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

Based on the information available in the provided documents, it is possible to use crowdfunding to raise money without violating securities laws in California by complying with the requirements of Regulation Crowdfunding.

Requirements for Crowdfunding in California

To rely on the Regulation Crowdfunding exemption, certain requirements must be met, including:

  1. Maximum Offering Amount of $1,070,000: A company issuing securities in reliance on Regulation Crowdfunding cannot raise more than $1,070,000 in a 12-month period.
  2. Disclosure Requirements: Companies must provide certain disclosures to investors, including information about officers and directors, the company’s business, the use of proceeds from the offering, and the risks associated with the investment.
  3. Limits on Investment: Investors are subject to limits on the amount they can invest in crowdfunding offerings in a 12-month period, based on their income and net worth.
  4. Limits on Advertising and Promoters: An issuer may not advertise the terms of a Regulation Crowdfunding offering except in a notice that directs investors to the intermediary’s platform and includes no more than the following information: a statement that the issuer is conducting an offering, the name of the intermediary through which the offering is being conducted, a link directing the investor to the intermediary’s platform, and the terms of the offering.

Conclusion

Therefore, to use crowdfunding to raise money without violating securities laws in California, companies must comply with the requirements of Regulation Crowdfunding, including the maximum offering amount, disclosure requirements, limits on investment, and limits on advertising and promoters.

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Source(s):
Jurisdiction

California