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

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

Crowdfunding is a method of raising capital through the solicitation of small individual investments from a large number of people, typically via the internet. The Securities and Exchange Commission (SEC) has established rules and regulations for crowdfunding under the Jumpstart Our Business Startups (JOBS) Act.

Illinois has its own securities laws, which are enforced by the Illinois Secretary of State Securities Department. In order to use crowdfunding to raise money in Illinois, you must comply with both federal and state securities laws.

Under federal law, companies can use crowdfunding to raise up to $5 million in a 12-month period. To do so, they must use a registered crowdfunding portal and provide certain disclosures to investors, including financial statements and information about the company’s management team and business plan.

In Illinois, companies must also comply with the Illinois Securities Law of 1953, which requires the registration of securities offerings unless an exemption applies. Illinois has adopted the federal crowdfunding exemption, which means that companies can use crowdfunding to raise money without registering their offering with the state if they comply with the federal crowdfunding rules.

It is important to note that the requirements for using crowdfunding to raise money can be complex and may vary depending on the specific circumstances of your offering. It is recommended that you consult with a securities attorney to ensure that you are in compliance with all applicable laws and regulations.

In summary, to use crowdfunding to raise money without violating securities laws in Illinois, you must comply with both federal and state securities laws, including the federal crowdfunding rules and the Illinois Securities Law of 1953. It is recommended that you consult with a securities attorney to ensure compliance with all applicable laws and regulations.

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Source(s):
Jurisdiction

Illinois