Title III Equity Crowdfunding Legal Overview
Title III, or regulation CF, is equity crowdfunding. Any sale, or offering by an initiator under a million dollars, can be done, but there are limits. No individual can invest, the greater of 2,000 or 5% of the net worth of the investor. If the annual income, or net worth of the investor, is less than 100,000, you are limited to the amount you can invest. If either of those amounts are above 100,000, you are allowed to invest up to 10% of your annual income. The FCC changed the law to say if both of your annual income and your net worth are equal to, or greater than 100,000 then you can invest up to 10%.
“One of the top Crowdfunding & JOBS Act attorneys in the country” Forbes magazine
Named 17th most influential thought leader in the crowdfunding industry, VentureBeat
“Top 19 Crowdfunding Experts Startups Need to Know” Inc. magazine
Mr. Almerico is CEO of BankRoll Ventures, who owns and operates BankRoll, an equity crowdfunding web site focused on Regulation A+ Mini IPOs and 506(c) and 506(b) private placements. Mr. Almerico is a regular crowdfunding columnist for Entrepreneur.com and a highly sought after keynote speaker on both a national and international level.
In this CLE class clip, Mr. Almerico discusses Title III Equity Crowdfunding Legal Overview.
Online investing has taken the complications out of this question, by automatically calculating for you the amount you can invest, based off your annual income. One of the important aspects of the law is that all of these transactions have to be taken care of through either a broker or funding portal. A company can not do this on their own, or via their own website. You must go through an intermediary.
The intermediary is responsible to make sure the amounts invested are done accurately and comply with regulations. Only US companies are allowed to use this law. Foreign companies must open a subsidiary, within the confines of the law, before they can take advantage of this law.
There are a number of companies that are not allowed to use this law. For example, investment and blank check companies, can not use regulation CF. In addition, reporting companies that are delinquent in their reporting can not use regulation CF. Finally, “bad actors”, anyone who can not pass a 23 point background check, that has to be done with certain people involved in a company, can not use regulation CF.