The Colorado Division of Securities Issues New Rules - The Crowdfunding Small Offering Exemption and Other Changes

Abstract

The Commissioner has adopted rules interpreting the Colorado Securities Act which are found at 3 CCR 704-1, available through the Colorado Secretary of State’s website. This article discusses new rules adopted by the Commissioner which became effective July 31, 2018. In a rule-making process that commenced in October 2017 with a “crowdfunding forum” hosted by the Commissioner, the Colorado Division of Securities (the “Division”) has issued significant amendments to its rules including a “Small Offering Exemption” of up to $500,000 under the Colorado Crowdfunding Act. The Division published its proposed rules on March 2, 2018, held a hearing on the proposed rules on May 1, 2018, after receiving written comments from five people, made certain amendments to the proposed rules, and published the final rules after completing the administrative approval process on July 12, 2018. The following sets forth a review of the significant amendments to the Division’s rules, and some questions left unanswered or unaddressed, starting with the significant and potentially beneficial changes to the rules under the Colorado Crowdfunding Act (the “CCFA”).