SEC Adopts Crowdfunding Securities Rules
The SEC adopts rules to permit securities based crowdfunding for small businesses and start up companies
Crowdfunding is a process where an entity or individual raises funds for some stated purpose by seeking small individual contributions from a large number of people via internet. You can read our indepth blog article here.
A relatively low dollar capital raising vehicle for startups and small businesses will be unleased soon. The Securities and Exchange Commission (“SEC”), consistent with the requirements of the 2012 Jumpstart Our Business Startups Act (“JOBS Act”), adopted final rules to offer and sell securities through crowdfunding (SEC proposed rules were published in October, 2013 with over 485 comment letters received). These rules are touted as Regulation Crowdfunding under new Section 4(a)(6) of the Securities Act of 1933. These rules will become effective 180 days after they are published in the Federal Register, thus these rules will likely become effective sometime in May 2016.
SEC Adopts New Crowdfunding Securities Rules
Small businesses and startups who are interested in Regulation Crowdfunding securities offering should consider connecting with qualified securities counsel. Moreover, such companies may consider enlisting the services of an accounting firm to assist in financial statement preparation, business planning and internal accounting systems and controls.