Friday, February 03, 2017

Vermont continues federal regulation crowdfunding trend

By Jay Fishman, J.D.

The Vermont Department of Financial Regulation is now the fourth state to promulgate a federal regulation crowdfunding rule following the SEC’s adoption of crowdfunding rules on May 16, 2016. Washington was the first jurisdiction to adopt a notice filing requirement for federal crowdfunding offerings on July 16, 2016. Thereafter, Massachusetts proposed a rule in November 2016 (which remains proposed), and Alabama’s rule takes effect on February 27, 2017. The state rules apply to offerings made under federal Regulation Crowdfunding 17 C.F.R. §227 and Securities Act, Sections 4(a)(6) and 18(b)(4)(C).

Vermont. As proposed, the Vermont rule would require issuers with either a Vermont principal place of business or who sell at least 50 percent of the aggregate offering amount to Vermont residents, to claim the federal regulation crowdfunding exemption by sending the Vermont Securities Commissioner: (1) a complete Uniform Notice of Federal Crowdfunding Offering Form or copies of all SEC-filed documents; and (2) a Form U-2, Uniform Consent to Service of Process (if the consent is not filed on the Uniform Notice of Federal Crowdfunding Offering Form). The notice would take effect for 12 months from the date it is filed with the Vermont Securities Commissioner.

An issuer, to renew the same offering for an additional 12 months, would file a complete Uniform Notice of Federal Crowdfunding Offering Form marked “renewal” and/or a cover letter or other document requesting renewal on or before the date the current notice expires.