While Title III of JOBS Act regulation opens crowdfunding opportunities in the entire nation, states are still passing laws in equity crowdfunding. The last one to do this move is New Jersey: a bill introduced by Senator Joe Kyrillos (Republican) back in 2013 was passed into law this November.
Non-accredited investors who reside in New Jersey are allowed to invest up to $5,000 per project, while businesses can raise up to $1 million from this public. All investments are tax free in the State.
Kyrillos argues that non-accredited investors are also exposed to risks in Wall Street, while only big businesses can benefit from the possibility of raising capital through stocks exchanges. In a time when traditional capital sources are scarce, new ventures, the ones that will generate the so much needed jobs to provide growth to the economy, have to have alternative ways of financing available.
90 percent of the employers in New Jersey State are small businesses. They are, effectively, the ones that actually form the basis of the economy and that drive economic growth. By removing regulatory barriers to capital raising and simplifying the process, small business growth can be better achieved with the support of the community.
New Jersey equity crowdfunding initiatives can only be made via Internet. We’ll highlight some requirements of the law:
- Portals must be registered with the State. They must be organized according to New Jersey laws and authorized to do business within it
- The portal must be a registered broker dealer, unless it does not provided financial advice, compensate employees for reaching some goals or if it is already registered as a broker dealer under SEC
- Companies must disclose the identity of the people who own more than 10 percent of the company
- Companies must detail the use of the proceedings, at leat 65 percent of them described in US dollars