If you are contemplating on raising equity based-funding for your new business product or service, there are certain compliance requirements. However, thanks to the Crowdsource Act of 2012 (Title III of the 2012 Jobs Act), there are significantly less reporting requirements than the Securities Act of 1933. The website portal you use to market your campaign should guide you through the process, but some of the pertinent compliance requirements include:
The business must disclose :
* Officers and directors with more than 20% ownership;
* Intended use of funds; target amount of funds;
* Deadlines and progress updates; and
* Financial statement (scope depends on target amount).
Other compliance requirements include:
* The limit offer may not exceed $1 million in any 12 month period;
* No cap for shareholders;
* Foreign entities may not invest;
* Since the Crowdsource Act 2012 (Jobs Act) is federal law, the activities are outside state regulation and control; and
* Investors are limited in any 12 month period to investing $2000 or 5% on income/net worth if less than $100,000, or 10% if income/net worth is more than $100,000.