An issuer who wishes to list its securities in the crowdfunding platform must submit disclosures, including an Offering Statement, which must indicate the target offering amount and the deadline to reach the target offering amount. The target amount must be reached on or before the deadline; otherwise, no securities will be sold in the offering and investment commitments will be cancelled and committed funds will be returned.
EARLY COMPLETION OF OFFERING
If an issuer reached the target offering amount prior to the deadline, the issuer may close the offering on a date earlier than the deadline, provided that:
1. The offering remains open for a minimum of 15 days;
2. The intermediary provides notice to any potential investors, and gives or sends notice to investors that have made investment commitments in the offering, of:
- The new anticipated deadline of the offering;
- The right of investors to cancel investment commitments for any reason until 48 hours prior to the new offering deadline; and
- Whether the issuer will continue to accept investment commitments during the 48-hour period prior to the new offering deadline.
3. The new offering deadline is scheduled for and occurs at least 5 business days after the required notice is provided; and
4. At the time of the new offering deadline, the issuer continues to meet or exceed the target offering amount.
CANCELLATION
An investor may cancel an investment commitment for any reason until 48 hours prior to the deadline identified in the issuer’s offering materials.
No-cancel period. During the 48 hours prior to such deadline, and investment commitment may not be cancelled, except when based on material changes.
CANCELLATIONS/ RECONFIRMATIONS BASED ON MATERIAL CHANGES
If there are changes to material information to the terms of an offering or to the information provided by the issuer, the intermediary shall give or send to any investor who has made an investment commitment notice of the material change and that the investor’s investment commitment will be cancelled unless the investor reconfirms his or her investment commitment within 5 business days from receipt of the notice.
The changes to material information are as follows:
- (i) Any event or transaction which increases or creates a risk on the investments or on the securities covered by the registration;
- (ii) Increase or decrease in the volume of the securities being offered at an issue price higher or lower than the range set and disclosed in the registration statement and which results to a derogation of the rights of existing security holders, as may be determined by the SEC;
- (iii) Major change in the primary business of the Issuer;
- (iv) Reorganization of the company;
- (v) Loss, deterioration or substitution of the property underlying the securities;
- (vi) Ten percent (10%) or more change in the financial condition or results of operation of the Issuer unless a report to that effect has been filed with the SEC and furnished the prospective purchaser;
- (vii) Classification, de-classification or re-classification of securities which results to the derogation of the rights of existing security holders, as may be determined by the SEC.
Failure to reconfirm. If the investor fails to reconfirm his/her investment within those five business days, the intermediary within 5 business days thereafter shall:
- Give or send the investor a notification disclosing that the commitment was cancelled, the reason for the cancellation and the refund amount that the investor is expected to receive; and
- Direct the refund of investor funds.
Extension of offering. If material changes to the offering or to the information provided by the issuer regarding the offering occur within 5 business days of the maximum number of days that an offering is to remain open, the offering shall be extended to allow for a period of five business days for the investor to reconfirm his or her investment.
RETURN OF FUNDS IF OFFERING NOT COMPLETED
If an issuer does not complete an offering, an intermediary shall, within 5 business days:
- Give or send each investor a notification of the cancellation, disclosing the reason for the cancellation, and the refund amount that the investor is expected to receive;
- Direct the refund of investor funds; and
- Prevent investors from making investment commitments with respect to that offering on its platform.
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