Category: Form C

SEC Regulation Crowdfunding guidance explaining new compliance interpretations for Reg CF offerings, investor limits, and financial statement requirements.

SEC Issues New Reg CF Guidance: Key Compliance Updates for Crowdfunding Issuers & Funding Portals

On By crowdfundattnyIn Crowdfunding Investors, Crowdfunding Portals, Form C, Regulation CF1 Comment

In February, the SEC published five new Compliance and Disclosure Interpretations — C&DIs — about Reg CF. The SEC issues C&DIs to tell the public its views without issuing formal regulations. Unlike what you might be told in a telephone conversation with the SEC staff, you can rely on a C&D.

Moving Your Offering to a Different Platform

A Reg CF offering may be conducted on only one platform. If you start on one platform, can you switch to another?

Yes, according to the new guidance, but only if you haven’t made any sales. You must cancel the offering on the original platform, have the offering materials removed from that platform, and file a new Form C to start fresh on the new platform.

Former Exchange Act Reporting Companies

Public companies – companies required to file reports under Section 13 or 15(d) of the Exchange Act — may not use Reg CF. But the new guidance clarifies that the disqualification ends for a company whose reporting obligations are terminated.  

The Rolling 12-Month Cap

Rule 100(a)(1) limits how much an issuer can raise through Reg CF to $5 million in any 12-month period. The question is: when does the 12-month period start?

The new guidance says the cap uses a rolling 12-month calculation measured from the date of each closing. If you closed your first tranche on June 15, 2025, the one-year anniversary of that closing is June 15, 2026. On that date, the amount raised in that closing – but just that closing – drops out of the calculation.

“Annual Income” for Investor Limits

Rule 100(a)(2) limits how much a non-accredited investor can invest in Reg CF offerings over a 12-month period, based on the investor’s “annual” income and net worth. The new guidance clarifies that “annual” means the calendar year. 

Stale Financial Statements in Ongoing Offerings

Suppose you start a Reg CF Offering on March 3, 2026 using financial statements from 12/31/2024 and 12/31/2023. If the offering is still open on 04/30/2026, then you must file your financial statements for 12/31/2025 before proceeding. In other words, you can’t keep an old set of financials in your Form C indefinitely just because the offering is still technically open. 

Questions? Let me know.

Markley S. Roderick
Lex Nova Law
10 East Stow Road, Suite 250, Marlton, NJ 08053
P: 856.382.8402 | E: mroderick@lexnovalaw.com

Self-hosted Reg CF offerings legal analysis SEC crowdfunding rules

Improving Legal Documents In Crowdfunding: How to Write A Biography For A Disclosure Document

On By crowdfundattnyIn Form C, Legal Documents, Offering Statement, Regulation ALeave a comment

Investors want to know the people running the show. That’s why we always include a brief biography of the principals in a securities disclosure document, whether a Form C, a Private Placement Memorandum, or an Offering Statement. In Regulation A offerings, for example, companies must:

Give a brief account of the business experience during the past five years of each director, executive officer, person nominated or chosen to become a director or executive officer, and each significant employee, including his or her principal occupations and employment during that period and the name and principal business of any corporation or other organization in which such occupations and employment were carried on. When an executive. officer or significant employee has been employed by the issuer for less than five years, a brief explanation must be included as to the nature of the responsibilities undertaken by the individual in prior positions to provide adequate disclosure of this prior business experience. What is required is information relating to the level of the employee’s professional competence, which may include, depending upon the circumstances, such specific information as the size of the operation supervised.

Note the italicized language:  “What is required is information relating to the level of the employee’s professional competence. . . .” I point that out because to often we see business biographies like this:

John Smith is a visionary leader with an unwavering commitment to excellence, known for his dynamic approach to seizing opportunities and delivering unparalleled value. With a forward-thinking mindset and a passion for innovation, he leverages his far-reaching vision to create transformative strategies that align with stakeholder interests. His results-oriented leadership style empowers teams, drives growth, and positions the company for long-term success in a rapidly evolving market landscape. Outside of his professional achievements, Mr. Smith enjoys spending time with his [fourth] wife and three children, traveling to exotic destinations, and pursuing hobbies such as gourmet cooking, marathon running, and landscape photography.

Alas, that has nothing to do with Mr. Smith’s professional competence.

