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In case you missed it… a few weeks ago the Securities and Exchange Commission finally adopted final rules to enable companies to offer and sell securities using crowdfunding.

The JOBS Act (which was signed into law April 5, 2012) created a federal exemption under the securities laws for crowdfunding but SEC rules were needed to make it possible.

Very soon, small investors can join the start-up phenomenon!

 

Here are the highlights for the new rules:

 

  • A company can raise a maximum aggregate amount of $1,000,000 through crowdfunding during a twelve-month period.
  • During any twelve-month period, an individual investor must limit the investor’s investments through crowdfunding to $100,000 or less.
  • During any twelve-month period, an individual investor must adhere to the following investment limits:

 

Annual Income or Net Worth Investment Limit
< $100,000 $2,000 or 5% of the lessor of the investor’s (a) annual income or (b) net worth
= or > $100,000 10% of the lessor of the investor’s (a) annual income or (b) net worth

 

Not all companies may participate in crowdfunding, such companies that have formed specifically to engage in a merger or acquisition, companies without a specific business plan, or companies that have failed to comply with annual reporting requirements.

The rules also contain certain requirements to which companies must adhere, such as retaining the services of a registered transfer agent for the transactions and have less than $25,000,000 in assets at the end of the most recent fiscal year.

 

The full press release from the Securities and Exchange Commission is available here: http://www.sec.gov/news/pressrelease/2015-249.html 


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