Fulfilling a promise made more than three and a half years ago,
on Friday the SEC approved final rules for Regulation Crowdfunding ("Reg
CF"), the last remaining component of the JOBS Act of 2012. Reg CF aims to
create a nationwide infrastructure for "retail crowdfunding,"
emerging companies and
entrepreneurs seeking to raise small amounts of capital from a wide array
- accredited and non-accredited
investors seeking to fund early stage and growth stage companies, and
- funding portal operators seeking
to connect the issuers and investors over the internet.
Reg CF is expected to go into
effect in 2016. The SEC has published a Fact Sheet detailing highlights of the
recommended final rules, which can be found here
Additionally, on Friday the
SEC also proposed rules to modernize intrastate securities offerings, such as
system, crowdfunding legislation
drafted by Winthrop & Weinstine attorneys Ryan Schildkraut and Zachary
Robins and signed into law in the state of Minnesota during the 2015
legislative session. Proposed changes to Securities Act Rule 147 and Rule 504
of Regulation D would eliminate cumbersome advertising constraints and increase
the amount of securities that may be sold. The SEC's Fact Sheet on the proposed
amendments can be found here
. The SEC is seeking public comments to
the proposed changes over the next 60 days, and will then determine whether to
adopt the proposed rules.
If you intend to utilize
crowdfunding for your business, either under the SEC rules or under MNvest, it
is wise to begin planning now, to take advantage of opportunities as soon as
the rules are enacted.
We will continue to monitor
developments to crowdfunding rules; for more information on the proposed
changes and how they may affect your business, please feel free to contact
About the Authors
Ryan Schildkraut and Zach
Robins are business transactions attorneys at Winthrop & Weinstine, and are
the co-authors of the MNvest legislation, which legalized securities
crowdfunding in Minnesota. They helped organize a group of politicians,
business leaders, and other supporters in a grassroots campaign to educate
Minnesotans on crowdfunding, and succeeded in MNvest being signed into law on
June 15, 2015.