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Title III of the JOBS Act created an exemption under securities laws for crowdfunding, which set the table for its regulation by the SEC -- that was supposed to happen by the end of last year. Two weeks ago the SEC finally issued its proposed rules on crowdfunding (summary here, full 500+-page PDF here). Here are the highlights:
- Companies are capped at raising $1 million cap per year through crowdfunding.
- Investors with less than $100,000 annual income and net worth, could invest up to $2,000/year or 5 percent of annual income or net worth (whichever is greater).
- Investors with at least $100,000 annual income and net worth, investment amount levels rise to 10 percent of annual income or net worth (whichever is greater), and purchase no more than $100,000 of securities through crowdfunding.
- Non-U.S. companies are ineligible for the crowdfunding exemption, as are companies that already report to the SEC, some investment companies, those who aren't compliant with certain reporting rules, and others with no business plan or pending M&A deals.
- Securities purchased via crowdfunding can't be resold for a year.
- Under the proposed rules, issuers publishing notices advertising an offering can include terms: the nature and amount of securities offered, their pricing, and the closing date of the offering period.
Thanks for this concise summary. Are there any state specific regulatory layers that can impact this concept?
ReplyDeleteThe "$1 million cap per year" is concerning and a major bottleneck. At 50% crowdsourced equity on $2/W projects this is only 1MW of PV funded per year per company. That could be 1 project. The admin overhead and business infrastructure needed to support such development is substantially more than today's margins. That cap will make for a hard business model and poor reception.
ReplyDeleteI am hopeful that the best minds will figure out a way (or a loophole) but what I see on the surface is another example of a throttled solar industry.
Nick, I share your concern ... One can hope that this will at least allow subscribers to invest in 500kW SPEs, and you could crank these out until the cows come home.
ReplyDeleteAnthony, as I understand it, federal law trumps state law, and you will be able to use this everywhere.
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