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Can I use crowdfunding to raise money without violating securities laws in Texas? What are the requirements?

To raise money through crowdfunding in Texas without violating securities laws, you must comply with the rules set forth in Tex. Vernon’s Civil Statutes Art. 581-44 [2.1]. The rules require that:

  • You must be an authorized small business development entity. An authorized small business development entity is defined as a Type A corporation authorized under Chapter 504, Local Government Code; a Type B corporation authorized under Chapter 505, Local Government Code; a nonprofit organization authorized by an agency or authority of the federal government to distribute housing and community development block grants; a municipal corporation; the Texas Veterans Commission; or a nonprofit community development financial institution certified by the Community Development Financial Institutions Fund [2.1].
  • You must list offerings of securities by issuers in which you are financially interested on your web portal [2.1].
  • You must not offer investment advice [2.1].
  • You may subcontract the operations of a crowdfunding web portal to a third party as permitted by board rule [2.1].
  • You must limit the offerings of securities on your web portal to securities of issuers located within your service area [2.1].

Therefore, to use crowdfunding to raise money in Texas, you must ensure that you meet all of these requirements [2.1].

Source(s):
Jurisdiction

Texas