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

Requirements for Crowdfunding in Minnesota

Yes, you can use crowdfunding to raise money in Minnesota without violating securities laws, but you must comply with the requirements set forth by the state.

According to [5], Minnesota has enacted a law that provides an exemption from regulation for crowdfunding transactions. The law requires that issuers comply with the following requirements:

  1. The issuer must be organized under the laws of Minnesota and have its principal place of business in Minnesota.
  2. The issuer must file a notice with the Minnesota Department of Commerce at least 10 business days before the first offer of securities.
  3. The issuer must provide investors with a disclosure document that includes information about the issuer, the securities being offered, and the risks associated with the investment.
  4. The issuer must use an online platform that is registered with the Minnesota Department of Commerce to offer and sell the securities.
  5. The issuer must limit the amount of securities sold to any investor to $10,000, unless the investor is an accredited investor.

Federal Securities Laws

In addition to complying with Minnesota state law, issuers must also comply with federal securities laws. According to [1], caution is required when using crowdfunding sites to raise capital without complying with federal securities laws.

The Securities and Exchange Commission (SEC) has adopted amendments to Regulation D under the Securities Act to facilitate issuers’ capital raising efforts and provide exemptions to facilitate intrastate and regional securities offerings, as described in [2] and [4].

Issuers must also comply with Regulation Crowdfunding, which provides a framework for securities-based crowdfunding, as described in [3]. The final rules require that issuers file a Form C-U: Progress Update to describe the progress of the issuer in meeting the target offering amount.

In summary, to use crowdfunding to raise money in Minnesota, issuers must comply with both state and federal securities laws.

Source(s):
Jurisdiction

Minnesota