are must because they ensure smooth working of the crowdfunding industry. It can otherwise get very hectic and troublesome, had there been no Crowdfunding Laws to regulate the business dealings done via crowdfunding. Crowdfunding Laws are good for everyone. While it secures the trust of crowd funders, investors and project creators also get to do worry-free campaigning.
Crowdfunding Laws make crowdfunding campaigns realistic, open and less provocative. In fact, crowdfunding in many countries failed to grow due to lack of crowdfunding laws. Crowdfunding Laws make companies share every possible detail about their companies; this reduces the doubt investors might have about a company. It ensures a risk-free investment to investors. In case a company shares wrong information, it is held responsible for any unexpected results investment gets with the implementation of Crowdfunding Laws.
Rulings for Companies
In order to eradicate fraud and cheating from crowdfunding industry, Crowdfunding Laws made certain rules mandatory for companies to follow. Following are the Crowdfunding Laws for companies:
- A while ago, non-accredited investors were not allowed to invest in startups, businesses or equity crowdfunding. But now every citizen can invest in equity crowdfunding, startup or business.
- Companies were not allowed to publicly advertise about investment opportunities their companies had. But they are now allowed to publicly advertise their investment opportunities in their companies.
- Crowdfunding Laws assist smaller companies to raise money for their startups, therefore, giving them a chance to launch their own business.
- With Crowdfunding Laws, the companies now have to mandatorily disclose their target offering amounts to the public, the deadlines they have set to reach that target.
- It is a must for companies now to disclose the current financial position of the company before the public. It, thereby, discloses the risk associated with the investment, hence giving ample opportunity to the investors to decide whether they should go for an investment or not.
Rulings for Crowdfunding Platforms
Crowd funding Laws has set some rules for the crowdfunding platforms also so that to make business dealings through it easy and fully secured. Following are the rules set by Crowd funding Laws:
- In order to create awareness about making an investment through a particular crowdfunding platform, that crowdfunding platforms has now to provide sufficient knowledge about every aspect of crowdfunding investments.
- Crowdfunding platforms must make clear the information they share with people about a particular company on their platform.
- Crowdfunding platforms now have to take adequate measures to reduce the every possibility of fraud.
- Crowdfunding platforms have to provide investors necessary communication channels, in case, they want to discuss further the project or the offerings promised.
- Crowdfunding platforms receive compensations from companies for every investment; this compensation amount also they have now to share with investors.
Crowdfunding Laws helped a lot in making crowdfunding a fair business. This lead to the tremendous growth of crowdfunding industry throughout the world and inspired more people to go for it, as fearlessly as possible. Crowdfunding Laws helped companies to win the trust of people.
