Gov. McCrory signs crowdfunding law

Gov. Pat McCrory signed a crowdfunding law Friday that gives North Carolina startups an alternative way to raise funds and brings a new pool of investors to the table.

Previously, only “accredited investors with a personal net worth of $1 million or more or annual income of $200,000 could invest.

Experts at WRAL’s Crowdfunding event in Raleigh in March warned that Entrepreneurs must educate themselves on the crowdfunding process before attempting it.

McCrory said the law will make NC more competitive nationally and open up investing.

What does it mean?

Benji Jones on the jobsnc.blogspot.com explains:

“A North Carolina business will be able to raise up to $1 million in any 12-month period (or up to $2 million with audited or reviewed financial statements) from investors who are North Carolina residents. There are no wealth or income limitations on who can invest; however, investors who are not “accredited” may only invest $5,000 in a particular venture in any 12-month period.

“Companies will be permitted to promote the offering publicly, after filing a notice (as well as substantive disclosures) with the Securities Division of the North Carolina Secretary of State. A fee of $150 will also be charged.  Companies are required to communicate in writing the business plan, financials, use of funds, and risks of the offering. Investors are required to certify in writing at the time of sale that they understand the risks of purchasing unregistered securities and that they may lose their entire investment.

“Companies may (but are not required to) use a professional crowdfunding intermediary that meets the requirements established by NC PACES and related rules. They are required to establish an escrow to hold funds prior to closing.”

The post also notes that companies that issue securities under the act will be required to provide quarterly reports to investors.

Companies can start gathering materials and preparing now, but the Securities Division of the North Carolina Secretary of State’s office must adopt specific rules to implement the provisions of the Act before companies can proceed. It has a year to do so.

For more information see:

http://jobsnc.blogspot.com/

https://wraltechwire.com/crowdfunding-event-north-carolina-is-out-of-business-commerce-secretary-says/14520751/?navkeyword=crowdfunding#luvVT2vE4Xqc2iPW.99