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November 12, 2015 by Sara Hanks
This is my least favorite bit of the SEC's Regulation CF: the fact that the exemption from Section 12(g) is conditional. What does this mean? Section 12(g) of the Securities Exchange Act of 1934 says that if you acquire a certain number of shareholders of any class of equity securities, you have to register that class with the SEC and become subject to the SEC's ongoing reporting requirements. The shareholder number for non-accredited investors is 500. Lots of crowdfunding companies will want to have at least 500 investors in their crowd. Regulation CF exempts crowdfunding companies from full SEC registration, BUT this exemption is conditioned on the companies...
This entry is filed under Crowdfunding, Disclosure, SEC, Section 4(a)(6), Blog
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November 11, 2015 by Sara Hanks
I had a few spare minutes yesterday after making our fifth Regulation A filing with the SEC and after a quick scamper round the internet I found that there is an amazing amount of bad information about Regulation A out there. It's getting so deep we are going to have to start shovelling. So I'm going to start picking on bits of misinformation and shovelling them out. We'll start with this one: "Non-affiliates can sell their shares after one year under SEC Rule 144." Nope. Rule 144 has nothing to do with Regulation A. Rule 144 gives affiliates and people who are holding "restricted" securities a way to sell their securities without being treated as underwriters...
This entry is filed under Crowdfunding, Regulation A, Securities Law, Blog
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November 08, 2015 by Sara Hanks
Issuers of securities under Regulation CF will be required to provide financial statements prepared in accordance with US Generally Accepted Accounting Practices (U.S. GAAP) covering the two most recently completed fiscal years (or shorter period since inception). The type of review that these financial statements have to undergo depends on the amount sought, the amount of securities that the issuer has already sold in reliance on Regulation CF in the preceding 12 months, and whether the issuer has previously sold securities in an offering under Regulation CF: ·         If current offer plus previous raises amounts to $100,000 or less, the financial...
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November 01, 2015 by Sara Hanks
As we all know by now, the SEC on Friday voted in favor of adopting the regulations that will permit securities-based crowdfunding. The rules will go into full effect 180 days after publication in the Federal Register, which may mean just around May 1. Which seems like a very fine time for a fundamental change in the funding of early-stage companies. We'll be blogging about various aspects of the new rules here. And we'll be producing a practical guide to Regulation Cf which we'll distribute to everyone and post in "Resources". So keep visiting! And long live the financial revolution!
This entry is filed under Crowdfunding, Section 4(a)(6), Securities Law, Blog
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October 28, 2015 by Andrew Hanks takes a look at the impact of Regulation A+ since it became available this past summer. The Current State of Reg A+ Investment Crowdfunding With all the excitement around the big SEC Title III Equity Crowdfunding announcement on Oct 30th it’s easy to overlook the fact that the SEC already enabled a potentially much more powerful set of rules earlier this year, which we are only now starting to see the effects of.
This entry is filed under Crowdfunding, Regulation A, SEC, Blog
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October 18, 2015 by Sara Hanks
We've discussed previously the fact that in a Regulation A offering the SEC gets to see all your stuff. Of course, it's not just the SEC who gets to see stuff, but anyone with an internet connection. And some of the stuff that they get to see in a Regulation A filing consists of your "material contracts." What are these? Well, they are described here, but basically they consist of contracts with management, such as employment agreements, stock option plans and important agreements such as supply or manufacturing contracts. What if you have confidential information in those contracts that you don't want to share with the public? Or the contract has a...
This entry is filed under Crowdfunding, Disclosure, Regulation A, SEC, Securities Law, Blog
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September 24, 2015 by Andrew Hanks
Thomson Reuter's Practical Law interviews CrowdCheck CEO Sara Hanks  on trends in equity crowdfunding and key issues for companies considering a crowdfunding offering.   Expert Q&A on Equity Crowdfunding
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September 18, 2015 by Andrew Stephenson
Here at CrowdCheck, we have been worried about how state regulators would respond to the SEC's new testing the waters rules for Tier 2 Offerings under Regulation A.  As we previously addressed on this blog, the new rules exempted testing the waters communications from federal securities registration requirements, but left some ambiguity with respect to the application of "state notice" filings (which are permitted even in Tier 2 offerings).  After all, testing the waters communications are offers of securities.  And when those communications are made through open, online forums —such as through an investment platform or social media — those are offers of...
This entry is filed under Regulation A, Securities Law, Blog
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September 07, 2015 by Sara Hanks
I had a great conversation with a member of the SEC Staff the other day in which he referred to the type of disclosure to be made under Regulation A as “free market disclosure.” I think that’s a great term and much better than the way I was thinking of disclosure under Regulation A, which was in terms of “non-application of the principle of ‘monopoly of the prospectus’.” Oops, I see I almost lost you there. I was talking securities law geek language again. The “monopoly of the prospectus” refers to the fact that, if you were doing a regular IPO, instead of a Reg A offering, you would not be able to make any statements about the offering outside the official...
This entry is filed under Crowdfunding, Disclosure, Regulation A, SEC, Blog
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August 18, 2015 by Andrew Hanks
Crowdcheck submitted a comment letter today to Washington State's DFI with respect to its proposed notice filing requirements for Tier 2 of Regulation A.
This entry is filed under Regulation A, Blog
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