Frequently Asked Questions

 

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General FAQs 

What is crowdfunding? 

Crowdfunding is simply raising funds from a crowd of people. While the term might be new the concept is not. The term “crowdfunding” generally applies to using the internet to raise money online by collecting varying amounts of money from many people. 

Is this like Kickstarter? 

There are two different types of crowdfunding: rewards-based crowdfunding and equity crowdfunding. Sites like Kickstarter, Indiegogo and GoFundMe are all rewards-based crowdfunding platforms. They allow people to raise money for a project or charitable cause and may or may not offer a perk or reward in exchange for contributions. If you give someone money on a rewards-based crowdfunding site, you are either donating money or purchasing a product that doesn’t exist yet. These platforms are not allowed to offer ownership in a business or issue debt for a business to raise funds.   

Equity crowdfunding allows businesses to raise money by selling equity in their business or offering debt instruments.  If you give someone through an equity crowdfunding site, you are investing in the business. The NC PACES Act regulates equity crowdfunding in North Carolina. 

Is equity crowdfunding only in the United States? 

The United States is late to equity crowdfunding. Equity crowdfunding has been allowed in Australia, the United Kingdom and the Netherlands for several years.  The JOBS Act of 2012, which established the crowdfunding exemption, was signed into law on April 5, 2012. The “CROWDFUND Act” stands for “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012.” 

How many businesses in the United States raise money through equity crowdfunding? 

According to a January 24, 2018 report on equity crowdfunding in the United States: 

  • The number of unique offerings increased from 178 in 2016 to 481 in 2017, 
  • Proceeds increased from $27.6 million in 2016 to $76.8 million in 2017, 
  • The number of successful offerings increased from 99 in 2016 to 200 in 2017, 
  • The average success rate of offerings to date is 66.7%, 
  • The total number of investors in Regulation Crowdfunding increased from 28,180 in 2016 to 44,433 in 2017, 
  • Issuers that filed annual reports and reported creating jobs created an average of 13.9 jobs, 
  • Revenues for Issuers that filed annual reports increased on average 131%.  

Are all equity crowdfunding offerings the same? 

There are several different types of offers that may be appropriate for issuers as well as for different classes of investors. Some businesses are selling equity and others are issuing debt or convertible debt.  Some offerings are only available to “accredited investors” and others are available to anyone who wants to invest.  Different laws apply to different offerings. In addition, different laws may be applicable in different states.  You should carefully read each business’s disclosure documents prior to making any investment.  

What is the difference between selling equity and issuing debt? 

Buying equity in a business means you are buying ownership. That ownership is usually in the form of shares of stock.  Debt means business gives investors a promissory note in exchange for funding. The promissory note may include interest to the investor, the option to convert the note to stock at some point in the future (convertible note) or other terms and conditions. You should carefully read each business’s disclosure documents prior to making any investment.  

Why use equity crowdfunding? 

Businesses need money to operate and to expand their businesses. Banks have very strict lending guidelines and angel investors and venture capitalists either say “no” more often than “yes” or they desire unreasonable terms or control over the business you have built. There are also other benefits to equity crowdfunding including creating a large database of brand ambassadors or potential customers. 

Is equity crowdfunding legal in North Carolina? 

The JOBS Act of 2012 made equity crowdfunding legal in the United States.  Since the enactment of that law, over 40 states, including North Carolina have passed legislation that is state specific and allows “intrastate” crowdfunding. The NC PACES Act (Providing Access to Capital for Entrepreneurs) was signed into law on July 22, 2016 and became effective April 1, 2017, making it possible for North Carolina businesses to raise money from North Carolina investors through equity crowdfunding. The North Carolina law is “nested” within the federal law and was designed to foster the support of North Carolina businesses by North Carolina investors. 

Is equity crowdfunding in North Carolina different than crowdfunding in other states? 

The NC PACES Act is specific to North Carolina. 

Where do I find detailed information about the NC PACES Act and the associated rules and regulations? 

