The U.S. Securities & Exchange Commission has adopted rules to allow equity crowdfunding platforms to begin operation, reports Mashable. The rules, adopted by a unanimous vote on Wednesday, will become effective 60 days following their publication in the Federal Register.
Under the new rules, startups can raise up to $50 million from virtually anyone, although there is an investment limit of 10% of an individual’s net worth. Offerings will still need to be qualified by the SEC, a process that will be somewhat complex but still easier than requirements for an Initial Public Offering. Online equity platforms will have to register with the SEC as broker-dealers, in essence becoming regulated financial institutions.
Silicon Prairie News previously reported on LB 226, a crowdfunding bill being considered by the Nebraska Legislature. At the public hearing, there was discussion of the pending SEC rules and the potential impact on LB 226.
Thanks to our sponsor
Steve Bradford, a law professor at the University of Nebraska speaking on his own behalf, said that what goes on at the federal level wouldn’t have any impact on LB 226.
“What the SEC does on the federal crowdfunding bill shouldn’t have any relationship or require any changes at all to LB 226,” said Bradford. “LB 226 piggybacks on the existing intrastate offering exemption and requires that it be an intrastate offering, Nebraska companies selling to Nebraska residents, money being used in Nebraska.”
Mark Quandahl, Director of the Nebraska Department of Banking & Finance, agreed.
“LB 226 will allow a Nebraska company to conduct a crowdfunding offering without waiting for the SEC to finalize its rule making,” said Quandahl. “Once the SEC finalizes its rules, issuers who want to conduct a crowdfunding offering in Nebraska will have two options to do so.”
LB 226 has been designated as a priority bill and is awaiting first-round consideration in the Legislature.
