Home Blog Regulation Crowdfunding: Exemption, Investment Process, Disclosure

Regulation Crowdfunding: Exemption, Investment Process, Disclosure

This page explains regulation crowdfunding, how the process works, and how a lawyer from ContractsCounsel can help you navigate it.

Jump to Section

Regulation Crowdfunding (Reg CF) allows companies to sell securities via crowdfunding to the public. It’s a process that encourages fundraising, and it’s especially beneficial for startups that require capital to set themselves up for future growth.

There are specific things to know about Regulation Crowdfunding so that you stay compliant and know how to navigate the process. Read the rest of this article to cover all your bases.

What is the Regulation Crowdfunding Exemption?

Regulation Crowdfunding is an exemption from the lengthy registration requirements for securities-based crowdfunding. It basically enables companies to sell up to $5 million of their securities within a 12-month period without having to go through the lengthy and costly process of registering it with the Securities and Exchange Commission (SEC).

Who Can Invest in Regulation Crowdfunding?

Unlike some other offerings in which investors have to meet certain or specific criteria in order to invest in the offering, anyone in the general public is allowed to invest capital for startups and early-stage companies.

However, there is a limit to how much people can invest during a 12-month period if they are non-accredited investors:

  • If their annual income or net worth is lower than $124,000, the limit is the greater of $2,500 or five percent of the greater of the investor’s annual income or net worth.
  • If the annual income and net worth are both equal to or higher than $124,000, the limit is 10 percent of the greater of their annual income or net worth.

If you are an accredited investor, you are allowed to invest an unlimited amount of capital.

How Can You Invest in a Regulation Crowdfunding?

Although anyone can invest in Regulation Crowdfunding, this has to be done in a specific way. You have to make use of an online platform belonging to a broker-dealer or a funding portal that’s registered with the SEC and is a member of the Financial Industry Regulatory Authority (FINRA).

To make an investment in a Regulation Crowdfunding, you need to create an account on the platform. The entire process, including your communications, will be electronic.

If you try to make an investment outside of these portals, this is strictly prohibited.

Can You Sell Your Shares?

The thing about Regulation Crowdfunding is that you’re not permitted to sell your shares whenever you wish to during the first year. There are exceptions to this rule, however. If the shares are transferred in the following ways, then they can be sold:

  • They are transferred to the company that issued the securities.
  • They are transferred to an accredited investor.
  • They are transferred to a family member.
  • They are transferred in connection with a circumstance such as death.
  • They are transferred to a trust that’s managed by you or a trust that was created for the benefit of a family member.
  • They are transferred as part of an offering registered with the SEC.

What are the Disclosure Rules of Regulation Crowdfunding?

Unlike with publicly-listed companies, the information investors receive is a bit more limited. Regulation Crowdfunding companies only need to disclose their results of operations and financial statements every year, via annual reports. They will have to fill out Form C-AR with the SEC, and submit it within 120 days after the end of their fiscal year.

What Do You Need to File for a Regulation Crowdfunding?

When establishing your Regulation Crowdfunding investment, it’s not just Form C-AR that you need to submit. You will have to complete Form C with the SEC.

This form is a lengthy form that has many questions. Some of what you’ll have to fill out includes:

  • How many securities are offered
  • Their price (or how price will be determined)
  • Information about directors and officer of the company
  • Risks involved for investors
  • Information about the purpose of the offering
  • Description of the issuer’s securities
  • Information about the issuer’s financial situation

You will have to submit Form C before you launch your Regulation Crowdfunding offering and accept investments.

What are Other Regulation Crowdfunding Requirements?

Besides filing Form C, companies engaged in Regulation Crowdfunding might have to get their financial statements reviewed by an independent public accountant. This is required for large offerings. For smaller offerings, the financial statements can be certified by management.

Companies will also have to create an offering statement, which is Form C. Once it’s filed with the SEC, it will be made available publicly on the portal.

As mentioned earlier, companies will have to use the broker-dealer or funding portal registered with the SEC to complete their offerings.

Do You Need a Lawyer for Regulation Crowdfunding?

While you might not need to hire a lawyer for Regulation Crowdfunding, it is recommended as they can help you through every step of the process. Some ways in which they can help you include the following:

  • They’ll ensure you remain compliant with the SEC, such as by filing Form C.
  • They’ll guide you on how to collect the right information for all your offering documents.
  • They’ll ensure you provide financial disclosure to reduce your liability risks.
  • They’ll structure your Regulation Crowdfunding offering so that it’s legally sound.
  • They’ll guide you on selecting the right platform for your offering, such as by choosing a registered and valid one.

Where can you find a lawyer to help you with Regulation Crowdfunding?

While it can be stressful to find a lawyer for Regulation Crowdfunding, ContractsCounsel makes it an easy process that doesn't take a lot of time or energy. This online legal network connects clients with lawyers who have been vetted on the platform.

