The Compliances and Regulations For Security Token Offerings
Regulations and Compliance
Under the Securities Act of 1933, the offer and sale of securities must be registered unless an exemption from registration is available. The Securities Act provides a number of exemptions, allowing some companies to compliantly offer and sell securities without having to register the offering with the SEC.
Title III of the Jumpstart Our Business Act (JOBS Act) added Securities Act Section IV which provides an exemption from registration for certain crowdfunding transactions. In 2015, the Commission adopted Regulation Crowdfunding to implement the requirements of Title III.
Both Title III and Title IV help entrepreneurs crowdfund capital investments from non-accredited and accredited investors alike. The differences between these regulations are related to the limitations imposed on investors, the amount of capital companies are attempting to raise, and the different disclosure and reporting requirements.
EGW Capital notes that a large number of compliant security token offerings are structured pursuant to Regulation D and Regulation S exemptions and that for reasons that are debatable, Regulation A+ offerings are not likely to meet the approval of the Securities and Exchange Commission.
Regulation A+ (Reg. A+, also known as Title IV of the JOBS Act) allows companies to raise up to US$50 million from both accredited and non-accredited investors. This regulation is similar to a traditional initial public offering (IPO). However, in a Reg. A+ offering, a company soliciting investments from the general public will remain private. Additionally, Reg. A+ offerings allow companies to raise capital faster and less expensively than in an IPO. There are two tiers to Reg. A+ offerings that a company may raise under depending on how much capital is being raised.
Regulation A+ offerings are available to companies that are incorporated in the United States and Canada, primarily conduct their business in the United States and Canada, and are seeking to raise a minimum of US$2 million. Lastly, it is important to note that Reg. A+ offerings incur significantly higher accounting and legal costs, have more stringent qualifications with SEC, and have ongoing disclosure requirements for investors and the public.
Title III of the JOBS Act, also known Regulation Crowdfunding (Reg. CF), was adopted in 2016 as a way to reduce regulatory restrictions for small companies and startups, making it easier to raise capital from both accredited and non-accredited investors. This means that companies who seek to raise up to US$1.07 million are now able to do so through crowdfunding portals.
Regulation D (Reg. D) offerings are advantageous to any private company because they allow an entity to obtain funding faster and avoid the costs associated with a public offering. Additionally, Title II does not impose capital raise limitations. Regulation D may allow offerings to be openly solicited to prospective investors in a network, though the company raising capital still needs to provide disclosure documentation and ensure that their investors are accredited. However, these requirements are significantly less than what is required in a public offering. Companies must still electronically file a Form D with the SEC, which includes names and addresses of their executives and directors and some details regarding their offering.
Among the other requirements of Title II, the issuer of the securities must provide disclosures of any prior “bad actor” events in advance of the sale. If such information is not provided, the issuer can prove they are not at fault if they establish that they were not aware nor could have become aware of the undisclosed information.
The benefits of Reg. D are only available to the issuer of the securities, not to affiliates of the issuer or to any other individual for resale of the securities. Exemptions offered under Title II only apply to the transactions, not to the securities themselves.
For decades, companies wishing to sell private securities had to rely on friends, family, or their own networks because securities laws did not allow for general solicitation. However, this changed when Title II of the JOBS Act came into effect in September 2013. The Rule 506 exemption was split into two: 506(b) represents the old approach and 506(c) — in keeping with the age of transparency and sharing of information — allows general solicitation or advertising to the public.
Companies selling securities under Rule 506(b) can — but do not usually — sell securities to accredited investors and up to 35 non-accredited, but sophisticated investors. Determining what constitutes a “sophisticated investor” is sometimes debated between issuers and the SEC. Under Rule 506(c), companies are required to sell only to accredited investors.
Regulation S (Reg. S) was adopted by the SEC in 1990 and provides that offers and sales of securities that occur outside of the United States are exempt from the registration requirements of Section V of the Securities Act of 1933. Regulation S is generally intended to facilitate two capital-raising scenarios: either a U.S. company that issues securities only to foreigners, or a U.S. investor who enters a foreign market to buy foreign securities. In essence, Reg. S permits these types of transactions, among others, to occur without SEC registration and imposes a 40-day lockup period on the trading of securities issued under the exemption.
As traditional, accredited, non-accredited, and even first-time investors turn to the burgeoning and accessible STO market to seek profit, the Securities and Exchange Commission's goal of investor protection becomes more compelling than ever. As new technology companies enter into the world of securities exchanges, and as traditional financial instruments are converted into digital securities, there is an even greater need for sound market regulation.
We are a private equity firm specializing in growth companies. We acquire or build portfolio companies in high growth industries, deploying a proprietary crowdfunding platform and other direct to market capital formation strategies to provide growth financing for our portfolio holdings, and decades of experienced corporate management experience to maximize value for our shareholders.
