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

Requirements for Crowdfunding in Louisiana

Crowdfunding is a method of raising capital through securities offerings using the internet. In Louisiana, crowdfunding is regulated by the Louisiana Securities Law [1]. To use crowdfunding to raise money without violating securities laws in Louisiana, you must comply with the following requirements:

  1. Register with the Louisiana Securities Division: Issuers must register with the Louisiana Securities Division before offering or selling securities in Louisiana [1].
  2. Use a registered intermediary: Issuers must use a registered intermediary to offer and sell securities in Louisiana [1].
  3. Disclose information: Issuers must provide certain information to investors, including financial statements, a description of the business, and the terms of the offering [1].
  4. Limit the amount of investment: Investors are limited in the amount they can invest in a crowdfunding offering. The maximum amount an investor can invest in a 12-month period is $5,000 [1].

Requirements for Private Placements under Rule 506(b)

Private placements under Rule 506(b) of Regulation D are considered a “safe harbor” under Section 4(a)(2) of the Securities Act. Companies conducting an offering under Rule 506(b) can raise an unlimited amount of money and can sell securities to an unlimited number of accredited investors [3]. However, an offering under Rule 506(b) is subject to the following requirements:

  1. No general solicitation or advertising: Companies cannot use general solicitation or advertising to market the securities [3].
  2. Limit the number of non-accredited investors: Securities may not be sold to more than 35 non-accredited investors [3].

Conclusion

To use crowdfunding to raise money without violating securities laws in Louisiana, you must register with the Louisiana Securities Division, use a registered intermediary, disclose information, and limit the amount of investment. Private placements under Rule 506(b) of Regulation D are subject to different requirements, including no general solicitation or advertising and limiting the number of non-accredited investors.

Source(s):
Jurisdiction

Louisiana