Mr. Smith’s biography should look more like this:

John Smith has more than 25 years of experience in the logistics and supply chain sector, with a track record of leading operational growth and efficiency in both privately held and publicly traded companies. From 2012 to 2021, he served as Chief Operating Officer of MidAtlantic Freight Systems, where he managed a network of five regional distribution centers, implemented a company-wide warehouse automation initiative that reduced order fulfillment times by 30%, and oversaw a workforce of more than 300 employees.

Before that, Mr. Smith was Director of Business Development at Eastern Transport Group, where he negotiated long-term contracts with Fortune 500 clients and led market expansion into three new states, increasing annual revenue by 45% over four years. Earlier in his career, he held senior operations roles at Interstate Logistics and Northstar Supply Chain Solutions, where he specialized in integrating newly acquired facilities and standardizing operational processes across multiple regions.

Mr. Smith holds a B.S. in Business Administration from Rutgers University and an MBA from Temple University’s Fox School of Business. He has extensive experience in vendor contract negotiations, ERP system implementation, transportation network optimization, and capital project management. Over the course of his career, he has built a reputation for data-driven decision-making, disciplined cost control, and the ability to align operational capabilities with long-term strategic goals.

That’s much more useful to investors. And it’s much more impressive, isn’t it?

Questions? Let me know.

Markley S. Roderick
Lex Nova Law
10 East Stow Road, Suite 250, Marlton, NJ 08053
P: 856.382.8402 | E: mroderick@lexnovalaw.com

Self-hosted Reg CF offerings legal analysis SEC crowdfunding rules

How To Draft A Form C For Regulation Crowdfunding

On By crowdfundattnyIn Crowdfunding Vehicles, Form C, Reg CF, SPVLeave a comment

Form C is the disclosure document used in Reg CF. Because I see so many Form Cs that aren’t done properly, I thought it would be worthwhile to explain how a Form C should be drafted and why too many lawyers go astray.

Rule 201 (17 CFR §227.201) tells us exactly what should be disclosed in a Form C:

  • Rule 201(a) calls for the name, legal status, physical address, and website of the issuer.
  • Rule 201(b) calls for the names and business experience of officers and directors. 
  • Rule 201(c) calls for the name of each person owning 20% or more of the voting stock.
  • All the way through Rule 201(z), which calls for copies of testing the waters materials.

Rule 201 is exhaustive, i.e., there is no disclosure requirement in Reg CF outside Rule 201, other than a short financial summary. 

If you had never prepared a disclosure document, how would you provide the disclosures required by Rule 201? Chances are, you would simply go down the list, from Rule 201(a) to Rule 201(z), and provide answers to all the questions. And that is exactly the right way to do it.

Look at this Form C, for a company called ScienceCast, Inc. Look at the Table of Contents, how it just goes through Rule 201, item-by-item. Look at the body, where each item is labeled with the corresponding rule. Look how the Form C describes the role of the crowdfunding vehicle, or SPV. If you had never prepared a disclosure document and were trying to do things right, I bet this is how you would do it.

Yet look at most of the Form Cs that are filed with the SEC. They don’t follow this format at all or follow it only loosely. In the worst case, of which there are many examples, you can’t even tell it’s a Form C. It looks like a typical Private Placement Memorandum you would see in a Regulation D offering.

And that explains why too many lawyers go off track. A lawyer who has prepared hundreds of Private Placement Memoranda thinks “A Form C is just another type of disclosure document. I’ll start with the form I’m already familiar with rather than create something new from scratch.”

Legal forms can be very useful, but they can also become like an old ship encrusted with barnacles. Over time, lawyers tend to add things to form documents as new cases are decided or new concepts come to mind, but rarely is any of the old stuff scraped away, much less the whole document re-thought.

Using the fresh-out-of-the-box Form C rather than the encrusted Private Placement Memorandum has many benefits:

  • It’s far easier to make sure all the disclosures are there.
  • It’s far easier to check for accuracy.
  • It’s far easier to create an easy-to-understand template.
  • It’s far more efficient, cutting costs.
  • It’s far easier for a lawyer to prepare or review, cutting costs.
  • It’s far easier for the funding portal to explain to the issuer.
  • It avoids all the duplication you see in a typical PPM.
  • It avoids all the state notices and other unnecessary legal boilerplate you see in a typical PPM.
  • It’s far easier for an investor to compare one offering to another.
  • It’s far easier for an investor to read and understand.
  • It uses less energy, reducing the impact of Reg CF on the fragile coral reefs surrounding Australia.

For Reg CF to grow, the industry must standardize. I hope it can at least standardize around a Form C.

Questions? Let me know.