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

Based on the context documents, crowdfunding may be subject to securities laws in North Carolina. The North Carolina Securities Act, Chapter 78A, applies to timeshares deemed to be investment contracts or to other securities offered with or incident to a timeshare [1.1]. The North Carolina Securities Act also applies to condominiums deemed to be investment contracts or to other securities offered with or incident to a condominium [1.13]. Crowdfunding may involve the offer or sale of securities, which may trigger the application of securities laws.

To use crowdfunding to raise money without violating securities laws in North Carolina, the following requirements must be met:

  1. Exemption from registration: The offer and sale of securities must be exempt from registration under the North Carolina Securities Act. There are several exemptions available, including the crowdfunding exemption under N.C. Gen. Stat. § 78A-17.1 [1.1].
  2. Limitations on the amount of investment: The amount of investment must be limited to the maximum amount allowed under the applicable exemption. For example, the crowdfunding exemption limits the amount of investment to $5,000 per investor, unless the investor is an accredited investor [1.1].
  3. Disclosure requirements: The issuer must provide certain disclosures to investors, including financial statements and other information about the issuer and the offering. The crowdfunding exemption requires the issuer to file a notice with the North Carolina Secretary of State and provide certain disclosures to investors [1.1].
  4. Prohibition on fraud: The issuer must not engage in any fraudulent or deceptive practices in connection with the offer or sale of securities [1.1].

It is important to note that the requirements for using crowdfunding to raise money without violating securities laws in North Carolina may vary depending on the specific exemption used and the nature of the offering. It is recommended to consult with a legal professional for guidance on compliance with securities laws.

Source(s):
Jurisdiction

North Carolina