There are two big differences between the Maryland crowdfunding exemption and many of the other state-based crowdfunding laws. First, Maryland crowdfunding has limited the amount and type of funds that can be raised under the exemption to a $100,000 debt offering. Furthermore, each individual state resident investor can invest a limit of only $100 in a particular deal without consideration as an “accredited investor” (high net-worth individual) under SEC regulations. By regulating crowdfunding in this manner, Maryland seems to have modeled its crowdfunding market to target small local businesses looking to raise funds from its closest supporters and customers.
The second crucial feature of the Maryland crowdfunding law is that there is no separate rule for funding portals. While many states have created exceptions from broker-dealer registration for crowdfunding web portals, the Maryland law specifically indicates that the exemption is unavailable to an issuer that pays “commission in connection with an offering of securities under this item to any person who is not registered as required under this title.”
Although Maryland’s law is relatively limited in terms of fundraising amounts and advertising of offerings, the rules call for corporate disclosures that are quite simplified and less burdensome than other states. Like all states, Maryland’s rules contain disqualification provisions to prevent certain “bad actors” from using the exemption to defraud investors. Finally, investors in a Maryland intrastate offering will not be able to resell the debt securities that they purchase.
Review the current Maryland Crowdfunding Exemption:
Here are just a few features for Maryland crowdfunding included in the CrowdForce platform software:
• State residency self-verification
• Driver’s license upload for verification
• Setting funding limits for non-accredited investors
• Allowing accredited investor participation
• Complete and simple document signing and management
• Integrated ACH payments
• Plug in your state escrow account
• Plugin in your broker services for accredited investments
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