“These proposals are great for the Crowdfunding Industry and for American capitalism. They’re not about Wall Street. They’re about small companies and ordinary American investors, where jobs and ideas come from.” writes Mark Roderick in his Crowdfunding & FinTech Law Blog
The SEC is proposing upgrades to Rule 504, Rule 506(b), Rule 506(c), Regulation A, and Regulation Crowdfunding (Reg CF). In fact, all of the online crowdfunding rules. These upgrades will provide more opportunity for investors and companies alike.
Reg CF, the SEC’s first attempt to democratize investment, is moving up. If the proposed changes pass, investors will be able to invest more, whether they are accredited or not. Issuers or developers will be able to raise more. Meaning more funds for more projects all around. Some of the big changes include:
For Reg CF investors:
Limits on how much accredited investors can invest will be removed altogether. This means an accredited investor will be able to invest as much as they want in a Reg CF offering.
Investment limits for non-accredited investors will also change from “lesser of net worth or income” to “greater of net worth or income”.
For Reg CF issuers:
The annual limit on raising funds through Reg CF will be increased from $1.07 million to $5 million.
New rules will permit companies (issuers) to “test the waters”. Until now, companies have been forbidden to advertise an offering until its live on a funding portal.
Also new will be the ability to form a special-purpose-vehicle to invest using Title III.
Overall, these proposals will increase the amount of revenue that funding portals can make, helping to improve compliance and business practices.
Bravo to the SEC for proposing these changes. If you’re interested, you can read all 351 pages of the proposed rules here and a summary here.
And you can read Mark’s original article here.
Image courtesy of Small Change