For more information on the NC PACES Act visit the North Carolina Department of the Secretary of State’s website at https://www.sosnc.gov/ or the North Carolina General Assembly’s website at https://www.ncleg.net/  

How can the NC PACES Act help a small business? 

The NC PACES Act may be helpful if a small business wants to raise funds and wants to use the Internet to reach investors. 

Can I raise funds as an individual or do I have to have a business?

The NC PACES Act only allows businesses to raise money. 

What businesses can use the NC PACES Act exemption? 

Generally, businesses located in North Carolina and registered and active with the North Carolina Department of the Secretary of State’s Corporations Division can use the NC PACES exemption. 

Can any business raise capital using equity crowdfunding? 

The NC PACES Act prohibits the following types businesses from using the crowdfunding exemption: 

  • An investment company; 
  • A holding company; 
  • A blind pool; 
  • A commodity pool; 
  • A blank check company; 
  • A peer-to-peer lender or similar online marketplace lender; 
  • A real estate investment trust (REIT); 
  • A company issuing viatical settlement contracts; 
  • A company issuing asset backed securities; or 
  • A company not specifically disqualified pursuant to G. S. 78A-17.1(e) 

Is there only one kind of exemption defined by the NC PACES Act? 

There are two different kinds of NC PACES securities offerings.  The NC Paces Offering (NCPO) and the Local Public Offering (LPO). 

What’s the difference between the two exemptions? 

A NCPO is a securities offering where a business is trying to raise a maximum of $2 million. The main points of the exemption are that the business must use the Internet to communicate with investors, can sell most types of securities, and has limits on how it advertises the securities offering.  

A LPO is a securities offering where a business is trying to raise a maximum of $250,000. The business does not have to use must use the Internet to communicate with investors although it can, can only sell limited types of securities, and has fewer limits on how it advertises the securities offering. 

Is there a lot of paperwork involved to file a claim for an NC PACES exemption? 

While the filing requirements for a business that wants to use the NC PACES Act exemption is significantly less than the requirements to register a security, there are still many requirements that must be met to issue exempt securities.  Prior to filing a Notice of Intrastate Claim of Exemption (NCE) with the North Carolina Department of the Secretary of State’s Securities Division, you should thoroughly review the requirements at https://www.sosnc.gov/. 

What documents do I need to? 

It depends on the type of offering but at a minimum you will need: 

  • Copies of any agreement that you have between you and: 
  • Your funding portal, 
  • Your registered dealer, 
  • Your escrow agent, or, 
  • Any other party involved in the offering 
  • Your disclosure document; and 
  • A $150.00 non-refundable filing fee  

Does an issuer have to say what they are going to do with the money?  

A business must disclose to investors how it will use the money it raises using the NC PACES exemption.  

What if an issuer raises more than their target amount? 

Investments above a target goal are called over-subscriptions.  Each issuer has the sole discretion to approve or deny additional investments after the target goal has been reached.  

What is meant by “security”? 

Generally, a “security” is an investment in either an ownership interest or a debt interest in a business or venture. The investor usually plays no active role in managing the business.  Generally, securities must be registered with the U.S. Securities and Exchange Commission (SEC) or individual states. 

Are these securities risky? 

All investments are inherently risky, and startup or early stage businesses are generally considered more risky than established businesses. It’s very important that you do your own due diligence to better understand not only the business and investment, but also the risk factors specific to that business, before you invest in any offering.  If you cannot afford to lose the money you plan to invest if things do not work out as the business hopes, you should not invest.  

Can anyone invest in a company using the NC PACES Act exemption? 

To invest in an offering using the NC PACES Act exemption, an investor’s principal residence must be in North Carolina and prior to investing each investor is required to provide proof of residency to the issuer. 

How much can I invest? 

The NC PACES Act allows for any investor to invest up to $5,000 per offering every 12 months.  Each offering is different, and issuers may set a minimum amount that can be invested per person.  In addition, accredited investors can invest higher amounts. 

What is an accredited investor? 

