SEC Approves Crowdfunding Rules, Proposals

Last week the SEC approved the new crowdfunding rules and proposed amendments, which allows companies to raise capital through crowdfunding options. The SEC approved the new rules under Title III of the JOBS Act where forms will be effective 180 days after they are published in the Federal Register, while forms for funding portals to register with the Commission will be effective January 29, 2016. The new rules state that the additional amount sold to all investors by the issuer during the 12-month period before the date of the transaction cannot exceed $1 million. Also, the dollar amounts can only be adjusted once every 5 years and must be published in the Federal Register to reflect changes in the Consumer Price Index. The final ruling goes on to explain that the capital raised through other exempt transactions will not be included in the additional amount sold. And, the rules require issuers to disclose certain information about their business and securities offering. The ruling has also created a framework for broker-dealer and funding portals to facilitate the transactions. In addition, the SEC proposed amendments to the existing Securities Act Rule 147, which will update the rules for intrastate offerings. In this proposal, issuers are allowed to incorporate and make offers outside of the state as long as sales are made to residents within the state. Furthermore, the issuer’s place of business must be in-state and should include one additional piece of evidence that would prove the company’s regional operations. The proposal would also amend Securities Act Rule 504 of Regulation D to increase the additional amount of money offered and sold, which is up to $5 million, while protecting investors. For the next 60 days, the SEC is accepting comments on the proposed rules. Also, visit our website at www.edgaragents.com or call our office at 732-780-5036 to learn more about our services and how we can assist with your filing needs.