she focuses her practice on business law and business transactions,
and primarily represents start-ups, small businesses and family
businesses.
322 W. Lincoln
Royal Oak, Michigan 48067
248.723.5500 Phone
248.723.5588 Fax
melissa@demolaw.com
www.demolaw.com
the JOBS Act into law.
small business to raise up to $1 million
in a year by issuing stock to many small-
scale investors, without going through
an initial public offering ("IPO"). The
United States Securities and Exchange
Commission ("SEC") will regulate
crowdfunding. Before businesses can
begin crowdfunding, the SEC must issue
regulations on how it will be done. The
regulations should be issued around the
end of 2012.
after the SEC issues its rules. Here is a
summary of how crowdfunding will work:
requires a crowdfunding issuer to work
with a crowdfunding intermediary
to issue securities to investors. The
crowdfunding intermediary will handle
the investor transactions and may not
issue the funds to the issuer until the
target offering amount (up to $1 million)
is reached.
to issue up to $1 million in securities
per year, with different requirements at
different investment thresholds.
much a particular investor can
invest. For example, if an investor
earns less than $100,000 annually,
he can invest up to 5 percent of
annual income or $2,000 (whichever
is less). An investor whose net
worth or annual income is more
than $100,000 can invest up to 10
percent of her annual income or
net worth, not to exceed $100,000
annually.
required to make all of the disclosures
required in a public offering, but will
have to make certain disclosures in a
crowdfunding offering memorandum,
including:
the entity
directors, and anyone holding
more than 20 percent of the equity
in issuer
proceeds
deadline to reach it
the price
capital structure of issuer
condition, including specific
financial statement requirements
for target offering level
statements must be reviewed by an
independent CPA
statements must be audited
investors and the SEC with financial
reports at least annually.
crowdfunding issuers use the services
of a crowdfunding intermediary, such
as a "funding portal" or a broker
registered with the SEC, to issue
the securities.
will be strictly regulated and
cannot give investment advice.
Their primary role will be
to provide information and
disclosures to investors, and to
reduce the risk of fraud.