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

Crowdfunding Requirements in South Dakota

To use crowdfunding to raise money in South Dakota without violating securities laws, you must comply with the following requirements:

1. Register with the South Dakota Division of Securities ^[3.1].
2. File a notice of intent to sell securities with the Division of Securities at least 10 days before the first sale ^[3.1].
3. Provide investors with a disclosure document that includes information about the company, the investment opportunity, and the risks involved ^[3.1].
4. Limit the amount of money that can be raised through crowdfunding to $5 million in a 12-month period ^[3.1].
5. Limit the amount that any individual investor can invest in a crowdfunding offering to $5,000, or 10% of their annual income or net worth, whichever is greater ^[3.1].
6. Use a registered crowdfunding portal to offer and sell securities ^[3.1].
7. Provide ongoing disclosures to investors, including annual reports and financial statements ^[3.1].

It is important to note that crowdfunding is subject to securities laws in South Dakota, which are designed to protect investors from fraud and ensure that they receive adequate information about the investment opportunity. Failure to comply with these requirements can result in civil and criminal penalties ^[3.1].

It is recommended to consult with a legal professional to ensure that you are in compliance with all applicable laws and regulations.

Source(s):

• [3.1] References to Administrative Rules.

Jurisdiction

South Dakota

• General