8/03/2015

New Colorado Crowdfunding Rules

The Colorado Crowdfunding Act (HB15-1246) will go into effect on August 5, and new rules were released by the Securities Division of the Colorado Department of Regulatory Agencies on July 29.  If your organization is participating in crowdfunding in Colorado, it is advisable to review these new rules to ensure you comply with all reporting requirements.  The Securities Division has set up an informational webpage which explains the forms you need to submit to the division, the limits on how much capital can be raised, and the laws regarding transactions outside of Colorado.

It is important to note that these rules refer to a type of crowdfunding known as "equity crowdfunding" and do not affect sites like kickstarter.com.  A press release from the Division of Securities defines equity crowdfunding:

Equity crowdfunding differs from current crowdfunding enterprises such as Kickstarter and Indigogo. With equity crowdfunding, businesses that choose to solicit money from the general public will now be able to offer equity or a stake in the company. Previously, individuals who contributed to crowdfunding campaigns were not allowed shares in the company, and their contributions were considered donations to an effort. Colorado joins a handful of other states in legalizing this method of capital acquisition in response to a delay in federal crowdfunding rules that were made legal through the 2012 Jump-Start Our Business Start-Ups (JOBS) Act.

1 comment:

Krishna Kumar said...

The Colorado Crowdfunding Act rules are clear, that intermediaries cannot act as broker dealers or investment advisers and cannot give investment advice.

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