Major Upgrades to Crowdfunding Rules

We are excited to share the SEC’s press release which announced a new set of amendments to Regulation Crowdfunding as well as other exempt offerings. These new set of amendments would harmonize, simplify, and improve the exempt offering framework to promote capital formation and expand investment opportunities while preserving and enhancing important investor protections. Click here to view the summary of the proposed changes.

Here are some highlights:

For Regulation A:

  • Raise the maximum offering amount from $50 million to $75 million

For Regulation Crowdfunding:

  • Raise the maximum offering amount from $1.07 million to $5 million
  • No investment limits for accredited investors
  • Revising the calculation method for investment limits for non-accredited investors to allow them to rely on the greater of their annual income or net worth when calculating the limit on how much they can invest instead of the constricting “lesser of” rules.
  • Allow SPVs for Regulation CF
  • Allow Testing the Waters for Regulation CF

For Rule 504 of Regulation D:

  • Raise the maximum offering amount from $5 million to $10 million.

These proposals are a HUGE game-changer for the crowdfunding industry and for private capital formation.

  1. Reg CF now becomes truly usable by almost all real estate businesses, as well as start-up and medium-sized businesses of all types.
  2. Crowdfunding Portals can now flourish, which will in turn not only help more businesses get funded but also protect the public by ensuring that offerings are done in compliance with securities regulations.
  3. Reg A can be used by even larger businesses.
  4. The general public has better access to alternative investments, giving them nearly the same wealth-building opportunities that historically have been reserved (by securities regulations) only for the very rich.
  5. More transparency.

When do these new rules go into effect?

These new rules do not immediately go into effect. They will be effective 60 days after publication in the Federal Register.