves online platforms intending to legally solicit offerings.
As a result, industry experts expect the capital raised via Regulation A+ crowdfunding efforts may generate up to $4 billion dollars!
Companies can now file Form C, which is the offering statement required by the SEC for Regulation A+ crowdfunding deals. However, there’s also a requirement stating that there must be a minimum of 21 days before any securities are sold in an offering, which means the first Regulation A+ Crowdfunding closings won’t take place until at least June 6th, 2016.
Registration of funding portals are exempt from this date and are permitted to operate online platforms for securities transactions under Regulation A+ crowdfunding and began filing their registration form (Form Funding Portal) since January 29th, 2016. This staggering of effective dates levels the playing field between broker-dealers and funding portals.
These rules let everyday people to invest in business startups by buying equity securities via the SEC registered portals mentioned above. Besides the requirement that companies must disclose information about their business, they must also limit how much a particular individual may invest based on their income and net worth status.
We are headed into the brave new world of equity crowdfunding. Are you on board? While it may be a bit premature to celebrate, it looks as if Title III of the JOBS Act is on a new path to success. Keep in mind that Crowdfunding via platforms such as KickStarter and IndieGoGo are NOT the same as raising money using Reg.A paper! Restrictions are in place, especially with regards to “solicitation” practices. You should carefully review all your options before initiating a Regulation A+ Title III campaign – and if you need help doing that, or require expert advice and/or guidance, the Reg.A+ Funding Group is there to help.