Crowdfunding Regulations – Issuer Rules

This May, the U.S. Securities and Exchange Commission’s highly anticipated equity crowdfunding rules (the “Crowdfunding Rules”) took final effect. A product of the Jumpstart Our Business Startups Act of 2012, crowdfunding has, for some time, been acclaimed an evolutionary capital raise mechanism. Through crowdfunding, start-ups and emerging companies can cast a wide net in acquiring muchneeded, and often hard-to-find, early-stage funding. In its original form, crowdfunding was an unregulated, reward-based system under which small businesses would use online host platforms, such as kickstarter.com, to seek out and raise capital from investors to fund their operations and push trendy ideas and initiatives to market. In return for their monetary contributions, investors would receive nominal gifts from the issuer in lieu of any actual equity stake in the company. Under the Crowdfunding Rules, investors are now able to make similar monetary investments in return for some form of equity, ownership or economic interest. Crowdfunding – P1

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