The platform gives you all the information about lawyers that you need, such as their credentials, fields of expertise, previous projects they’ve completed on the platform, and client ratings. This prevents you from having to do your own research, so you can choose the best lawyer for your requirements and get on with raising capital for your business.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Christina M. on ContractsCounsel
View Christina
5.0 (12)
Member Since:
June 22, 2023

Christina M.

Legal Consultant
Free Consultation
Las Vegas, NV
19 Yrs Experience
Licensed in NV
UNLV Boyd School of Law

I am a regulatory transactional attorney with 16 years of in-house experience, largely in the gaming/gambling industry. I have negotiated various types and sizes of contracts from janitorial services for a small commercial building to multi-million dollar technology transactions. I also have a strong regulatory background that strengthens my ability to navigate contracts that are subject to stringent regulations.

Recent  ContractsCounsel Client  Review:
5.0

"Great lawyer and easy to work with. She really cares about your business."

Bobby H. on ContractsCounsel
View Bobby
5.0 (6)
Member Since:
June 22, 2023

Bobby H.

Associate Attorney
Free Consultation
Atlanta, Georgia
13 Yrs Experience
Licensed in GA
University of Miami School of Law

Bobby E. Hill, Jr. is a native of Tuscaloosa, Alabama and holds undergraduate degrees in music and business administration from Xavier University of Louisiana. He received his Juris Doctor from the University of Miami School of Law where he was a staff and articles editor for the school’s Race & Social Justice Law Review and a student attorney in the institution’s Immigration Clinic. In addition to freelancing, Bobby is currently a litigation associate at Johnson & Freeman, LLC, a boutique litigation firm in Atlanta, Georgia, where he practices in the firm's Condemnation, Probate, Real Estate Litigation, Real Estate Transactions, E-Discovery and Business and General Civil Litigation Practice areas. In this role, Bobby has acquired appreciable experience in drafting memoranda of law for partners and senior counsel, and all litigation related pleadings including pleadings related to dispositive motions, discovery, appeals, and other post-judgment relief.

Recent  ContractsCounsel Client  Review:
5.0

"Helpful. Professional. Gave us peace of mind on a business partnership agreement."

Peter L. on ContractsCounsel
View Peter
5.0 (5)
Member Since:
July 1, 2023

Peter L.

In House Counsel
Free Consultation
Weston Florida
30 Yrs Experience
Licensed in FL, NY
Hofstra University

Experienced in house counsel with expertise in contracting, labor and employment, regulatory and compliance and healthcare

Recent  ContractsCounsel Client  Review:
5.0

"Thank you Peter, you did an amazing job for this medical contract, We appreciate your help and diligience."

Jessica M. on ContractsCounsel
View Jessica
4.8 (4)
Member Since:
June 24, 2023

Jessica M.

Attorney
Free Consultation
Portland, Oregon
26 Yrs Experience
Licensed in OR
Lewis and Clark

Jessica Molligan is an attorney with twenty years of experience in family law, bankruptcy, and litigation.

Recent  ContractsCounsel Client  Review:
5.0

"Jessica was great to work with. We got a quick cliam deed done and it was an easy process to go through with her. Highly reccomend hiring her for any of your needs."

David U. on ContractsCounsel
View David
4.7 (2)
Member Since:
June 22, 2023

David U.

Attorney
Free Consultation
CO, AZ, OK
26 Yrs Experience
Licensed in AZ, CO
The University of Oklahoma College of Law

For the last 25 years I've focused on representing businesses and entrepreneurs in transactional law deals, including LLC creation, operation and sale of businesses; real estate sales and leasing; and general contract negotiation and drafting. While I've helped all manner of businesses work out a variety of contract and business matters, I am an expert at helping clients with buying and selling commercial properties including multi-family and office projects and buildings, subdivisions, and retail shopping centers. I am also a recognized expert negotiating leases for retail and office tenants and landlords. Over 25 years I've honed my skills a lawyer at one of the largest law firms in the world, an elite real estate boutique in Aspen, Colorado and a highly regarded firm based in Denver, Colorado, before starting my own practice in 2016. Since 2016 I've been helping my clients with real estate and business deals. I'm a commercial real estate and business expert with a passion for helping clients forge successful ventures in an efficient and understandable manner.

Recent  ContractsCounsel Client  Review:
4.7

"David was very informative during our initial call, and helped me understand the scope of work that my project needed depending on how many legal avenues I wanted addressed and covered. The work he provided was detailed and completed by the deadline that he provided."

David M. on ContractsCounsel
View David
Member Since:
June 20, 2023

David M.

Shareholder
Free Consultation
Ann Arbor, Michigan
24 Yrs Experience
Licensed in MI
Wayne State University

Michigan and USPTO licensed attorney with over 20 years of experience on counseling clients in the fields of intellectual property, transactional law, technology involvement, negotiations, and business litigation.

Derek C. on ContractsCounsel
View Derek
Member Since:
June 19, 2023

Derek C.

