April 5, 2012
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The New "Crowdfunding" Exemption from Securities Registration
Part of the Jumpstart Our Business Startups Act (the “JOBS Act”) passed by Congress and signed into law by the President on April 5, 2012, exempts “crowdfunding” from the registration requirements for securities offerings under the Securities Act of 1933 (the “Securities Act”). Crowdfunding refers to private companies raising relatively small amounts of money from a potentially large number of investors often via the internet, as we discussed in our Lathrop Gage Alert dated October 6, 2011.
The crowdfunding exemption is limited to issuers that are private companies
Offerings Limited to $1 Million
For an issuance of securities to be exempt from registration under the crowdfunding exemption:
Crowdfunding Requires Using a Registered Intermediary
An issuance of securities under the crowdfunding exemption must be conducted through an “intermediary,” which must:
An issuer of securities under the crowdfunding exemption must file with the SEC, and provide to its investors, potential investors, and intermediary, the following information:
Securities issued under the crowdfunding exemption may not be transferred by the purchaser during the one-year period beginning on the date of purchase, except:
The statutory crowdfunding exemption is not self-executing, so it will become effective once the SEC issues final rules, which are due within 270 days after the enactment date. To discuss this alert or any securities law matter, please contact your Lathrop Gage attorney or any of the attorneys listed on this alert.
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