An accredited investor is defined someone who meets very specific criteria outlined by the SEC and by federal law. Generally, an accredited investor is someone with a net worth of at least $1,000,000, not including his or her primary residence, or an annual income of at least $200,000. Institutions such as trusts, endowments, angels and venture funds can also be certified as accredited provided they have more than $5 million in assets. 

Can I invest in offerings if I am not accredited? 

Equity crowdfunding offerings do not require you to be accredited to invest.   The NC PACES Act allows individuals to invest up to $5,000 per offering every 12 months. 

Can I encourage other people to invest in offerings I like? 

There is nothing illegal about casually discussing a business or stock you like or are interested in; however, you should refrain from giving investment advice to others, because you could violate certain laws regulating securities and investment advice. 

Will I be able to sell my shares after I invest in a business? 

Equity crowdfunding securities are illiquid investments and currently there is no secondary market. 

What do I do if I believe a business offering a NC PACES security is not complying with the law or is a fraud? 

Contact the North Carolina Department of Secretary of State’s Securities Division immediately. 

Issuer FAQs

Who is an “issuer”? 

An issuer is a business that chooses to use the NC PACES Act exemption to raise money. 

How do I keep someone form stealing my idea? 

Steve Jobs said, “We’ve always been shameless about stealing great ideas.” Having your unfunded idea stolen and duplicated is rare; however, putting your business or idea online for the public to see, whether it’s for raising money or any other purpose, carries the risk that someone will try to steal your idea or have access to information that you feel is confidential.  The NC PACES Act requires an issuer to give potential investors a substantial amount of information so that they can make an informed decision about whether to invest in your business. Our exclusive technology partner, Funding Stack™, requires an interested investor to sign a Non-Disclosure Agreement (NDA) prior to gaining access to information that we consider confidential or proprietary.  If you are interested in raising money using the NC PACES Act exemption and this is a concern for you, we would be happy to discuss the additional options available to mitigate the risk of someone stealing your idea. 

What are the benefits of using the NC PACES crowdfunding exemption? 

While most securities must be registered, an NC PACES Act crowdfunding security is exempt from registration. This means that the issuer does not must register the security with the regulator. It does not mean the issuer does not have to do anything. The issuer must file all of the paperwork required to be exempt. This filing is not the same as registration.  A NC PACES Act crowdfunding securities offering happens entirely in North Carolina, which means it involves North Carolina businesses offering securities to North Carolina investors.  These are just some of the benefits of using the NC PACES Act equity crowdfunding exemption. 

What are the risks of using the NC PACES crowdfunding exemption? 

There is no guarantee that you will be successful and raise the money you need. There are also costs that are associated with equity crowdfunding. These costs vary widely and may be significant. You will have ongoing obligations to your investors.  It addition it will be a lot of work! While the NC PACES Act securities offerings are less regulated than some other kinds of securities, you still need to comply with the NC PACES Act and the NC PACES Act rules.  These are just some of the risks of using the NC PACES Act equity crowdfunding exemption. There also may be some risks that are specific to your business. 

If I want to use the exemption what should I think about? 

There are many questions you may want to consider when deciding if an NC PACES Act securities offering is the best way to raise money for your business. For example, you will need to decide: 

  • How much money do I want to raise?  What is my target? 
  • What’s the minimum amount I need to make a difference in my business? 
  • What will I do with the proceeds? 
  • What types of security should I offer?  Equity or debt? 
  • Who are my target investors?  Accredited or non-accredited or both? 
  • How will investors learn of my securities offering?  Equity or debt? 
  • Can I advertise and if so what type? 
  • How long will it take me to raise the funds? 
  • Will I be able to comply with the law and rules? 
  • Do I need help? 

Am I required to hire an attorney to do a NC PACES securities offering? 

The NC PACES Act does not require you to hire an attorney; however, securities laws are complicated.  

Where do I begin? What is the process? 

