Highlights of the New Crowdfunding Final Rules

The new rules would, among other things, enable individuals to purchase securities in crowdfunding offerings subject to certain limits, require companies to disclose certain information about their business and securities offering, and create a regulatory framework for the intermediaries facilitating crowdfunding transactions.  More specifically, the recommended rules would: 

Permit a company to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period;

Permit individual investors, over a 12-month period, to invest in the aggregate across all crowdfunding offerings up to:


  • If either their annual income or net worth is less than $100,000, than the greater of: $2,000 or  5 percent of the lesser of their annual income or net worth
  • If both their annual income and net worth are equal to or more than $100,000, 10 percent of the lesser of their annual income or net worth; and 
  • During the 12-month period, the aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $100,000.


Under the rules, certain companies would not be eligible to use the exemption. Such companies include non-U.S. companies, Exchange Act reporting companies, certain investment companies, companies that are subject to disqualification under Regulation Crowdfunding, companies that have failed to comply with the annual reporting requirements under Regulation Crowdfunding during the two years immediately preceding the filing of the offering statement, and companies that have no specific business plan or have indicated that their business plan is to engage in a merger or acquisition with an unidentified company or companies.

Securities purchased in a crowdfunding transaction generally could not be resold for one year. 


Holders of these securities would not count toward the threshold that requires a company to register its securities under Exchange Act Section 12(g) if the company is current in its annual reporting obligations, retains the services of a registered transfer agent and has less than $25 million in total assets as of the end of its most recently completed fiscal year.

Additionally, all transactions relying on the new rules would be required to take place through an SEC-registered intermediary, either a broker-dealer or a funding portal. 

                                                  Disclosure by Companies 


Companies that rely on the recommended rules to conduct a crowdfunding offering must file certain information with the Commission and provide this information to investors and the intermediary facilitating the offering, including among other things, to disclose: 

The price to the public of the securities or the method for determining the price, the target offering amount, the deadline to reach the target offering amount, and whether the company will accept investments in excess of the target offering amount;

A discussion of the company’s financial condition;


Financial statements of the company that, depending on the amount offered and sold during a 12-month period, are accompanied by information from the company’s tax returns, reviewed by an independent public accountant, or audited by an independent auditor.  A company offering more than $500,000 but not more than $1 million of securities relying on these rules for the first time would be permitted to provide reviewed rather than audited financial statements, unless financial statements of the company are available that have been audited by an independent auditor;

A description of the business and the use of proceeds from the offering;


Information about officers and directors as well as owners of 20 percent or more of the company; and
certain related-party transactions.

In addition, companies relying on the crowdfunding exemption would be required to file an annual report with the Commission and provide it to investors.



For the Full SEC Release, please click on the following link -- http://www.sec.gov/news/pressrelease/2015-249.html  

The Jumpstart Our Business Startups Act (the “JOBS Act”), enacted on April 5, 2012, establishes a regulatory structure for startups and small businesses to raise capital through securities offerings using the Internet through Crowdfunding. The Crowdfunding provisions of the JOBS Act were intended to help provide startups and small businesses with access to capital by permitting the sale of private (unregistered) securities to non-accredited investors through a registered crowdfunding portal. 


Representing Funding Portals & Platforms

Equity - Debt & Market Place Lending - Reward - Donation - Royalty


Since 2011, Mr. Georgiades has been meaningfully involved with issuers, crowdfunding portals, service providers and regulators to implement the new capital formation reforms enacted under the JOBS Act. He had represented many of the leading venture-backed funding platforms since their inception and continue to represent crowdfunding platforms both nationally and internationally. We have worked with new funding platforms to develop strategies and models around their business model and to create funding 'eco-systems' which foster crowd-diligence, transparency, compliance and efficient execution of online finance transactions.

“There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need..”  SEC Chair Mary Jo White