Regulation Crowdfunding

Question: What information can an issuer disseminate prior to filing the Form C with the Commission and providing it to the relevant intermediary?

Answer: Subject to certain conditions, an issuer may communicate orally or in writing at any time prior to filing a Form C in order to determine whether there is any interest in a contemplated securities offering. These communications are deemed to be offers of a security for purposes of the antifraud provisions of the Federal securities laws. Pursuant to Rule 206, the issuer must clearly state that (i) no money or other consideration is being solicited, and if sent, will not be accepted; (ii) no offer to buy securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through an intermediary’s platform; and (iii) a prospective purchaser’s indication of interest involves no obligation or commitment of any kind. Rule 201(z) requires that the issuer include any Rule 206 solicitation materials with the Form C that is filed with the Commission.

For an issuer considering an offering of securities exempt from registration under the Act, but that has not determined a specific exemption from registration on which it intends to rely, Rule 241 permits an issuer to make communications orally or in writing, similar to that permitted under Rule 206, to determine whether there is any interest in a contemplated offering of securities, provided legends similar to those detailed above are included.

In addition, information not constituting an offer of securities may be disseminated by an issuer prior to the commencement of a Regulation Crowdfunding offering. For example, factual business information that does not condition the public mind or arouse public interest in a securities offering is not an offer and may be disseminated widely. The Commission has interpreted the term “offer” broadly and has explained that “the publication of information and publicity efforts, made in advance of a proposed financing which have the effect of conditioning the public mind or arousing public interest in the issuer or in its securities constitutes an offer…” Securities Act Release No. 8591 (July 19, 2005). See also Securities Act Rule 169 and Securities Act Rule CFI 256.25. [March 12, 2025]

Question: Are non-natural persons that invest in Regulation Crowdfunding offerings subject to investment limits?

Answer: Yes. The investment limits in Rule 100(a)(2) of Regulation Crowdfunding apply to all non-accredited investors. Instead of calculating investment limits based on annual income or net worth, a non-natural person calculates the limits based on its revenue or net assets (as of its most recent fiscal year end). Accredited investors are not subject to investment limits in Regulation Crowdfunding offerings. [March 12, 2025]

Question: Before making any sales in the offering, may an issuer conducting a Regulation Crowdfunding offering move its offering from one intermediary’s platform to a different intermediary’s platform?

Answer: Yes, assuming compliance with Rule 303(a) and Rule 100(a)(3) and the instruction thereto. The issuer should cancel its offering on the initial platform, its offering materials should be removed from that platform, and the issuer should then file a new Form C to begin the offering anew on the new platform. [February 17, 2026]

Question: Would Rule 100(b)(2) disqualify former Exchange Act reporting companies from relying on Regulation Crowdfunding if they no longer have active Exchange Act reporting obligations because such reporting obligations have been terminated or suspended?

Answer: No. [February 17, 2026]

Question: How does an issuer determine the start of the 12-month period in Rule 100(a)(1) for purposes of calculating the maximum aggregate amount of securities that can be offered?

For example, if an issuer commenced an offering with a maximum offering amount of $5 million on May 16, 2025, completed an initial closing of $500,000 on June 15, 2025, and then completed the offering by closing on the remaining $4.5 million on September 30, 2025, can the issuer launch a new offering on June 16, 2026 with a maximum offering amount of $5,000,000?

Answer: The offering limit in Rule 100(a)(1) is based on a rolling 12-month calculation from the date of each closing.

In the example, only the 12-month anniversary of the initial closing has occurred, so the maximum the issuer could offer on June 16, 2026 in reliance on Regulation Crowdfunding would be $500,000. [February 17, 2026]

Question: How is the “annual” period calculated for “annual income” in Rule 100(a)(2)?

Answer: The annual period is a calendar year. Instruction 1 to paragraph (a)(2) of Rule 100 specifically calls for the approach to be consistent with Regulation D. See Securities Act Release No. 6389 (Mar. 16, 1982), at footnote 15. [February 17, 2026]

Question: May a recently formed issuer choose to provide a balance sheet as of its inception date?

