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

Requirements for Using Crowdfunding to Raise Money in Michigan

Michigan Invests Locally Exemption (MILE) allows small businesses to raise capital by reaching out to Michigan residents to invest in their companies. However, there are certain requirements that must be met to avoid violating securities laws in Michigan.

  1. The small business must be a Michigan-based business.
  2. The small business must use a Michigan-based crowdfunding portal.
  3. All payments for the purchase of securities must go to and be held by a Michigan bank or depository institution.
  4. The small business must give a copy of the disclosure statement to each prospective purchaser at the time the offer of securities is made.
  5. No offer to sell securities under the MILE can last longer than 12 months from the time the first offer to sell is made.
  6. The small business must provide a quarterly report to the purchasers and to LARA as long as there are securities that have been sold to a purchaser through the MILE.

It is important to note that violating either the Federal or State regulations could result in dire consequences. Therefore, it is recommended to consult a securities attorney before using MILE for raising funds [1].

Conclusion

To use crowdfunding to raise money in Michigan without violating securities laws, small businesses must meet certain requirements, including being a Michigan-based business, using a Michigan-based crowdfunding portal, and following specific guidelines for payments and disclosures. It is important to consult a securities attorney to ensure compliance with all regulations [1].

Source(s):
Jurisdiction

Michigan