Feb 09, 2018

Annual Reporting Obligations for Issuers Who Raised Capital in a Regulation Crowdfunding Offering

Equity Crowdfunding By Lahdan Rahmati, Lou Bevilacqua

If you are reading this, then you are probably an issuer who sold securities in a Regulation Crowdfunding (Regulation CF) Offering – Congratulations! Not. So. Fast. You must comply with annual reporting obligations in order to continue relying on the Regulation CF exemption.

A Quick Intro

Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012 (Title III) added Section 4(a)(6) to the Securities Act of 1933. Title III provides an exemption from registration for certain crowdfunding transactions, or the Reg CF Exemption. The U.S. Securities and Exchange Commission (SEC) adopted Regulation CF to implement the requirements of Title III. In a nutshell*, issuers relying on Reg CF are permitted to raise a maximum aggregate amount of $1,070,000 in a 12-month period.  For purposes of determining the maximum aggregate amount that may be sold in a Reg CF offering, an issuer does not have to include aggregate amounts sold in other exempt offerings.  Three cheers for the SEC and issuers who are eligible to rely on the Reg CF Exemption!

What information is contained in the Annual Report?

The SEC requires issuers to file an annual report on Form C-AR (Annual Report).  Information contained in the Annual Report is similar to the information required in the offering statement, however, neither an audit nor a review of the financial statements is required.

Where will the Annual Report be filed and when is it due?

The Annual Report is filed on EDGAR and a copy must be posted on the issuer’s website no later than 120 days after the end of the issuer’s fiscal year. For example, if the issuer’s fiscal year end was December 31, 2017, then the issuer’s Annual Report is due no later than April 30, 2018.  If the issuer’s fiscal year end was September 30, 2017, then the issuer’s Annual Report was due on January 28, 2018.

How long must an issuer comply with annual reporting obligations?

Issuers must continue to file an Annual Report until one of the following occurs:

  • the issuer becomes subject to reporting requirements under Exchange Act Sections 13(a) or 15(d);
  • the issuer has filed at least one Annual Report and has fewer than 300 holders of record;
  • the issuer has filed at least three Annual Reports and has total assets that do not exceed $10 million;
  • the issuer or another party purchases or repurchases all of the securities issued pursuant to Regulation CF, including any payment in full of debt securities or any complete redemption of redeemable securities; or
  • the issuer liquidates or dissolves in accordance with state law.

Any issuer terminating its annual reporting obligations is required to file notice on Form C-TR reporting that it will no longer provide Annual Reports pursuant to the requirements of Regulation CF.

*There is a lot more to Regulation CF, summarily described above for the purposes of this blog, and we would be more than happy to set up a call to walk you through it. Whether you plan to undertake the responsibility on your own or would like to retain our services, we urge you to take this obligation seriously in order to maintain compliant with the federal securities laws. Please contact us today at or by phone at (202) 869-0888 ext. 100 to learn more about our services.