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

Answer

To raise money through crowdfunding in Iowa, you must comply with the Iowa Uniform Securities Act (IUSA) [1]([1]). The IUSA requires that all securities offerings be registered with the Iowa Securities Bureau, unless an exemption applies. Crowdfunding offerings may qualify for an exemption under the IUSA if they meet certain requirements.

Requirements for Crowdfunding Exemption

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

  • The issuer must be organized under Iowa law and have its principal place of business in Iowa.
  • The offering must be made exclusively to Iowa residents.
  • The total amount of securities sold in the offering cannot exceed $5 million in a 12-month period.
  • The issuer must file a notice with the Iowa Securities Bureau at least 10 business days before the first sale of securities in the offering.

Federal Crowdfunding Rules

In addition to complying with the IUSA, issuers must also comply with federal crowdfunding rules [2]([3]). These rules, which are part of Regulation Crowdfunding, impose additional requirements on issuers, including:

  • Issuers must use a registered crowdfunding intermediary to conduct the offering.
  • The amount an investor can invest in all crowdfunding offerings in a 12-month period is limited based on the investor’s income and net worth.
  • Issuers must provide certain disclosures to investors, including financial statements and information about the offering.

Conclusion

To use crowdfunding to raise money in Iowa, you must comply with both state and federal securities laws. The Iowa Uniform Securities Act provides an exemption for crowdfunding offerings that meet certain requirements, while federal crowdfunding rules impose additional requirements on issuers. If you meet these requirements, you may be able to use crowdfunding to raise money without violating securities laws in Iowa.

Source(s):
Jurisdiction

Iowa