Proposed SEC Crowdfunding Rules And Related Canadian Developments

The Securities and Exchange Commission has released its proposed equity crowdfunding rules under the U.S. Jobs Act. The intent of the proposed rules is to increase access to capital for smaller companies and startups by allowing them to raise money online by issuing securities in exchange for smaller pooled investments.

Crowdfunding Exemption

The proposed crowdfunding exemption would allow qualified U.S. issuers to raise up to US$1 million annually. Over the course of a 12-month period investors whose net worth and annual income are less than US$100,000 would be permitted to invest the greater of US$2,000 or 5% of their annual income or net worth, whereas investors whose net worth or annual income exceeds US$100,000 would be permitted to invest the greater of US$100,000 or 10% of their annual income.