SEC gives go-ahead to crowdfunding
The Securities and Exchange Commission recently adopted final rules to allow companies to offer and sell securities through crowdfunding, which will make it easier for startup companies to attract financing in accordance with the JOBS Act, the Jumpstart Our Business Startups Act, of 2012.
The SEC also voted to propose amendments to existing Securities Act rules to facilitate intrastate and regional securities offerings. The new rules and proposed amendments are designed to help smaller companies attract capital while giving investors additional protections.
Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects. Title III of the JOBS Act created a federal exemption under the securities laws so that this type of funding method can be used to offer and sell securities.
The final rules, Regulation Crowdfunding, permit individuals to invest in securities-based crowdfunding transactions subject to certain investment limits. The rules also limit the amount of money an issuer can raise using the crowdfunding exemption, impose disclosure requirements on issuers for certain information about their business and securities offering, and create a regulatory framework for the broker-dealers and funding portals that facilitate the crowdfunding transactions.
The new crowdfunding rules and forms will be effective 180 days after they are published in the Federal Register. The forms enabling funding portals to register with the Commission will be effective Jan. 29, 2016.
Read the full article from Accounting Today.