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SEC issues final rule on crowdfunding

  • SEC document Image

Oct 30, 2015

The SEC has issued a final rule, "Crowdfunding," which would permit eligible companies to use “crowdfunding” to offer and sell securities. Crowdfunding is a method of raising capital through the Internet, typically by soliciting small individual contributions from a large number of people.

The final rule (mandated by Title III of the JOBS Act) permits an individual to use crowdfunding to invest in eligible companies, subject to certain thresholds, on the basis of the annual income or net worth of the individual; however, the amount of money a company can raise through crowdfunding offerings would be limited to $1 million in a 12-month period. The final rule will become effective May 16, 2016, except that instruction 3 adding part 227 and instruction 15 amending Form ID are effective January 29, 2016.

In addition, the SEC has issued a proposed rule that would amend Securities Act Rule 147 for intrastate offerings and Rule 504 of Regulation D for the small offering exemption. Comments on the proposed rule are due January 11, 2016.

For more information, see the press release, final rule, and proposed rule on the SEC’s Web site.

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