SEC Rules on Crowdfunding “Kick Starter”


SECRules on Crowdfunding &quotKick Starter&quot

SECRules on Crowdfunding &quotKick Starter&quot

TheSecurities and Exchanges Commission (SEC) put into practice variousrules that are supposed to allow firms in dealing in securities whichis through crowdfunding. The SEC adopted the rules with the mainreason of helping companies that are small form capital and offerprotection to investors. When capital is raised using the internet,then it is called crowdfunding (Micic, 2015).

First,the company rules require that companies open up on their prices ofthe securities. They need to disclose them to the general public.Under the law, the companies are also required to show theirfinancial position as well as transactions that are related to thebusiness and its relation to its directors or owners. Additionally,the company will need to disclose its financial statements in detail(Micic, 2015).

Second,there is no company that provides not above $ 500, 000 will need anaudit. They will only be supposed to show financial statements thatare reviewed. However, those that offer more than the amount willundergo the auditing (Micic, 2015). The rules also require that firmsfile reports yearly with the SEC. For the information to get topotential investors, they need to post it on their websites. Thereport should also have financial statements and other details(Micic, 2015).

Third,there will not be reselling the securities that are acquired for ayear. Further, the SEC has come up with regulations on the amountspeople can invest in a year. Also, any transactions that base on theregulations should occur through a party that is recognized by theSEC (Micic, 2015). In conclusion, companies having a lot of investorsmay go through this by using provisions such as proxies of voting andothers. The stakeholders in the field need to realize these rules arein place, and they need to abide by them. They should not findthemselves in any hard situations.


Micic,I.(2015).Crowdfunding:Overview of the Industry, Regulation and Role of Crowdfunding in theVenture Startup.Hamburg: Anchor Academic Publishing.