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March 6, 2014

Crowd investing law takes effect

A new law allowing businesses to raise up to $1 million by selling small amounts of equity to investors took effect Monday, according to the Portland Press Herald.

After rules are drafted through the state Office of Securities, a process that could take up to six months according to Administrator Judith Shaw, businesses seeking investors will be able to advertise publicly on crowd investing websites like Wefunder.com, which allows investments of as little as $100. The law limits a company to selling a maximum of $5,000 worth of shares per year to any one non-accredited investor. Accredited investors would have no cap on investments in a company's crowd investing effort.

The law will allow businesses to register with the state Office of Securities, which will require the business to set a deadline for meeting its fundraising goal. If the goal is not met by the deadline, the company is required to return all money to the would-be investors.

Correction: A previous version of this story incorrectly stated limitations on investments through Maine's crowd-funding law. Portland attorney Joel Shaw said an issuer may conduct a "friends and family" round of fundraising selling into jurisdictions beyond Maine.

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