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Mr. Crowd University

Course 4:More on Equity Crowdfunding in US and Title III of the JOBS Act

What does it mean to be an issuer under Title III of the JOBS Act?
An issuer is the legal entity that develops, registers, and sells securities on a registered funding portal or broker-dealer.

Investment Limit for Non-Accredited Investors
Under Title III of the JOBS Act, over a 12-month period, a non-accredited investor will be limited to investing:

  1. the greater of: $2,500 or 5 percent of the greater of your annual income or net worth if either annual income or net worth is less than $124,000; or
  2. 10 percent of the greater of your annual income or net worth, not to exceed an amount sold of $124,000, if both annual income and net worth are $124,000 or more.
Investment Limit for Accredited Investors
There is no investment limit for accredited investors.

Restrictions on Resales
Investments made in a Title III crowdfunding transaction can't be resold for a period of one year, except when transferred:
  1. to the issuer of the securities;
  2. to an accredited investor;
  3. as part of an offering registered with the SEC;
  4. to a family member of the purchaser or the equivalent, or in connection with certain events, including death or divorce of the purchaser, or other similar circumstances, in the discretion of the SEC.
Equity Crowdfunding Intermediaries
Under Title III of the JOBS Act, a company would be required to conduct its offering through an equity crowdfunding intermediary, which needs to be registered as a broker-dealer or a funding portal with the U.S. Securities and Exchange Commission (SEC), and become a member of FINRA.

Disclosure and Ongoing Reporting by Issuers
Title III of the JOBS Act imposes specific disclosure requirements on issuers regarding their business and the securities offering. Issuers are required to file certain information with the SEC and provide this information to investors.

You are highly recommended to read the disclosure materials of an issuer before you invest. You should also pay attention to the ongoing reporting by the issuer if you become an investor of the issuer.

Click HERE for more information regarding disclosure and ongoing reporting by issuers.
Exceptions/Termination of Ongoing Reporting Requirement
Investors should be aware that a company will no longer be required to file an annual report if the earliest of the following events occurs:
(1) the company is required to file reports under Exchange Act Sections 13(a) or 15(d);
(2) the company has filed at least one annual report and has fewer than 300 holders of record;
(3) the company has filed at least three annual reports and has total assets that do not exceed $10 million;
(4) the company or another party purchases or repurchases all of the securities issued pursuant to Section 4(a)(6), including any payment in full of debt securities or any complete redemption of redeemable securities; or
(5) the company liquidates or dissolves in accordance with state law.
Ongoing Relationship Between an issuer and Mr. Crowd
Investors must be aware that following completion of an offering conducted through Mr. Crowd, there may or may not be any ongoing relationship between the issuer and Mr. Crowd.

What is an Escrow in Equity Crowdfunding?
Because a funding portal cannot receive any funds and hold securities for investors, all investment money or securities are held in an escrow account. Escrow is a trustee, qualified pursuant to FINRA rules, who on behalf of an issuer and investors participating in an offering holds funds and maintains the escrow ownership ledger. The Trustee is required to holds such funds in an account at a US Federally insured bank.

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IMPORTANT LEGAL NOTICE: Ksdaq Inc. owns and operates Mr. Crowd (www.MrCrowd.com), a funding portal (the "Funding Portal") registered with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA) [FINRA Funding Portal Members]. By accessing the Funding Portal and any pages on the Funding Portal, you agree to be bound by the Terms of Use and Privacy Policy, as may be amended from time to time without notice or liability. Securities offerings posted on the Funding Portal are limited to Regulation Crowdfunding offerings.

Investors must acknowledge and accept the high risks associated with investing in private securities offerings. These risks include holding your investment for periods of many years with limited ability to resell, limited access to periodic reporting, and losing your entire investment. You must have the ability to bear a total loss of your investment without a change in your lifestyle. Funding Portal is only required to conduct limited due diligence on each Issuer and does not in any way give investment advice, provide analysis or recommendations regarding any offering posted on the Funding Portal. Past performance is not indicative of future performance. All investors should make their own determination of whether or not to make any investment in an offering, based on their own independent evaluation and analysis and after consulting with their financial, tax and investment advisors. Prior to making any investment, you will be required to demonstrate your understanding of the speculative nature of investing in such private securities. The securities offered on this Funding Portal can only be marketed in jurisdictions where public solicitation of offerings are permitted; it is solely your responsibility to comply with the laws and regulations of your country of residence. You are strongly advised to consult your legal, tax and financial advisor before investing.

You can learn more about investing in crowdfunding from the SEC, FINRA or NASAA.

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