On October 30, 2015, the Securities and Exchange Commission (SEC) held an open meeting at which it adopted final rules regarding a company’s ability to offer and sell securities using crowdfunding.1 The final rules, Regulation Crowdfunding, implement Section 4(a)(6) of the Securities Act of 1933, as amended (the “Securities Act”), which was created by the Jump Start Our Business Startups (JOBS) Act of 2012 to exempt certain crowdfunding transactions from registration under Section 5 of the Securities Act and provide a new framework for the regulation of registered funding portals. The rules were approved by a vote of 3–1 with Commissioner Michael Piwowar dissenting. These rules represent the SEC’s final major remaining rulemaking mandate under the JOBS Act. Several modifications from the proposed rules attempt to make engaging in crowdfunding transactions pursuant to the final rules less burdensome and costly for new issuers. While the rules do provide a new opportunity for startups to raise capital, the time and resources required to comply with the complex rules and disclosure requirements may still deter new, small companies from engaging in offerings pursuant to these rules.

The new rules and forms will be effective 180 days after they are published in the Federal Register, except that the forms allowing funding portals to register with the SEC will be effective January 29, 2016.

Please see full advisory for more information.