PROPOSED AMENDMENTS TO RULE 506 AND FORM D

The SEC is "proposing amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 to implement Section 201(a) of the Jumpstart Our Business Startups Act. The proposed amendment to Rule 506 would provide that the prohibition against general solicitation and general advertising contained in Rule 502(c) of Regulation D would not apply to offers and sales of securities made pursuant to Rule 506, provided that all purchasers of the securities are accredited investors. The proposed amendment to Rule 506 would also require that, in Rule 506 offerings that use general solicitation or general advertising, the issuer take reasonable steps to verify that purchasers of the securities are accredited investors. The proposed amendment to Rule 144A(d)(1) would provide that securities may be offered pursuant to Rule 144A to persons other than qualified institutional buyers, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are qualified institutional buyers. We are also proposing to revise Form D to add a separate check box for issuers to indicate whether they are using general solicitation or general advertising in a Rule 506 offering."

In summary, PROPOSED AMENDMENTS TO RULE 506 AND FORM D
A. Eliminating the Prohibition Against General Solicitation
B. Reasonable Steps to Verify Accredited Investor Status
C. Reasonable Belief that All Purchasers Are Accredited Investors
D. Form D Check Box for Rule 506(c) Offerings
E. Specific Issues for Privately Offered Funds

See: http://sec.gov/rules/proposed/2012/33-9354.pdf

Comments

Crowdfunding Accounting 101 - Revenue Recognition in Crowdfunding

A start-up using crowd funding to create a product is different from a normal company. The start-up has cash inflows from donations but does not have a product, yet. In this situation, we recommend using completed-contract method to recognize revenue. Under this way of thinking, we assume the start-up is akin to a project or a long-term contract. The crowdfunding company will find it difficult to estimate the revenue from crowdfunders and, hence, the cost of rewards or perks. Under International Financial Reporting Standards (IFRS) and GAAP guidelines, if the firm cannot reliably measure the outcome of the project, revenue should be recognized based on contract costs. These costs should be expensed when incurred. Profit is recognized only at the completion of the project. In summary, for crowdfunding companies, revenue, expense, and profit are recognized only when the crowdfunded product is actually manufactured. 1 For example, assume that AAA Corp. wants to manufacture bicyc...

Top 50 Crowdfunding Campaigns: Fifty Most Successful Crowdfunding Campaigns

Top 50 Crowdfunding Campaigns: Fifty Most Successful Crowdfunding Campaigns Kindle Edition https://www.amazon.com/gp/product/B00RKK4NL0/ref=dbs_a_def_rwt_bibl_vppi_i0

8 Tips For Launching: Crowdfunding For Startups

As the article notes, "For a people who revere startup culture and the idea that one can bootstrap one’s way to business success, we seem to prefer the TV version to the real thing — especially as of late. It turns out that new business creation recently approached its 40-year low. Banks are retaining their Great Recession-era tight-fistedness and the costs of education, housing and healthcare continue daily to expand beyond the ability of most Americans to keep pace... Due to these factors — along with the legalization of equity crowdfunding accomplished via the passage of the JOBS Act in 2012 — crowdfunding has arisen as a means of raising startup funds. You may only be familiar with crowdfunding in the context of all the medical- and disaster-based campaigns that have been making the news lately, but crowdfunding is a viable way to raise money for businesses as well." See the full article at: https://www.merchantmaverick.com/crowdfunding-for-startups-8-tips-you-s...

Crowdfunding Now!

Search This Blog