Crowdfunding has provided new opportunities for companies to obtain financing; however, there are some regulatory obligations associated with those opportunities as well. In terms of transparency and protection for the investor, all crowdfunding offerings require the filing of certain documents in a prescribed manner.
· Regulatory compliance obligations
Crowdfunding offerings will be subject to the same federal securities laws as any other securities offering, thus having to make accurate and timely disclosures pursuant to that law. Adhering to the EDGAR protocols for crowdfunding filings provides companies with a standardized way to demonstrate compliance with their regulatory obligations and to provide the market with consistent, easily accessible information about their filings.
· Transparency for investors
Investors can review crowdfunding offerings to make well-informed decisions by having access to concise, impartial, and straightforward information about the issuer. Transparency is provided through having access via the EDGAR Filing System, which contains public access to all crowdfunding filings, allowing investors to evaluate key financial metrics about the issuer and create a risk assessment.
· Uniformity of data
The EDGAR Filing System promotes uniformity in the format and quality of filings entered into the EDGAR Filing System. Without a recognized standard format to make filings in the EDGAR Colonial Filings System, there is a lack of uniformity in the data contained within filings made to the EDGAR system.
· Recognizing efficient data management
Presently, the EDGAR system allows companies to easily submit documents electronically while making it possible to electronically store and retrieve all documents submitted via the EDGAR System. The improvement of efficiency for both issuers and regulators through the use of electronic means instead of paper to file documents, reducing errors associated with the filing of documents.
Ø Enhancing market-place credibility
Companies that adhere to the guidelines of EDGAR are viewed by their potential investors as being credible and professional in their business dealings. Therefore, if a company has filed appropriately through EDGAR for crowdfunding filings, it creates more confidence in its integrity and accountability with its potential investor population.