CROWDFUNDING FOR EMERGING GROWTH COMPANIES LEGISLATION IN EFFECT MONDAY, SEPTEMBER 23, 2013
EAST BRUNSWICK, NJ (September 23, 2013) – Federal legislation intended to ease access to capital and reduce fundraising costs for emerging growth companies and small start-ups through crowdfunding went into effect today. It is part of the 2012 “Jumpstart Our Business Startups Act” known as the “JOBS Act”. Companies that qualify may seek equity investments on internet websites and social media for up to $1 million annually, with certain safeguards in place, including issuing and selling their securities only to accredited investors costly audited financial statements prepared by companies that raise more than $500,000. Final rules governing crowdfunding, however, have not yet been adopted by the United States Securities and Exchange Commission (“SEC”); similarly, the Financial Industry Regulatory Authority (“FINRA”) has not yet created a regulatory system for funding portals. The SEC has adopted new rules lifting the ban on general solicitation and advertising for certain securities offerings and is in the process of writing and adopting new rules regarding company disclosures and other safeguards, as well as rules governing funding portals.