  • Read all the FAQs. It will help you make the decision about what type of NC PACES Act securities offering is best for you and what service providers can help you. 
  • Decide if you want to do an NCPO or an LPO. 
  • Read the NC PACES Act and the Rules. 
  • If you are doing an NCPO you should read the Section .2000 Rules. 
  • If you are doing an LPO, you should read the Section .2000 Rules and the Section .2100 Rules because you must still comply with the rules in .2000, but there are special rules in .2100 that give you more flexibility. 
  • Pay close attention to what you will need to include in your forms. 
  • Start gathering the information you need so you can fill out the Forms NCE or NCE-LPO and Disclosure Document. 
  • Select your service provider(s). 
  • Create your disclosure document. 
  • Complete your forms. 
  • Set up your mandatory meeting with us if you are considering an LPO. Call us if you have any questions at (919) 814-5400 or toll free at (800) 688-4507. 
  • File your forms and pay the fee. 
  • Wait until you receive a Notice of Compliance before offering your security. 

What do I must file? 

You must submit the following: 

  • North Carolina Notice of Intrastate Claim of Exemption (Form NCE), or 
  • North Carolina Claim of Intrastate Claim of Exemption and Addendum - Local Public Offering (Form NCELPO) 
  • A disclosure document that complies with the rules, 
  • An escrow agreement that complies with the rules, 
  • Any other contracts with service provider(s) relating to the securities offering, and 
  • The nonrefundable filing fee of $150. 

Where can I find the required NC PACES Act forms that I will need? 

http://sosnc.gov/Sec/ 

How long will the review process take?  

Generally, you will hear back from the State within 10 business days.  They may have additional questions or need additional information. 

Can I hire someone to help me or do it for me? 

Businesses use Cardinal Crowdfund Solutions, LLC to help them raise capital from “the crowd.” Cardinal Crowdfund Solutions, LLC helps businesses simplify the equity crowdfunding process by applying a proven process and a bundled service package.  Cardinal Crowdfund Solutions, LLC helps an issuer from pre-fundraising activities to post-fundraising reporting, including development of videos, marketing plans and strategies, financial statements and disclosure documents.   

What is Cardinal Crowdfund Solutions? 

Cardinal Crowdfund Solutions, LLC is the exclusive partner of LogicBay Corporation’s FundingStack™ technology platform that provides North Carolina-based investors access to investment opportunities and North Carolina-based businesses with access to investors. Cardinal Crowdfund Solutions, LLC was founded to assist North Carolina-based businesses raising capital using the revolutionary new NC PACES Act equity crowdfunding laws and rules and to allow access to the proprietary FundingStack™ technology, the only funding portal to receive notice of effectiveness of registration from the North Carolina Secretary of State. 

Who are the people behind Cardinal Crowdfund Solutions? 

Cardinal Crowdfund Solutions, LLC was co-founded by Donald C. Seifert, Jr. and Robert M. Wright. Mr. Seifert graduated from the University of North Carolina at Chapel Hill earning a Bachelor of Science degree in Business Administration.  He received his MBA from the University of North Carolina at Wilmington. He has over 30 years of experience owning and operating small businesses, primarily in the financial services industry. Mr. Wright earned both his Bachelor of Science degree in Chemistry and his MBA from the University of North Carolina at Wilmington.  Mr. Wright’s expertise is in operations management where he has spent most of his career, most recently as Director of Business Development for Bald Head Island Limited.  For more on the Cardinal Crowdfund Solutions, LLC team, visit our About Us page. 

How often must I provide updates to my investors? 

You must provide quarterly reports to investors directly, or to investors by posting them on the funding portal platform or your website if you don’t use a portal. Even if you post it, an investor can still ask for a copy directly from you. 

How long do I must provide updates to my investors? 

You must provide the quarterly reports until no securities issued in the offering are outstanding. 

What do I must include in the quarterly reports? 

Quarterly reports must include details of the compensation received by each director and executive officer of the business, an analysis by management of the business operations and financial condition of the business and details on the progress of the offering toward the target offering amount if the offering is still ongoing. 

Are there federal rules I must follow in addition to the state’s requirements? 

Every securities offering under the NC PACES Act must also has to comply with federal law and rules. 

Investor FAQs  

How are securities regulated? 

