The SEC today published in the Federal Register its previously-announced amendments to Regulation CF that expand crowdfunding further than before. The new rules, which take effect March 15, 2021:
• Raise the offering limit in Regulation CF deals from $1.07 million to $5 million;
• Modify the limits on the amount that can be invested in Regulation CF offerings by:
- eliminating limits for accredited investors; and
- changing the limits for non-accredited investors to the greater of their (i) annual income or (ii) net worth;
• Extending for 18 months the current temporary exemption applicable to some Regulation CF offerings regarding financial statement review requirements for issuers offering $250,000 or less of securities in reliance on the exemption within a 12-month period;
• Permitting Regulation CF issuers to “test-the-waters” prior to filing an offering document with the Commission in a manner similar to current Regulation A and,
• Establishing rules that permit the use of Special Purpose Vehicles (SPV) that function as a conduit for investors to facilitate investing in Regulation Crowdfunding issuers.
The new amendments are likely to increase interest among entrepreneurs utilizing Regulation CF as a vehicle to raised start-up capital.