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Regulation Crowdfunding
TheseComplianceandDisclosureInterpretations(C&DIs)compriseinterpretations
ofRegulationCrowdfundingbystaffoftheDivisionofCorporationFinance.
Theyarenotrules,regulations,orstatementsoftheCommission.Further,the
Commissionhasneitherapprovednordisapprovedtheseinterpretations.
Thesepositionsdonotnecessarilycontainadiscussionofallmaterialconsiderations
necessarytoreachtheconclusionsstated,andtheyarenotbindingduetotheir
highlyinformalnature.Accordingly,theseresponsesareintendedasgeneral
guidanceandshouldnotbereliedonasdefinitive.Therecanbenoassurancethat
theinformationpresentedintheseinterpretationsiscurrent,asthepositions
expressedmaychangewithoutnotice.
ThebracketeddatefollowingeachC&DIisthelatestdateofpublicationorrevision.

Rule 100: Crowdfunding exemption and requirements

Question100.01
Question:WhatinformationcananissuerdisseminatepriortofilingtheFormCwith
theCommissionandprovidingittotherelevantintermediary?
Answer:Informationnotconstitutinganofferofsecuritiesmaybedisseminatedbyan
issuerpriortothecommencementofaRegulationCrowdfundingoffering.Forexample,
factualbusinessinformationthatdoesnotconditionthepublicmindorarousepublic
interestinasecuritiesofferingisnotanofferandmaybedisseminatedwidely.The
Commissionhasinterpretedthetermofferbroadlyandhasexplainedthatthe
publicationofinformationandpublicityefforts,madeinadvanceofaproposedfinancing
whichhavetheeffectofconditioningthepublicmindorarousingpublicinterestinthe
issuerorinitssecuritiesconstitutesanofferSecuritiesOfferingReform,ReleaseNo.
338591(July19,2005).SeealsoSecuritiesActRule169andSecuritiesActRuleC&DI
256.25.RegulationCrowdfunding,however,doesnotprovideanexemptionforthe
disseminationofinformationthatconstitutesanofferofsecuritiesbyanissuerpriorto
theissuerfilingaFormCwiththeCommissionandprovidingittotherelevant
intermediary.[May13,2016]
Question100.02:
Question:ArenonnaturalpersonsthatinvestinRegulationCrowdfundingofferings
subjecttoinvestmentlimits?
Answer:Yes.TheinvestmentlimitsinRule100(a)(2)ofRegulationCrowdfundingapply
toallinvestors.Insteadofcalculatinginvestmentlimitsbasedonannualincomeandnet
worth,anonnaturalpersoncalculatesthelimitsbasedonitsrevenueandnetassets(as
ofitsmostrecentfiscalyearend).[May13,2016]

Rule 201: Disclosure Requirements

Question201.01:
Question:Mayarecentlyformedissuerchoosetoprovideabalancesheetasofits
inceptiondate?
Answer:Yes,iftheofferingisconductedduringtheperiodfrominceptionuntil120
daysafterreachingtheannualbalancesheetdateforthefirsttime,theissuermust

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includeabalancesheetasofadateinthatperiod,whichmaybeinceptiondate.When
thebalancesheetisdatedasofinceptionthestatementsofcomprehensiveincome,
cashflowsandchangesinstockholdersequitywillnotbeapplicable.Foranoffering
conductedmorethan120daysaftertheissuersfirstannualbalancesheetdate,the
dateofthemostrecentannualbalancesheetdeterminestheperiodforwhich
statementsofcomprehensiveincome,cashflowsandchangesinstockholdersequity
mustbeprovided.Forexample,dependingonitsdateofinception,anissuerwitha
December31fiscalyearendthatstartsaRegulationCrowdfundingofferinginJune2016
wouldprovidefinancialstatementsasfollows:
DateofInception

BalanceSheet

OtherFinancialStatements

May2016

Asofinception

Notapplicable

May2015

AsofDecember31,
2015

FortheperiodfrominceptiontoDecember31,2015

May2014

AsofDecember31,
2015and2014

FortheyearendedDecember31,2015andtheperiod
frominceptiontoDecember31,2014

[May13,2016]

Rule 204: Advertising

Question204.01
Question:MayanissueradvertisethetermsoftheofferingunderRegulation
Crowdfunding?
Answer:Yes,butanysuchadvertisingthatismadeotherthanthroughcommunication
channelsprovidedbytheintermediaryontheintermediarysplatformwillbelimitedto
noticesthatincludenomorethantheinformationdescribedinRule204(b)ofRegulation
Crowdfunding.Termsoftheofferingisdefinedtoincludetheamountofsecurities
offered,thenatureofthesecurities,thepriceofthesecuritiesandtheclosingdateof
theofferingperiod.SeeInstructiontoRule204.[May13,2016]
Question204.02
Question:Mayanissueradvertisethetermsoftheofferingthroughavideothat
complieswithRule204(b)ofRegulationCrowdfunding?
Answer:Yes.[May13,2016]
Question204.03
Question:Ifanissuersadvertisementdoesnotincludeanyofthetermsofthe
offering,istheissuerlimitedtonoticesthatincludenomorethantheinformation
describedinRule204(b)ofRegulationCrowdfunding?
Answer:No.Thelimitationonadvertisementappliesonlywhentheadvertisement
includesanyofthetermsoftheoffering.[May13,2016]
Question204.04
Question:Couldathirdpartypublication,suchasamediaarticle,constituteanotice
thatwouldsubjectanissuertothelimitationsofRule204?
Answer:Yes.Ifthemediaarticleadvertisesthetermsoftheofferingandtheissuerhas
beendirectlyorindirectlyinvolvedinthepreparationofthepublication,thearticlewould
beanoticesubjecttoRule204.BecauseRule204limitstheinformationthatmaybein
suchanotice,itwouldlikelybedifficultfortheissuertocomplywiththerules
requirements.Ifthemediaarticledidnotadvertisethetermsoftheoffering,itwould
notbeanoticesubjecttoRule204,althoughitcouldstillconstituteanofferunderthe
securitieslaws.[May13,2016]

Rule 205: Promoter Compensation

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Question205.01
Question:Whenanissueriscompensatingathirdpartytopromotetheissuersoffering
outsideoftheintermediaryscommunicationchannels,dothosethirdparty
communicationsneedtocomplywiththenoticerequirementsofRule204(b)of
RegulationCrowdfunding?
Answer:Yes.SeeRule205(b).[May13,2016]

Modified:May13,2016
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