Focus
Regulation Crowdfunding Reg CF Equity CrowdFunding (also known as Title III), Accredited Equity CrowdFunding (Title II), Regulation A+ (Also known as Title IV)
Our focus is on providing our clients with Regulation Crowdfunding which covers Title II, Title III and Title IV. Regulation Crowdfunding enables eligible companies to offer and sell securities through crowdfunding. The rules:
require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal
permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period
limit the amount individual non-accredited investors can invest across all crowdfunding offerings in a 12-month period and
require disclosure of information in filings with the Commission and to investors and the intermediary facilitating the offering
Securities purchased in a crowdfunding transaction generally cannot be resold for one year. Regulation Crowdfunding offerings are subject to "bad actor" disqualification provisions.
The Jumpstart our Business or Jobs Act (The JOBS Act allows companies to access funding in ways that were not allowed before due to securities regulations)
It is important to note that with the advent of the Jumpstart Our Business Startups Act or the JOBS Act included a number of provisions intended to reduce the costs and risks associated with initial public offerings for “emerging growth companies,” which are generally defined as companies with gross annual revenue of less than $1 billion during their most recently completed fiscal year whose first public offering of common equity securities occurred on or after December 9, 2011. These provisions make significant changes to the IPO process, IPO registration statement disclosure requirements and post-IPO reporting and other requirements for emerging growth companies by, among other things, permitting:
- emerging growth companies to confidentially submit draft IPO registration statements and subsequent amendments to the SEC for confidential nonpublic review, provided the initial confidential submission and all amendments are publicly filed at least 21 days prior to the IPO “road show”;
- oral and written communications between the emerging growth companies and certain institutional investors before and after filing a registration statement to “test the waters” to determine whether such investors might have an interest in a contemplated securities offering;
- investment banks that are participating or will participate in an offering to publish or distribute a research report about or have analysts make public appearances regarding an emerging growth company that proposes to file a registration statement or is in registration, without having such research report deemed to be a prospectus or an “offer” under the Securities Act;
- investment banks to publish or distribute research reports about or have analysts make public appearances regarding an emerging growth company following the IPO or within any period prior to the expiration of a lock-up agreement between the investment bank and the stockholders of an emerging growth company;
- emerging growth companies to comply with reduced disclosure requirements in IPO registration statements, including two years of required audited financial statements instead of three years, reduced “smaller reporting company” executive compensation disclosures and the ability to delay complying with new or revised accounting standards that do not yet apply to private companies; and
- newly public emerging growth companies to gradually “phase-in” certain post-IPO disclosure and other requirements for as many as five years, including auditor attestations of internal controls under Section 404(b) of the Sarbanes-Oxley Act, say on pay votes, full executive compensation disclosures and compliance with new or revised accounting standards that do not yet apply to private companies.
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