Colorado’s Senate has approved the bill for intrastate crowdfunding that was proposed last February. The rules are now waiting for the signature of the State’s Governor to be then officially enacted. The proposed legislation would allow local companies to raise up to $1 millions unless they submit audited financial statements to the securities commissioner, in which case the cap is $2 million.
With regards to intermediary platforms, the legislation forbids them to offer investment advice or handle investor funds or securities. Also, their compensation must be in the form of either a fixed amount for each offering or a variable amount based on the length of time that the securities are offered by the online intermediary, or a combination of the fixed and variable amounts.They also need to keep and present records of securities transactions in case of inspection by the division of securities.
Once the Governor signs off the rules, Colorado will join about 15 other States which in the last two years allowed intrastate crowd investing. Despite Regulation A+ being recently approved, the State’s governing bodies will continue putting effort and dedicating attention to intrastate crowdfunding which means they are still uncertain of the effects Regulation A+ will have on this new market. Although Regulation A+ has a great potential to impact the US capital market, some experts say the compliance procedure for Regulation A+ is still too burdensome for smaller companies and only Title III of the JOBS Act will improve the situation. Nevertheless, we will be able to get a better understanding of how the market reacts to Regulation A+ in a few months, after it has been enacted and used by a good number of US companies.
Yoshimura, M. (2015). Colorado Votes Yes to Expand Crowdfunding. CrowdfundInsider.
About the author - Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.