Answer: Yes, if the offering is conducted during the period from inception until 120 days after reaching the annual balance sheet date for the first time, the issuer must include a balance sheet as of a date in that period, which may be inception date. When the balance sheet is dated as of inception the statements of comprehensive income, cash flows and changes in stockholders’ equity will not be applicable. For an offering conducted more than 120 days after the issuer’s first annual balance sheet date, the date of the most recent annual balance sheet determines the period for which statements of comprehensive income, cash flows and changes in stockholders’ equity must be provided. For example, depending on its date of inception, an issuer with a December 31 fiscal year end that starts a Regulation Crowdfunding offering in June 2016 would provide financial statements as follows:

[May 13, 2016]

Question: Rule 201(r) requires the issuer to disclose any related party transaction that exceeds 5% of the amount raised by the issuer in reliance on section 4(a)(6) during the preceding 12-month period, including the amount the issuer seeks to raise in the current offering. An issuer sets a target offering amount (i.e., the minimum amount of investment commitments needed for the offering to close) in a Regulation Crowdfunding offering, but will accept offering proceeds in excess of the target offering amount up to a specified maximum amount. Which dollar amount should the issuer use to determine the threshold at which disclosure of related party transactions is required under Rule 201(r)?

Answer: The issuer should determine the threshold for disclosure of related party transactions based on the target offering amount plus any amount already raised in reliance on 4(a)(6) in the preceding 12-month period. For example, if an issuer that raised $60,000 in reliance on section 4(a)(6) in the previous 12-month period sets a $100,000 target offering amount but will accept offering proceeds of up to $940,000, the issuer would need to disclose related party transactions of more than $8,000 (5% of $160,000, which is the sum of the $100,000 target offering amount plus the $60,000 previously raised). [April 5, 2017]

Question: An issuer has an ongoing Regulation Crowdfunding offering in which at least one “rolling closing” has already occurred. If the offering is still ongoing more than 120 days following the issuer’s fiscal year end, what does the issuer need to file?

Answer: The issuer must file an amendment to the issuer’s Form C with updated financial statements that meet the requirements of Rule 201(t) and an annual report on Form C-AR. See Instruction 4 to Rule 201(t) and Rule 202(a) of Regulation Crowdfunding. In addition, the issuer must file progress updates under Rule 203(a)(3). [February 17, 2026]

Question: How does an issuer calculate the number of holders of record for purposes of determining eligibility to terminate its duty to file ongoing reports pursuant to Rule 202(b)(2) of Regulation Crowdfunding?

Answer: The issuer would count all holders of record of securities of the same class of securities issued in the Regulation Crowdfunding offering for which the reporting obligation exists, regardless of whether the holders of record purchased their securities in the Regulation Crowdfunding offering. [April 5, 2017]

Question: An issuer conducted a Regulation Crowdfunding offering using a crowdfunding vehicle compliant with Rule 3a-9 under the Investment Company Act of 1940. It sold securities pursuant to the offering, and therefore has an ongoing reporting obligation under Rule 202(a) of Regulation Crowdfunding. Over 300 investors invested in the offering, and all did so through the crowdfunding vehicle. None of the events in Rule 202(b)(1), (3), (4), or (5) have occurred. Can the issuer avail itself of Rule 202(b)(2) after it has filed one annual report, treating the crowdfunding vehicle as “one” holder of record?

Answer: No. For purposes of Rule 202(b), “record holders” means investors who invested in the offering. See Securities Act Release No. 10884 (Nov. 2, 2020), at Section F.1.c (discussing that the Commission created crowdfunding vehicles as “conduit[s],” intended to “protect[] investors by simply passing along the same exposures, rights and disclosures as if [the investors] had invested directly in the crowdfunding issuer in an offering made under Regulation Crowdfunding”). Accordingly, the reporting obligation continues until there are less than 300 investors who invested in the offering, or at least one of the events in Rule 202(b)(1), (3), (4), or (5) has occurred. [July 9, 2026]

Question: When an issuer is compensating a third party to promote the issuer’s offering outside of the intermediary’s communication channels, do those third-party communications need to comply with the notice requirements of Rule 204(b) of Regulation Crowdfunding?

Answer: Yes. See Rule 205(b). [May 13, 2016]