For Regulation Crowdfunding, the amendments:
- raise the offering limit from $1.07 million to $5 million;
- change the investment limits for investors by:
- removing investment limits for accredited investors; and
- using the greater of their annual income or net worth when calculating the investment limits for non-accredited investors; and
- extend for 18 months the existing temporary relief providing an exemption from certain Regulation Crowdfunding financial statement review requirements for issuers offering $250,000 or less of securities in reliance on the exemption within a 12-month period
Furthermore, rules have been established that permit the use of certain special purpose vehicles that function as a conduit for investors to facilitate investing in Regulation Crowdfunding issuers, which will allow issuers to avoid fragmentation of their cap table due to the large number of investors in equity crowdfunding campaigns.
An interesting addition is that Regulation Crowdfunding issuers will be allowed to “test-the-waters”, i.e. evaluate the interest of potential investors prior to filing an offering document with the Commission, in a manner similar to current Regulation A.
The amendments will be effective 60 days after publication in the Federal Register.
Read the full SEC press release here