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

Requirements for Crowdfunding in Connecticut

Connecticut has not enacted any specific laws or regulations regarding crowdfunding. However, crowdfunding is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

To use crowdfunding to raise money without violating securities laws, you must comply with the federal regulations. The JOBS Act of 2012 created two exemptions for crowdfunding: Regulation Crowdfunding and Regulation A+.

Regulation Crowdfunding

Regulation Crowdfunding allows companies to raise up to $5 million in a 12-month period through crowdfunding. To use this exemption, companies must meet the following requirements:

  • The company must be organized under the laws of a U.S. state or territory and have a principal place of business in the U.S.
  • The company cannot raise more than $5 million in a 12-month period.
  • The company must disclose certain information to investors, including financial statements, a description of the company’s business, and the intended use of the funds raised.
  • The company must use a registered crowdfunding intermediary, such as a broker-dealer or funding portal.

Regulation A+

Regulation A+ allows companies to raise up to $50 million in a 12-month period through a public offering. To use this exemption, companies must meet the following requirements:

  • The company must file an offering statement with the SEC and provide certain disclosures to investors, including financial statements and a description of the company’s business.
  • The company must use a registered broker-dealer to sell the securities.
  • The company must comply with ongoing reporting requirements.

Conclusion

To use crowdfunding to raise money without violating securities laws in Connecticut, you must comply with the federal regulations, including Regulation Crowdfunding or Regulation A+. It is important to consult with a lawyer to ensure compliance with all applicable laws and regulations.

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Source(s):
Jurisdiction

Connecticut