Virginia has specific “Intrastate Crowdfunding Exemptions” (ICE) for local businesses to raise capital from Virginia residents, allowing offerings up to $1M (or $2M with audited financials), with investor limits of $10k per non-accredited investor, under state law (21VAC5-40-190). Businesses can use state-approved portals or sell directly, but must comply with Virginia State Corporation Commission (SCC) rules, potentially alongside federal Reg CF rules (using SEC Rule 147A) for broader reach, but state rules often require the issuer to be Virginia-formed or have significant local business.
Key Virginia Crowdfunding Rules (Intrastate Exemption)
- Issuer/Investor Location: Must sell only to Virginia residents; issuer must be Virginia-formed or meet specific business-in-VA criteria.
- Capital Raised: Up to $1 million in 12 months, or $2 million if audited financials are provided.
- Investor Limits: Max $10,000 per non-accredited investor; higher for accredited investors.
- Securities: Equity only (no debt) under the ICE.
- Intermediaries: Can use registered broker-dealers or state-approved online platforms.
- Disclosure: Must file with the SCC and provide disclosures, including Form ICE.
- Resale Restrictions: Securities cannot be transferred for six months from the last sale.
How it Differs from Federal Rules (Reg CF)
- Federal Regulation Crowdfunding (Reg CF) allows national campaigns up to $5M (as of recent updates) and broader investor pools.
- Virginia’s ICE focuses on local capital, requiring issuers to be local and selling only to local investors, while still leveraging federal rules like SEC Rule 147A for some flexibility (allowing general solicitation).
State Tax Credits
- Virginia also offers potential state income tax credits for certain crowdfunding investments, with rules managed by the Virginia Department of Taxation.
Where to Find Official Info
- Virginia SCC: Visit the SCC’s website for detailed guidance, forms (like Form ICE), and regulations.
- Virginia Law: Check the Virginia Administrative Code (21VAC5-40-190) for the full text of the exemption.
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Crowdfunding Guidelines
During the 2013 Session, the Virginia General Assembly enacted House Bill 1872 (2013 Acts of Assembly, Chapter 289), which allows any investment made by a taxpayer that is transacted via an online general solicitation, an online broker, or a funding portal (“crowdfunding”) to be eligible for any income tax credit for which it qualifies.
This legislation required the Department of Taxation (“the Department”) to develop guidelines to facilitate the submission of any electronic documents that are required to be submitted by a taxpayer to document or verify that a crowdfunding investment eligible for a tax credit has been made. Because selling equity through crowdfunding was not generally permissible by the Securities and Exchange Commission (“SEC”) at the time 2013 House Bill 1872 was enacted, the Department postponed the development of the guidelines required by such legislation until the SEC released its crowdfunding regulations. Because the SEC’s regulations regarding crowdfunding became effective on May 16, 2016, the Department began developing the guidelines required by 2013 House Bill 1872 during 2016.
On October 4, 2016 the Department of Taxation published final Crowdfunding Guidelines.
Legislative Documents
House Bill 1872 (2013)