The Maine Office of Securities has published a Maine crowdfunding rule that goes into effect on January 1, 2015. New Rule 523 – entitled “Rule Regarding Short-Form Seed Capital Registrations”1 – can be found at MOOS’s home page: http://www.maine.gov/pfr/securities. The rule allows a Maine-based company to seek up to $1,000,000/year of new capital through a broadly disseminated offering – such as through Internet social media sites, Internet advertising, a securities broker-dealer, or the company’s own website. The rule is somewhat fussy, and in each case requires that a registration statement be filed and cleared by MOOS before any solicitations begin. The short-form registration statement is built around a company business plan and a detailed set of financial statements, supplemented with a Q&A format disclosure document covering a range of topics. Securities can be sold under this registration only to Maine residents, and there is a $5,000/year cap on the amount any one person can invest (unless the person has sufficient wealth or income to be an “accredited investor,” as defined). All subscription proceeds must be impounded with a bank until a company-specified minimum dollar amount has been raised. The company must also specify a maximum dollar amount to be raised (not exceeding 3.33 times the minimum).
Who is a good candidate for using the new Maine crowdfunding rule? We will know better as people gain experience with this, but in our judgment the following factors will be important: