Can I use crowdfunding to raise money without violating securities laws in Alabama? What are the requirements?

Requirements for Crowdfunding in Alabama

Crowdfunding is a method of raising capital through securities offerings using the internet. The JOBS Act provides for crowdfunding provisions that allow companies to raise capital from a large number of investors. However, to use crowdfunding in Alabama, you must comply with the state’s securities laws.

Alabama Securities Act requires that all securities offerings in Alabama be registered with the Alabama Securities Commission (ASC) unless they qualify for an exemption. The ASC has adopted Rule 830-X-3-.02, which provides an exemption from registration for certain crowdfunding offerings.

To qualify for the crowdfunding exemption, the offering must meet the following requirements:

• The issuer must be an Alabama resident or have its principal place of business in Alabama.
• The offering must be made exclusively to Alabama residents.
• The issuer must file a notice with the ASC at least 10 days before the first sale of securities.
• The issuer must provide investors with a disclosure document that includes information about the issuer, the securities being offered, and the risks associated with the investment.
• The issuer must limit the amount of securities sold to $5,000 per investor and $100,000 in the aggregate.

Conclusion

To use crowdfunding to raise money in Alabama, you must comply with the state’s securities laws. The ASC has adopted Rule 830-X-3-.02, which provides an exemption from registration for certain crowdfunding offerings. To qualify for the exemption, the offering must meet specific requirements, including filing a notice with the ASC, providing investors with a disclosure document, and limiting the amount of securities sold to $5,000 per investor and $100,000 in the aggregate.

Jurisdiction

Alabama

• General