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Equity Crowdfunding Requirements – Full Comparison

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We developed a comprehensive Equity Crowdfunding Chart Comparison below for all crowdfunding requirements that includes Reg A+ (Tier 1 and Tier 2), Reg D 506 C, and Reg CF. Our chart creates an easy-to-read visual representation of all the different requirements, so you can pick which form of crowdfunding works best for you. Requirements for each type can be confusing, so our chart allows you to easily see how the requirements vary.

Reg A+: Tier 1 Reg A+: Tier 2 Reg D: Rule 506(c) Crowdfunding (Reg CF)
Maximum Offering $20,000,000 $50,000,000 No limit $1,070,000 limit, but simultaneous Rule 506 offerings allowed
Eligible Investors Any, including non-accredited investors; Affiliates of the issuer can invest up to $6mm Any, including non-accredited investors; Affiliates of the issuer can invest up to $15mm Unlimited accredited investors (must take “reasonable steps to verify accreditation), and up to 35 non-accredited investors (must be “sophisticated”) No restrictions on investor type, but must show understanding of investment and limit in dollar amount
Annual Individual Investment Limits None No more than 10% of the individual’s net worth unless the purchaser is an accredited investor or the securities will be placed on a national exchange upon qualification. None Investment limits in all Reg CF offerings:
-if investor’s annual income or net worth below $107,000, limit is greater of $2,200 or 5% of lesser of net worth or annual income
-if both annual income and net worth are above $107,000 then 10% investment limit with a $107,000 investment max
Investor Verification None Self-certification required for investment limits Must take reasonable steps to ‘verify’ status Self-certification required for investment limits
Solicitation No restrictions No restrictions No restrictions Marketed over internet, with primary solicitation and disclosure occurring on ‘funding portal’
Pre-filing Issuers are allowed to “test the waters” or solicit interest either before or after filing the offering statement Issuers are allowed to “test the waters” or solicit interest either before or after filing the offering statement No pre-filing requirements except certain state filings Pre-filing with SEC required before any offers are made
SEC Filings Must file Form 1-A Must file Form 1-A Must file Form D Must file Form C
State Filings (see our Blue Sky Filings Services) State registration must be filed to all 50 states. State registration is preempted except in these circumstances:
“Issuer-Dealer” Registration is required for issuers involved in selling the securities themselves in AZ, FL, ND, NE, NY, TX.
Agent Registration is required for any officer or director undertaking selling efforts in AL, NV, NJ, WA.
State registration is preempted but  issuers must file state notices to all 50 states. State registration is preempted
Financial Disclosure Reviewed financials, unaudited financial statements allowed Audited financials None, if only raising from accredited investors Officer certification if raising $107k or less; Reviewed financial statements if raising $107k-$535k, Audited financial statements required if raising above $535k if previously sold securities via Reg CF otherwise only reviewed financials required if first time Reg CF
Ongoing SEC Filings None, except Exit report Annual, semi-annual and current reports are required None, unless the offering remains open after 1 year The same information that is provided in the initial filing also required to be filed yearly
Exemption from Section 12(g) Reporting Total assets greater than $10 million and a class of equity securities held by 2,000 or more persons, or 500 or more persons who are not accredited investors Must meet these criteria: 1. Engage SEC registered transfer agent.
2. Remains subject to a Tier 2 reporting obligation.
3. Is current in its annual and semiannual reporting at fiscal year-end.
4. Has a public float of less than $75 million, or, in the absence of a public float, had annual revenues of less than $50 million.
Total assets greater than $10 million and a class of equity securities held by 2,000 or more persons, or 500 or more persons who are not accredited investors Total assets greater than $10 million and a class of equity securities held by 2,000 or more persons, or 500 or more persons who are not accredited investors
Resale Restrictions  None None Securities ‘restricted’, cannot be freely resold Limited resales allowed for one year
Eligible for Broker Quotes  No Yes – NYSE, NASDAQ, OTCQX, OTCQB Securities ‘restricted’, cannot be freely resold Limited resales allowed for one year
Shareholder Limits None, in most instances None, in most instances 2,000 accredited investors Unlimited
Intermediary None are required None are required None are required Funding portal or Broker-dealer required
Liabilities Standard 12(a)(2) Liability Standard 12(a)(2) Liability Standard 12(a)(2) Liability The burden of proof for ‘diligence defense’ is placed on the issuer

Colonial is available to help with any of your transfer agent and crowdfunding needs. Please contact us to learn more. 

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