SEC’s Proposed Amendments to Rule 147 and 504 to Facilitate New Intrastate Crowdfunding and the Sale of Regional Securities Offerings
SEC’s Proposed Actions for Title III Crowdfunding
The Securities and Exchange Commission is considering whether to propose amendments to Securities Act Rule 147 and Rule 504 of Regulation D. The proposed amendments would be part of the Commission’s efforts to assist smaller companies with capital formation consistent with its investor protection mission.
Proposed Title III Crowdfunding Amendments
Proposed Amendments to Rule 147
The proposed amendments would modernize Rule 147 to permit companies to raise money from investors within their state without concurrently registering the offers and sales at the federal level. The proposed amendments to Rule 147 would, among other things:
- Eliminate the restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state or territory.
- Refine what it means to be an intrastate offering and ease some of the issuer eligibility requirements in the current rule.
- Limit the availability of the exemption to offerings that are registered in-state or conducted under an exemption from state law registration that limits the amount of securities an issuer may sell to no more than $5 million in a 12-month period and imposes an investment limitation on investors.
Proposed Amendments to Rule 504
The proposed amendments to Rule 504 of Regulation D would increase the aggregate amount of securities that may be offered and sold under Rule 504 in any 12-month period from $1 million to $5 million and disqualify certain bad actors from participation in Rule 504 offerings. The proposed rules would facilitate capital formation and increase investor protection in such offerings.