After Michigan, New Mexico and eleven other States, Texas joins the Intrastate Crowdfunding Movement, becoming the largest US state adopting a set of rules for equity crowdfunding (California’s law for intrastate crowdfunding got stuck in the State’s senate).
Last Wednesday, the Texas State Securities Board approved a law that allows adults resident in Texas to buy shares of private companies through crowdfunding portals. Like in all the other States which joined the Intrastate Crowdfunding Movement, also in Texas the law limits the possibility to use crowdfunding to raise equity capital only to companies incorporated in the State.
Last Wednesday, the Texas State Securities Board approved a law that allows adults resident in Texas to buy shares of private companies through crowdfunding portals. Like in all the other States which joined the Intrastate Crowdfunding Movement, also in Texas the law limits the possibility to use crowdfunding to raise equity capital only to companies incorporated in the State.
The new regulations set a limit of $5,000 per investment for non-accredited investors, while for accredited investors, who will now be permitted to self-certify as such, there is no cap on investments. For companies, instead, the maximum amount they can raise in one year is set at $1 million.
The state’s move to establish an intrastate crowdfunding market, open only to Texas companies and Texas residents, came in response to continued delays at the Securities and Exchange Commission. The US crowdfunding scene, in fact, has been waiting for SEC to release Title III for more than one year now.
Some people are concerned that when Title III is eventually released the Intrastate Crowdfunding rules will come to no use. Others, instead, are convinced that the existing State’s rules will be upgraded and adapted to integrate the Federal rules.
Texas seems to be of the latter position, as its Securities Board stated that it will periodically review the regulations, in order to evaluate possible changes.
A lot is moving at intrastate crowdfunding level in the US, creating an opportunity for many players to enter the crowdfunding market. This could be a smart first move for crowdinvesting platforms to be already active, with a community and a dealflow when Title III is enacted.
References
Alois, JD. (2014). Texas Approves Intrastate Crowdfunding Rules. Crowdfundinsider
Rumbaugh, A. (2014). Board passes crowdfunding rules. Houston Chronicle.
Zehr, D. (2014). State Regulators Open Crowdfunding for Texas Companies, Residents. Government technology.
Image credit to: Jack http://bit.ly/1w88Dck
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