The June 2016 column1 discussed the crowdfunding rules2 pursuant to Securities Act of 1933, Section 4(a)(6). The discussion included the maximum amount that can be raised in a crowdfunding offering ($1 million in a 12-month period), the types of investors, excluded issuers and the disclosure requirements. This column will discuss the financial disclosures and ongoing reporting obligations associated with crowdfunding.
Financial Disclosure Requirements. Compliance varies based on the amount offered and sold in reliance on Section 4(a)(6) within the preceding 12-month period. All financial statements prepared for purposes of the crowdfunding rules must be prepared in accordance with U.S. generally accepted accounting procedures (GAAP). In addition, an issuer must also provide a narrative discussion of its financial condition, which must include (if material), a discussion of liquidity, capital resources and historical results of operations.
