Showing 3 posts from August 2014.
The State of Washington has published proposed rules for intrastate crowdfunding in that state.
Like most other intrastate crowdfunding arrangements, the Washington State arrangement relies in Section 3(a)(11) of the Securities Act of 1933 and the SEC's Rule 147 thereunder. Accordingly:
- Issuers must be organized under the laws of the State of Washington;
- Issuers must be doing business in the State of Washington at the time of the offering; and
- Every investor in the offering must be a resident of the State of Washington.
The proposed rules establish certain "bad actor" disqualifications and require a notice filing on a prescribed form.
Intrastate crowdfunding can be useful for local projects where all investors are residents of the state and the projecting being funded will primarily have local interest. Offerings under the Washington State rules may not exceed $1 million.
The Washington State rules limit the amount an investor may invest. For investors with incomes under $100,000, the maximum individual investment is the lesser of $2,000 or 5% of annual income. For investors with incomes over $100,000, the maximum individual investment is the lesser of $100,000 or 10% of annual income.
The Washington State rules are also noteworthy because they give investors a statutory right of rescission in certain circumstances and also proscribe certain shareholder rights that must be included in an offering that is exempt under the rules.
Interested persons may submit written comments to: Securities Division, P.O. Box 9033, Olympia, WA, 98507-9033 or by email to email@example.com. Comments must be delivered by September 23, 2014.
Intrastate crowdfunding rules have now been adopted in nearly a dozen states including Kansas, Georgia, Wisconsin and several others. Intrastate crowdfunding has grown in popularity as the SEC has continued to delay its implementation of interstate crowdfunding under Title III of the JOBS Act of 2012.
(Hat tip: Jim Hamilton).
The founder of RealtyShares has penned this guide to real estate crowdfunding.
Until the SEC adopts final regulations for interstate crowdfunding under the JOBS Act, local crowdfunding into real estate is likely to be the biggest opportunity for investors.
The North Carolina legislature has failed to pass a bill that would have permitted intrastate crowdfunding in that state.
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