The SEC opens up crowdfunding rules to help businesses survive COVID-19

As the coronavirus is continuously making the situation more dire for businesses, the Securities and Exchange Commission (SEC) has offered them a potential lifeline by providing temporary, conditional relief by easing the US’ crowdfunding rules.

Through the initiative, SMEs can enjoy relief from certain rules with respect to the timing of a company’s offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief. The relief will apply to offerings launched between the effective date of the temporary rules and Aug. 31, 2020.

“In the current environment, many established small businesses are facing challenges accessing urgently needed capital in a timely and cost-effective manner,” said Jay Clayton, chairman of the SEC. “Today’s action responds to feedback we have received from our Small Business Capital Formation Advisory Committee and others about the difficulties these companies may face in conducting an offering within a time frame that meets pressing capital needs, while continuing to provide appropriate protections for investors.”

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