Real Estate Attorney
Tampa, Florida
12 Yrs Experience
Licensed in FL, NM, NY
Barry University

With over a decade of experience in transactional legal work, I provide clients with comprehensive, practical, and tailored solutions in real estate, business law, and estate planning. My focus is on delivering precise, client-centered services that protect your interests and help you achieve your goals. What I Offer: Real Estate Law: Expertise in drafting, reviewing, and negotiating contracts for purchases, sales, leases, easements, title documents, and closings. Whether you're dealing with commercial, multifamily, or residential properties, I’ll ensure your transaction is seamless and secure. Business Law: Skilled in forming entities, drafting contracts, and other key negotiations. From startups to established businesses, I provide legal guidance to help you operate and grow with confidence. Estate Planning: Comprehensive estate planning services, including wills, trusts, powers of attorney, and healthcare directives. I work closely with clients to create customized plans that protect their assets and ensure their wishes are honored. Transactional Expertise: A proven track record of navigating complex deals efficiently and accurately, reducing risks and delivering results. Why Work With Me? Client-Centered Approach: I prioritize your unique needs, ensuring tailored solutions and clear communication throughout. Attention to Detail: My meticulous approach ensures that every document, negotiation, and agreement is handled flawlessly. Proven Results: For over 10 years, I’ve helped clients close real estate deals, secure favorable business outcomes, and establish estate plans that offer peace of mind. Let’s work together to secure your future, protect your assets, and simplify complex legal transactions. Contact me today to discuss how I can support your real estate, business, or estate planning needs!

John B. on ContractsCounsel
View John
Member Since:
June 21, 2023

John B.

Principal Attorney
Free Consultation
Indianapolis, IN
16 Yrs Experience
Licensed in IL, IN
University of Illinois Chicago School of Law

I am an attorney with over 13 years experience licensed in both Illinois and Indiana. I spent the early part of my career as a civil litigation attorney. Eventually, I moved into an in-house role, specifically as general counsel, to help companies avoid the pains of litigation. In doing so, I gained significant experience in executive leadership, corporate governance, risk management and cybersecurity/privacy. I bring this wealth of experience to my client engagements to not only resolve the immediate issue, but help implement lasting improvements in practices to avoid similar problems going forward.

Daniel W. on ContractsCounsel
View Daniel
Member Since:
June 22, 2023

Daniel W.

Attorney
Free Consultation
New York
25 Yrs Experience
Licensed in NJ, NY
HOFSTRA LAW SCHOOL

I am a Spanish-fluent corporate and commercial real estate attorney and broker licensed in New York and New Jersey. My pragmatic approach towards conflict resolution allows me to provide valuable advice to clients on avoiding issues of liability through effective risk management and strategic allocation of resources. I counsel businesses, developers, owners and investors on residential/commercial real estate and corporate transactions involving the acquisition, finance, development, leasing and disposition of all asset classes. In addition, I advise on joint venture partnerships and the negotiation, structure and drafting of operating agreements. Throughout my successful practice, I have held in-house counsel positions at large corporations, including JPMorgan Chase and Duane Reade, and had the privilege of working for the Department of Justice where I honed expertise in all aspects of mortgage-backed securities.

Christine T. on ContractsCounsel
View Christine
Member Since:
July 17, 2023

Christine T.

Partner
Free Consultation
Albany, NY
8 Yrs Experience
Licensed in CT, NJ, NY
UCLA School of Law

Christine E. Taylor focuses her practice in the areas of Hospitality Law, Business Law, Labor and Employment Law, Real Estate Law, Administrative Law, Estate Law and Litigation. Ms. Taylor grew up within the campground industry, working at parks in both the Yogi Bear’s Jellystone Park Franchise and the Kampgrounds of America Franchise. Armed with two decades of experience, Ms. Taylor is quick to point out the legal issues that apply to outdoor hospitality business owners. She has provided a wide variety of services to campgrounds, RV Parks, and glamping venues, including seasonal licenses, waivers, employment contracts, real estate services and even litigation services as needed.

Scott M. on ContractsCounsel
View Scott
Member Since:
August 2, 2023

Scott M.

Managing Attorney
Free Consultation
Kansas City
13 Yrs Experience
Licensed in KS, MO, TX
Washington University in St. Louis

Skilled/versatile attorney (and RE broker) with 10+ years' experience and diverse background in real estate, business law, injury litigation, estate planning. Select Experience: • Former General Counsel (and current Of Counsel) for a prominent real estate developer touching on all aspects of business in a hands-on and advisory role, including Lease and PSA contract negotiations; • Years of successful injury litigation practice as associate and solo (primarily plaintiff, some defense) with multiple six-figure settlements; • Years of expertise in business law for a variety of industries as well as estate planning for small to mid-size entities.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with a legal contract?

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES
See All Corporate Lawyers
REGULATION CROWDFUNDING LAWYERS BY CITY
See All Regulation Crowdfunding Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city