We look to own companies in high growth industries, with disruptive technologies or significant market advantages, a top flight management team and a compelling strategy for exponential growth. We look for special opportunity wherever it can be found, and we bring a full array of services to our portfolio companies, including strategic growth and marketing, technology, management and long term strategic planning initiatives, grooming our companies for ultimate IPO or other liquidity event. We never stop looking for the next great opportunity, and we work tirelessly for our shareholders.
Company Name: EGW Capital Inc.
Contact: James Law
Address: 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309
This release was published on openPR.
Permanent link to this press release:
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.
You can edit or delete your press release The Compliances and Regulations For Security Token Offerings here
News-ID: 1421795 • Views: 552
More Releases from EGW Capital Inc
EGW Capital Finalizes US $100 Mn Debt Raise Through SPV Structure
EGW Capital, the blockchain based investment bank is gearing up to raise US $100 mn debt by issuing blockchain based debt tokens to the retail and high net worth investors around the globe. The company has confirmed its debt raise and the whitepaper will be released before end of May. The debt tokens will be listed on the blockchain exchanges which will ensure liquidity to the investors. The debt tokens will bear
ICO’s Are Dead, Security Tokens Are In
If ICOs in spite of a lack of regulation still fueled startups with a massive $5.6 billion, what’s next? Many believe it’s STO’s or the Securities Token Offering. While for ICOs the way it usually works is tokens or coins are offered by companies for purchase as a form of crowdfunding, however with STOs it’s an upgrade whereby you can purchase tokens during the offering that you can then trade, sell,
Securities Tokens Are Transforming The World Around You
The Bitcoin network allows users to access a censorship resistant ledger, with its native coin offering properties that align to ‘digital gold’. For distributed ledgers like Bitcoin and Ethereum, there are a myriad of use cases emerging that will change a wide range of industries. What is a Securities Token? Securities tokens are digital tokens that represent ownership of an underlying asset or security — subject to a nation’s federal securities regulations. These digital
EGW Capital Inc. To Submit Form 10 To SEC
EGW Capital Inc. will file its registration statement on Form 10 with the Securities & Exchange Commission before March 31, 2018 to become a publicly reporting entity and to facilitate the listing of its common stock on the OTC Markets stock exchange once effective. EGW Capital Inc. is a blockchain company which assists the global emerging companies with the Initial Coin Offerings. The company is currently working on the $100 million
More Releases for Reg
Project NMP-REG: Looking back on a successful cooperation
Phase I of the Interreg Europe project NMP-REG ends on March 31, 2019. Good reason for drawing a summary of an intensive and successful cooperation with partners from other European regions and stakeholders from North Rhine-Westphalia after a three years period. Therefore, the cluster NMWP.NRW invited to the information event „Erfolgreich in den Schlüsseltechnologien“ (Being successful in Key Enabling Technologies), which took place in Duesseldorf on March 26, 2019. The event
NMP-REG @ 8th NRW Nano Conference
North Rhine-Westphalia’s leading role in the fields of nanotechnology and materials science is clearly demonstrated at the biennially organised NRW Nano Conference, the most important nanotechnology event in Germany. The focus of the last event, which took place in Dortmund from 21-22 November 2018, was extended from nanotechnology to the topic of “Innovations in Materials and Applications” taking into account current developments in industry and science. International keynotes and plenary
Top Scenario: Bioliquid Heat and Power Generation Market By Key Players: Olleco, …
Qyresearchreports include new market research report Bioliquid Heat and Power Generation to its huge collection of research reports. The Bioliquid Heat and Power Generation market was valued at Million US$ in 2017 and is projected to reach Million US$ by 2025, at a CAGR of during the forecast period. In this study, 2017 has been considered as the base year and 2018 to 2025 as the forecast period to estimate the
Global Bioliquid Heat and Power Generation Market Advancement & Future Opportuni …
An up-to-date research report has been disclosed by Market Research Hub highlighting the title “Global Bioliquid Heat and Power Generation Market Advancement & Future Opportunities Recorded during 2018 – 2024” which provides an outlook for current market value as well as the expected growth of "Bioliquid Heat and Power Generation Market " during 2018-2025. The report studies the casing heads market worldwide, especially in North America, China, Europe, Southeast Asia,
Global Bioliquid Heat and Power Generation Market Report, Trends, Size, Share, A …
Research N Reports comes up with a new statistical report titled as Global Bioliquid Heat and Power Generation Market. The report is analyzed in detail and information such as the market dynamics, figures and geographical segmentation of the market is mentioned. Along with this, it also provides a wide-ranging evaluation of the competitive landscape of the market. On the basis of the geographical outlook, the market is categorized into regions
Gardening Tools Market is Anticipated is Expected to Reg ister Highest CAGR of 2 …
In terms of volume, the global gardening tools market is projected to register 1.6% CAGR during the forecast period 2017 to 2025, according to a recent report by Persistence Market Research (PMR). PMR’s report estimates the global sales of gardening tools to expand from nearly 280,000 ‘000 units in 2017 to surpass 300,000 ‘000 units by 2025-end. People in developed economies consider home improvement and small maintenance activities as a favorable