The United States Securities and Exchange Commission (SEC) has published a small entity compliance guidein anticipation of Monday’s (May 16, 2016) effectiveness of Regulation Crowdfunding. Final rules pertaining to Regulation Crowdfunding were approved by the SEC in October 2015 to implement the requirements of Title III of the Jumpstart Our Business Startups Act, which allows certain companies to offer and sell its securities through the use of crowdfunding.

Regulation Crowdfunding now enables eligible startups and small businesses to raise capital from its securities and sell to everyday citizens, or those non-accredited investors who generally make less than $200,000 per year and have a net worth less than $1 million (subject to certain limits). Specifically, eligible startups and small businesses may raise up to $1 million from non-accredited investors via standard broker-dealers or registered crowdfunding portals within a 12-month period.

For a broader discussion of Regulation Crowdfunding and its rules, please see our previous client alert, SEC Finally Adopts Final Rules on Crowdfunding.