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:
the greater of: $2,200 or 5 percent of the greater of your annual income or net worth if either annual income or net worth is less than $107,000; or
10 percent of the greater of your annual income or net worth, not to exceed an amount sold of $107,000, if both annual income and net worth are $107,000 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:
to the issuer of the securities;
to an accredited investor;
as part of an offering registered with the SEC;
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.