Oregon Crowdfunding Law – A Better Way?

I just got off the phone with a lawyer in Oregon’s Department of Finance and Corporate Securities and I am quite enthused with what they are doing with Oregon’s crowdfunding law.    Like Washington, the company using the law must be incorporated in the home state. But the level of agency review is much more limited than in Washington.  Under Oregon DFCS Rule 441-035-0110, the issuer must file a notice with the DFCS at least seven days before beginning an offering or publishing an advertisement.  The Notice must contain information about the company and the offering but the disclosure is not onerous.

Other differences from Washington’s 2023

  • $250,000 maximum (Washington’s is $1,000,000)
  • $2,500 maximum individual investment (wealthy people in Washington can invest up to 10% of their income)
  • Must meet in person with a business technical service provider (nothing like this in Washington)
  • Reports to shareholders do not have to be made publicly available (a big negative of Washington’s law)
  • No escrow requirement (another negative of Washington’s law)
  • Disclosure document must state offering minimum amount, if any.  (I.e., you don’t necessarily need minimum commitment before you close the round.  In Washington, you do.)

Oregon’s law, in contrast to Washington’s, was passed by rulemaking, not by statute, so you know it has the support of the Oregon DFCS.  And unlike Washington, their law is being used. I found at least eight or nine Oregon companies that are using the rule to raise money.  Obviously, this law won’t help Washington companies, but if it is successful in Oregon, perhaps authorities here in Washington will see feet to making changes in our law.

Oregon’s crowdfunding rules and a FAQ prepared by the DFCS can be found here:  http://www.dfcs.oregon.gov/securities/raise_capital.html

 

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