10.6. Crowdfunding: Regulation CF

The crowdfunding exemption was created by Congress in 2012. It allows small companies to conduct online offerings to raise up to $5 million over a twelve-month period. The SEC set up a regulatory framework for crowdfunding in the form of Regulation Crowdfunding, also called Regulation CF. To be eligible, a company must be a domestic, non-reporting company that is not an investment company. The issuer of crowdfunding securities must file Form C with the SEC, which requires certain disclosures about itself and its officers and directors. There is no limit on the number of investors permitted in a crowdfunding offering. Non-accredited investors are limited in how much they can invest.