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8/16/2019 SEC Reg CF

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5/20/2016 SEC.gov | Regulation Crowdfunding

https://www.sec.gov/divisions/corpfin/guidance/reg-crowdfunding-interps.htm

These Compliance and Disclosure Interpretations (“C&DIs”) comprise interpretations

of Regulation Crowdfunding by staff of the Division of Corporation Finance.

They are not rules, regulations, or statements of the Commission. Further, the

Commission has neither approved nor disapproved these interpretations.

These positions do not necessarily contain a discussion of all material considerations

necessary to reach the conclusions stated, and they are not binding due to their

highly informal nature. Accordingly, these responses are intended as general

guidance and should not be relied on as definitive. There can be no assurance that

the information presented in these interpretations is current, as the positions

expressed may change without notice.

The bracketed date following each C&DI is the latest date of publication or revision.

Rule 100: Crowdfunding exemption and requirements

Question 100.01

Question: What information can an issuer disseminate prior to filing the Form C with

the Commission and providing it to the relevant intermediary?

Answer: Information not constituting an off er of securities may be disseminated by an

issuer prior to the commencement of a Regulation Crowdfunding offering. For example,

factual business information that does not condition the public mind or arouse public

interest in a securities offering is not an offer and may be disseminated widely. The

Commission has interpreted the term “offer” broadly and has explained that “thepublication of information and publicity efforts, made in advance of a proposed financing

which have the effect of conditioning the public mind or arousing public interest in the

issuer or in its securities constitutes an offer…” Securities Offering Reform, Release No.

33-8591 (July 19, 2005). See also Securities Act Rule 169 and Securities Act Rule C&DI

256.25. Regulation Crowdfunding, however, does not provide an exemption for the

dissemination of information that constitutes an offer of securities by an issuer prior to

the issuer filing a Form C with the Commission and providing it to the relevant

intermediary. [May 13, 2016]

Question 100.02:

Question: Are non-natural persons that invest in Regulation Crowdfunding offerings

subject to investment limits?

Answer: Yes. The investment limits in Rule 100(a)(2) of Regulation Crowdfunding apply

to all investors. Instead of calculating investment limits based on annual income and net

worth, a non-natural person calculates the limits based on its revenue and net assets (as

of its most recent fiscal year end). [May 13, 2016]

Rule 201: Disclosure Requirements

Question 201.01:

Question: May a recently formed issuer choose to provide a balance sheet as of its

inception date?

Answer: Yes, if the offering is conducted during the period from inception until 120

days after reaching the annual balance sheet date for the first time, the issuer must

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include a balance sheet as of a date in that period, which may be inception date. When

the balance sheet is dated as of inception the statements of comprehensive income,

cash flows and changes in stockholders’ equity will not be applicable. For an offering

conducted more than 120 days after the issuer’s first annual balance sheet date, the

date of the most recent annual balance sheet determines the period for which

statements of comprehensive income, cash flows and changes in stockholders’ equity

must be provided. For example, depending on its date of inception, an issuer with a

December 31 fiscal year end that starts a Regulation Crowdfunding offering in June 2016

would provide financial statements as follows:

Date of Inception Balance Shee t Other Financial Statements

M ay 2 01 6 A s of i nc epti on N ot appli cabl e

May 2015 As of December 31,

2015

For the period from inception to December 31, 2015

May 2014 As of December 31,

2015 and 2014

For the year ended December 31, 2015 and the period

from inception to December 31, 2014

[May 13, 2016]

Rule 204: Advertising

Question 204.01

Question: May an issuer advertise the “terms of the offering” under Regulation

Crowdfunding?

Answer: Yes, but any such advertising that is made other than through communication

channels provided by the intermediary on the intermediary’s platform will be limited to

notices that include no more than the information described in Rule 204(b) of Regulation

Crowdfunding. “Terms of the offering” is defined to include “the amount of securities

offered, the nature of the securities, the price of the securities and the closing date of

the offering period.” See Instruction to Rule 204. [May 13, 2016]

Question 204.02

Question: May an issuer advertise the “terms of the offering” through a video that

complies with Rule 204(b) of Regulation Crowdfunding?

Answer: Yes. [May 13, 2016]

Question 204.03

Question: If an issuer’s advertisement does not include any of the “terms of the

offering,” is the issuer limited to notices that include no more than the information

described in Rule 204(b) of Regulation Crowdfunding?

Answer: No. The limitation on advertisement applies only when the advertisement

includes any of the “terms of the offering.” [May 13, 2016]

Question 204.04

Question: Could a third party publication, such as a media article, constitute a notice

that would subject an issuer to the limitations of Rule 204?

Answer: Yes. If the media article advertises the terms of the offering and the issuer has

been directly or indirectly involved in the preparation of the publication, the article would

be a notice subject to Rule 204. Because Rule 204 limits the information that may be in

such a notice, it would likely be difficult for the issuer to comply with the rule’s

requirements. If the media article did not advertise the terms of the offering, it would

not be a notice subject to Rule 204, although it could still constitute an “offer” under the

securities laws. [May 13, 2016]

Rule 205: Promoter Compensation


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Modified: May 13, 2016

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Question 205.01

Question: When an issuer is compensating a third party to promote the issuer’s offering

outside of the intermediary’s communication channels, do those third-party

communications need to comply with the notice requirements of Rule 204(b) of

Regulation Crowdfunding?

Answer: Yes. See Rule 205(b). [May 13, 2016]
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