No intermediary may accept an investment commitment in a transaction involving the offer or sale of securities in reliance on the Crowdfunding Rules until the investor has opened an account with the intermediary and the intermediary has obtained from the investor consent to electronic delivery of materials.
An intermediary shall provide all information that is required under the Crowdfunding Rules, including, but not limited to, educational materials on investing in crowdfunding, notices and confirmations, through electronic means.
Unless otherwise indicated in the relevant rule, in satisfying this requirement, an intermediary shall provide the information through an electronic message that contains the information, through an electronic message that includes a specific link to the information as posted on the intermediary’s platform, or through an electronic message that provides notice of what the information is and that it is located on the intermediary’s platform or on the issuer’s website. Electronic messages include, but are not limited to, e-mail, social media messages, instant messages or other electronic media messages.
EDUCATIONAL MATERIALS
An intermediary shall deliver educational materials to investors establishing an account on their platform that explain in plain language and are otherwise designated to communicate effectively and accurately:
- The process for the offer, purchase and issuance of securities through the intermediary and the risks associated with purchasing securities offered and sold in reliance to the Crowdfunding Rules;
- The types of securities offered and sold in reliance on the Crowdfunding Rules available for purchase on the intermediary’s platform and the risks associated with each type of security, including the risk of having limited voting power as a result of dilution;
- Any restriction on the resale of a security offered and sold in reliance on the Crowdfunding Rules;
- The types of information that an issuer is required to provide (Disclosure Requirements), the period and frequency of the delivery of that information;
- The limitations on the amounts an investor may invest (Eligibility for Exemption from Registration);
- The limitations on an investor’s right to cancel an investment commitment and the circumstances
in which an investment may be cancelled by the issuer (Cancellation of Offerings);
- The need for the investor to consider whether investing in a security offered and sold in reliance to the Crowdfunding Rules is appropriate for that investor;
- That following completion of an offering conducted through the intermediary, there may or may not be any ongoing relationship between the issuer and intermediary; and
- That under Section 58 (End of Compliance), an issuer shall cease to publish annual reports.
An intermediary shall make the most current version of its educational material available on its platform at all times and, if at any time, the intermediary makes a material revision to its education materials, it shall make the revised educational materials available to all investors before accepting any additional investment commitments or effecting any further transactions in securities offered and sold in reliance to the Crowdfunding Rules.
PROMOTERS
In connection with establishing an account for an investor, an intermediary shall inform the investor that any person who promotes an issuer’s offering for compensation, whether past or prospective, or who is a founder or an employee of an issuer that engages in promotional activities on behalf of the issuer on the intermediary’s platform, shall clearly disclose in all communications on the intermediary’s platform, respectively, the receipt of the compensation and that he or she is engaging in promotional activities on behalf of the issuer.
COMPENSATION DISCLOSURE
When establishing an account for an investor, an intermediary shall clearly disclose the manner in which the intermediary is compensated in connection with offerings and sales of securities in reliance on the Crowdfunding Rules.
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