Over the last few weeks I have spoken to several people regarding Bohemian Guitars
' upcoming Sparkmarket
campaign, I've been working to educate them on what Sparkmarket and IGE is, and how Bohemian Guitars can legally launch a securities based crowdfunding campaign. From investors to securities lawyers, most people have told me that equity crowdfunding is illegal. But that is not the case. INTRA
-state equity-based crowdfunding is legal in both the state of Georgia and Kansas. Last year, the GA Commissioner of Securities passed legislation to make it easier for GA businesses to raise capital. The legislation that passed is called the 'Invest GA Exemption' or 'IGE'. Read the rules here: http://rules.sos.state.ga.us/doc...
But how is this legal under the Federal Securities Act? As stated above currently, "only Georgia and Kansas have legalized investment crowdfunding for businesses to generally solicit investment from non-accredited investors in those states, without having to register the offering. What this means is that a businesses based in Georgia can sell shares of equity to any Georgia resident, regardless of whether the resident is considered an “accredited” investor. Nationally, investment crowdfunding will not be legal until the SEC writes rules implementing Title III of the JOBS Act, and no one knows when this will occur." (http://www.sparkmarket.com/#tfaqs
So what does IGE allow for? It's really simple. IGE eases restrictions on how Georgia-based businesses can raise capital from the public market. IGE permits INTRA
-state securities-based crowdfunding.
IGE includes the following features:
1. Allows Georgia-based businesses to sell equity via crowdfunding to Georgia residents, whether accredited
2. Who qualifies? To qualify, the company must:
(a) be a for-profit business,
(b) be formed under the laws of the State of Georgia and registered with the Secretary of State,
(c) have its principal office in Georgia, and
(d) carry out a significant amount of its business in this State.
3. Allows Georgia-based companies to publicly offer their securities through a crowdfunding portal. (As stated in previous posts, Bohemian Guitars will be launching a campaign on SparkMarket).
investors who are Georgia residents can invest up to $10,000.00 per year via intrastate crowdfunding. A non-accredited investor is an individual with annual income less than $200,000.
5. Accredited investors can invest as much as they like.
6. Each company can raise a maximum of $1 million per year.
This is the IGE at a high-level. It is exciting to be a Georgia based business as the state government is clearly intent on helping local businesses grow and prosper. What is even more exciting is if successful, Bohemian Guitars, is set to make history, as the nation's 1st successfully funded equity-based campaign.