Is Crowdfunding A Good Choice For Your Business?
Georgia’s legislation positions the state as one of the leaders in assisting businesses and providing alternative means of raising capital by offering securities to the public. Crowdfunding is accomplished through Georgia’s Invest Georgia Exemption.
Georgia businesses are able to utilize this key provision in order to raise startup capital, growth strategies, expansion, new or existing product development or expansion or project development.
Lerman Law Associates, P.C., is able to assist both new and established businesses to take advantage of this exemption from securities registration.
Crowdfunding Under The Invest Georgia Exemption
The key points and rules under this intrastate crowdfunding provision allow the offer or sale of for-profit corporate security from an issuer, provided that:
- The business is formed under the laws of Georgia.
- The offering is qualified as an intrastate offering under the Securities Act of 1933.
- The total capital raised does not exceed $1 million in a given 12-month period.
- Any investors are limited to a maximum capital investment of $10,000 unless the investor is “accredited” under Rule 501 of SEC Regulation D.
- The business must not be an “investment company” as defined in Section 3 of the Investment Company Act of 1934.
Contact Lerman Law Associates, P.C., for more information regarding this advantageous exemption from securities registration for Georgia offerings. Lerman Law Associates, P.C., can assist and provide legal representation in navigating this offering through full counsel in complying with the complete set of rules regarding Georgia crowdfunding, in addition to the preparation of relating corporate documents, formation, by-laws, offering memorandums, subscriptions documents and other related legal documents in order to have a successful round of financing.
Crowd Funding: New Rules Of The Game — JOBS Act
The JOBS Act has carved out an exemption from the existing regulatory scheme that allows companies and their representatives to utilize crowdfunding to raise investment funds. Crowdfunding refers to the sale of small amounts of equity to many investors. These investors are solicited openly — usually online or via social media.
The exemption is not without limits, however. There are some important restrictions on raising money through crowdfunding, including the following:
- The business that is raising money may not be publicly traded or an investment company.
- The company itself cannot do the fundraising. The money must be funneled through SEC regulated brokers or funding portals.
- Businesses may raise a maximum of $1 million per year through crowdfunding.
- Filing financial disclosures with the SEC is required.
- Businesses must say what the money is being used for, the amount they are seeking to raise and the price it will be offered to the public for.
Just like any area that is regulated by the SEC, the new crowdfunding regulations are complex. The above rules are just a sample; there are many more that you must comply with in order to raise money under the new exemption. Attorney Craig Lerman can help determine whether crowdfunding is the right solution for your business.
These Are Positive Changes
It cannot be overstated how positive the changes to Rule 506 and the crowdfunding exemption under the JOBS Act are for businesses in need of capital. Craig Lerman can help you navigate the nuances of the regulations and help you secure the financial future of your business.