10.6. Crowdfunding: Regulation CF
The crowdfunding exemption was created by Congress in 2012. It allows small companies to conduct online offerings to raise up to $5 million over a twelve-month period. The SEC set up a regulatory framework for crowdfunding in the form of Regulation Crowdfunding, also called Regulation CF. To be eligible, a company must be a domestic, non-reporting company that is not an investment company. The issuer of crowdfunding securities must file Form C with the SEC, which requires certain disclosures about itself and its officers and directors. There is no limit on the number of investors permitted in a crowdfunding offering. Non-accredited investors are limited in how much they can invest.
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Maximum that May Be Accepted from Non-Accredited Investors |
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If annual income OR net worth is less than $124,000 |
The greatest of: • $2,500 • 5% of income • 5% of net worth |
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If annual income AND net worth are $124,000 or | |