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SEC Regulation & Tokenization 

ONLINE CAPITAL FORMATION & TOKENIZED SECURITIES

It is important to follow SEC regulations when raising capital for real estate projects. The SEC has implemented regulations to ensure that companies raising capital do so in a transparent and fair manner, to provide investors with sufficient information to make informed investment decisions. 

Leveraging blockchain technology and conducting an offering under exemptions such as RegCF, RegA+ or RegD is also a compliant method to raise capital. The pre-launch steps of the offering still adhere to traditional practices and comply with regulation. The offering process takes an innovative turn when investors are issued security tokens that represent their traditional investment shares. Both issuer and investor benefit from the management and recording of these shares on the blockchain.

 

Rules can be programmed into each security token to ensure compliance, automate processes like dividend payments and the issuance of tax forms along with a host of many other conveniences.

According to the SEC, a Security Token Offering is classified as securities and is subject to regulations, including registration requirements under the Securities Act of 1933. It is crucial to seek guidance from a qualified securities attorney to ensure full compliance with relevant securities laws and regulations.

RegCF

Regulation CF

  • Can raise up to $5M USD every 12 months

  • Unlimited investor access - accredited and non-accredited  

  • No shareholder limit

  • Ability to solicit the general public anywhere in the world

  • US based entities only

  • Audited financials required

  • SEC registered Transfer Agent required

  • FINRA Broker Dealer required or approved Crowdfunding platform

  • Easy for accredited investors to invest without the strenuous process of demonstrating accreditation 

  • 12  month resale restriction

  • After 12 months, no resale restriction

 

RegA+

 

 

 

​Regulation A+ Tier 2

  • Can raise up to $75M USD every 12 months

  • Unlimited investor access - accredited and non-accredited 

  • No shareholder limit

  • Ability to solicit the general public anywhere in the world 

  • US or Canadian based entities only

  • Audited financials required 

  • Benefits from series LLC structuring 

  • SEC qualification required

  • SEC registered Transfer Agent required

  • Easy for accredited investors to invest without the strenuous process of demonstrating accreditation 

  • Free trading - no holds, no restrictions

RegD

Regulation D 506(c)

  • Can raise unlimited amount of capital

  • Limited to accredited investors only

  • Limited to 2000 shareholders (beyond that requires SEC reporting)

  • Ability to solicit the general public

  • No audited financials required

  • No SEC qualification required

  • No Broker-Dealer requirement

  • No Transfer Agent requirement

  • 12 month resale restriction

  • After 12 months, restrictions on resale

High level information provided above on Regulation CF, A+ and D is for general purposes only and should not be interpreted as guidance or legal advice. SEC Regulations can change without notice. Consult a licensed Securities Attorney for proper direction.

How to Avoid
Costly Mistakes

Overall, STOs can provide a compliant and efficient way for real estate companies to raise capital, but it is important to consult with a licensed securities attorney to ensure compliance with applicable securities laws, jurisdictions and regulations.The SEC's mission is to protect investors, maintain fair and efficient markets, and facilitate capital formation. Failure to follow SEC regulations can result in legal and financial consequences for the issuer and harm to investors. Fold in tokenization compliance and sound advice would be DDIY (Don't Do It Yourself)!

We carefully guide you through this process and help avoid costly mistakes. Some key responsibilities include:

  • Vett all supporting service providers for acceptance and approval 

  • Systematize the project with all supporting service providers 

  • Coordinate efforts and facilitate communication between you and 

    • financial professionals like broker-dealers

    • technology providers

    • transfer agents

    • investor acquisition resources

  • Provide non-legal advisory services

  • Assist with due diligence

  • Work with marketing providers to establish fruitful strategies

  • Provide other project support services to streamline the offering

Having a well-coordinated team is just as critical as having all the necessary documentation and financials. A trusted advisor is essential to ensure meticulous attention to detail and seamless coordination among all the components. By preparing well for a tokenized securities offering, you can put your best foot forward and make a strong impression on potential investors. We can develop a unique offering that sets you apart from competitors and attracts the funding needed for your project.

To learn how to get started with this technology, let's discuss your project now. Contact us today to learn how we can assist in achieving your goals. 

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