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Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comAuthor: Scarinci Hollenbeck, LLC|July 14, 2015
The SEC’s recent exemption, called “Reg A ,” will give filmmakers a new way to offer securities. Though the regulation wasn’t intended to control crowdfunding websites specifically, it will offer filmmakers and investors new ways to use them. For some time, a number of filmmakers, often independent, have been raising money for productions through websites such as Kickstarter.
These sites allow people to invest in campaigns, such as a film-funding initiative, but do not offer any financial return. Instead, investors are offered other amenities, such as merchandise, mentions in the credits or opportunities to meet those involved with the movie.
The Reg A exemption is expected to change this. If issuers meet public offering registration requirements, they can sell ownership stakes through crowdfunding websites, as long as the site provides all the requisite forms and takes care of filing with the SEC.
The registration requirements, listed in full by the Hollywood Reporter, are as follows:
If all these requirements are met, then under Reg A, issuers are allowed to do a few things. One of these activities is raising funds through a crowdfunding website, but several others are allowed with the SEC’s new regulation. The issuer will be allowed to advertise the offering in a variety of ways, such as through social media.
The issuing company will also be allowed to “test the waters,” with marketing material, but cannot accept any investors before delivering the SEC-approved form. The issuer will also be allowed to accept investments from any investor, not just those accredited through certain net worth requirements. The number of investors a company can accept is unlimited.
These new registration rules and advertising allowances have the potential to completely change the way that filmmakers finance their projects. Previously, it had been difficult to offer crowdfunding investors any sort of equity for their donations because of securities regulations. Reg A will give people the opportunity to invest in movie projects with some potential for returns, as well as the typical risk, offering studios and independent filmmakers a transformative new way to fund their projects. As a filmmaker looking for investors, consulting an attorney to ensure the process is done correctly is advised.
The Firm
201-896-4100 info@sh-law.comThe SEC’s recent exemption, called “Reg A ,” will give filmmakers a new way to offer securities. Though the regulation wasn’t intended to control crowdfunding websites specifically, it will offer filmmakers and investors new ways to use them. For some time, a number of filmmakers, often independent, have been raising money for productions through websites such as Kickstarter.
These sites allow people to invest in campaigns, such as a film-funding initiative, but do not offer any financial return. Instead, investors are offered other amenities, such as merchandise, mentions in the credits or opportunities to meet those involved with the movie.
The Reg A exemption is expected to change this. If issuers meet public offering registration requirements, they can sell ownership stakes through crowdfunding websites, as long as the site provides all the requisite forms and takes care of filing with the SEC.
The registration requirements, listed in full by the Hollywood Reporter, are as follows:
If all these requirements are met, then under Reg A, issuers are allowed to do a few things. One of these activities is raising funds through a crowdfunding website, but several others are allowed with the SEC’s new regulation. The issuer will be allowed to advertise the offering in a variety of ways, such as through social media.
The issuing company will also be allowed to “test the waters,” with marketing material, but cannot accept any investors before delivering the SEC-approved form. The issuer will also be allowed to accept investments from any investor, not just those accredited through certain net worth requirements. The number of investors a company can accept is unlimited.
These new registration rules and advertising allowances have the potential to completely change the way that filmmakers finance their projects. Previously, it had been difficult to offer crowdfunding investors any sort of equity for their donations because of securities regulations. Reg A will give people the opportunity to invest in movie projects with some potential for returns, as well as the typical risk, offering studios and independent filmmakers a transformative new way to fund their projects. As a filmmaker looking for investors, consulting an attorney to ensure the process is done correctly is advised.
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