2.24.2016

Starting Soon... The Use of Crowdfunding to Sell Your Company's Securities

Good news for companies seeking to sell securities to raise money: From May 16, 2016 onwards, companies can offer and sell securities to the public via crowdfunding. 

Recently, the SEC’s Office of Investor Education and Advocacy published an investor bulletin to educate investors on the opportunities and risk regarding these crowdfunded offerings.  Two key takeaways:

  1. If either your annual income or your net worth is less than $100,000, then during any 12-month period, you can invest up to the greater of either $2,000 or 5% of the lesser of your annual income or net worth.
  2. If both your annual income and your net worth are equal to or more than $100,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $100,000.

The bulletin, among other things, also instructs investors in the different ways they can calculate their net worth to meet the investment limit. 
To ensure that you are in compliance with the SEC's crowdfunding rules and that your investors are properly vetted, contact me at danny@djimlaw.com.  

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