To: [Stakeholder/Executive Team Name]
From: [Your Name/Position]
Date: March 2, 2026
Subject: Information Summary: Regulation Crowdfunding (Reg CF) for Stock Issuance
Executive Summary
This letter outlines the current regulatory framework for raising capital through Regulation Crowdfunding (Reg CF). As of 2026, Reg CF remains a primary vehicle for private companies to raise up to $5 million in a 12-month period from both accredited and non-accredited investors. This method allows for “general solicitation” (public advertising), provided the offering is conducted through a registered intermediary.
1. Key Offering Limits & Eligibility
To qualify for the Reg CF exemption, the following statutory limits apply:
- Maximum Raise: You may raise an aggregate of $5 million in any rolling 12-month period.
- Intermediary Requirement: The offering must be conducted online through a single SEC-registered and FINRA-member intermediary (either a broker-dealer or a funding portal).
- Issuer Eligibility: Most U.S. companies are eligible. However, “blank check” companies (those with no specific business plan), investment companies, and companies that have failed to comply with ongoing reporting requirements are disqualified.
2. Investor Participation & Limits
Reg CF is unique because it democratizes investment, but it imposes “safety caps” on how much non-accredited individuals can invest every 12 months:
- Accredited Investors: No investment limits.
- Non-Accredited Investors: * If annual income or net worth is <$124,000: The limit is the greater of $2,500 or 5% of the greater of their income/net worth.
- If both are ≥$124,000: The limit is 10% of the greater of their income/net worth, not to exceed $124,000.
3. Mandatory Disclosure Requirements (Form C)
Before launching, the company must file Form C with the SEC. Key disclosures include:
- Financial Statements: * Target <$124,000: Certified by the principal executive officer.
- Target $124,000–$618,000: Reviewed by an independent public accountant.
- Target >$618,000: Audited financial statements (for first-time issuers, “reviewed” statements may suffice depending on specific tiering).
- Business Details: Description of the business, use of proceeds, ownership structure, and risk factors.
- Progress Updates: Companies must file Form C-U within five business days of reaching 50% and 100% of the target offering amount.
4. Post-Offering Compliance
Raising capital via Reg CF triggers ongoing obligations:
- Annual Reports (Form C-AR): Must be filed annually no later than 120 days after the end of the fiscal year.
- Transfer Restrictions: Securities issued under Reg CF generally cannot be resold for one year, except back to the issuer, to an accredited investor, or as part of an SEC-registered offering.
Important 2026 Update
The SEC recently clarified (February 2026) that the 12-month fundraising cap is calculated on a rolling basis from the date of each closing, rather than a fixed calendar year. Additionally, companies that have terminated prior Exchange Act reporting obligations are no longer automatically disqualified from using Reg CF.
Note: This letter is for informational purposes only and does not constitute legal or financial advice. We should consult with securities counsel before filing Form C.