Beginning on May 16, 2016, small businesses and start-ups will be able to sell shares to the American general public on crowdfunding portals. Under the Securities and Exchange Commission crowdfunding rules, an eligible company may raise up to $1 million on the internet in a 12-month period, through either a broker or a crowdfunding portal registered with the SEC.
An investor earning or having net worth less than $100,000 may invest no more than (a) the greater of $2,000 or (b) 5 percent of the lesser of the investor’s income or the investor’s net worth in all crowdfunding offerings in a 12-month period. An investor having net worth and income greater than $100,000 may invest no more than (a) $100,000 or, if less, (b) 10 percent of the lesser of the investor’s income or the investor’s net worth in all crowdfunding offerings in a 12-month period. An issuer generally may rely on an intermediary to determine whether an investor’s crowdfunding investments are within these limits. Crowdfunding securities may not be resold for one year, except to accredited investors.