In general, issuers must register their securities with the U. S. Securities and Exchange Commission (SEC) or the state(s) in which they wish to sell them.  The appropriate regulator must approve the securities offering before investors can buy the securities.  

How do I prove that my principal residence is in North Carolina? 

Examples of things you can use to show that your principal residence is in North Carolina include: 

  • Documentation issued by a federal, state, or local government like a driver’s license or ID card, 
  • A recently-dated utility bill, 
  • A pay-stub, 
  • Information in your state or federal tax returns, or 
  • A public or private database that you determine is reasonably reliable, including credit bureau databases, directory listings, and public records. 

What are some of the benefits of NC PACES crowdfunding for me as an investor? 

You can now invest in startup businesses just like more experienced investors do. And it is easy to do.  

A NC PACES Act securities offering gives you the chance to invest in a local business and support your local community.  A NC PACES Act securities offering can give you a chance to invest in a product or business you know and like.  There may be other kinds of investments that would allow you to do these things too. You may want to consult an investment professional to find out about other options. 

What are some of the risks of NC PACES crowdfunding for me as an investor? 

Every investment comes with some risk.  Businesses that use the NC PACES Act exemption to offer securities are not evaluated by any regulator on their ability to earn money or for the truth of the statements in their filings. The regulator simply determines if the NC PACES Act securities offerings’ filings comply with the filing requirements and the rules.  Some of the businesses that may offer securities through NC PACES Act may be startups or in the early stages. Investments in startups or early stage businesses carry additional risks.  You should research the investment yourself or hire a licensed professional to help you.  If you buy an NC PACES Act investment, federal law requires you to hold on to it for at least 6 months before you can sell it, if you can sell it then.  In addition, each securities offering will also have risks that are specific to the issuer’s business.  You should not invest any money that you can’t afford to lose. You alone must decide for how much risk to assume.  

Where can I find the information I need to make an informed decision? 

The issuer is required to provide you a legal document called a disclosure document and it must contain all relevant information that you need to make an informed decision.  This document is a part of the exemption filing that is submitted to the State.  An issuer will also have a platform that will include the disclosure document as well as other important information.  The platform will include a communications channel where you can interact directly with the issuer. You will be able to share information with other people interested in investing or who have already invested.  You can also research the business online or use the North Carolina Department of Secretary of State’s online business registry http://www.sosnc.gov/search/index/corp 

Is there anything else I should know prior to investing in a NC PACES Act securities offering? 

You are required to do your own due diligence.  No one is going to do it for you.  No regulator confirms the truth of any statements in the disclosure documents or the issuer’s financial statements. 

Once I decide to invest, who should I send my money to? 

The disclosure document tells you where to send your money, but you will be sending the money to an escrow agent.  An escrow agent is a person or entity that holds property, money in this case, in trust for third parties while a transaction is finalized.  Until the issuer has reached at least 20% of its goal, the escrow agent will not release any funds to the issuer. 

What if I make an investment and change my mind? 

If the fundraising minimum target amount is not met by the fundraising deadline or if an investor requests that their money be returned prior to the 20% of the target fundraising goal being met, then the escrow agent will return money back to investors.  Any other requests for a return of your investment will be at the discretion of the issuer. 

How can I protect myself from fraud? 

The best thing you can do is to do your homework!  Look for information like: 

  • What is the business? 
  • Who are its officers? 
  • What is their business plan? 
  • What are the risks of investing in this business? 
  • How do they intend to use your investment to make money? 
  • Who are their competitors? 
  • How long before you could expect to see a return? 
  • What types of securities are they offering – stocks (equity) or bonds (debt)? 
  • If there are financial statements, have they been audited or reviewed? 
  • Does it sound too good to be true? 

The questions above are just a starting point. 

What do I do if I believe a business offering a NC PACES security is not complying with the law or is a fraud? 

Contact the North Carolina Department of Secretary of State’s Securities Division immediately. 

Escrow FAQs 

What is an escrow and escrow account? 

Escrow generally refers to money being held by a third-party on behalf of transacting parties.  The third party is a neutral party and holds funds in an escrow account until certain conditions as set forth by the transacting parties are met.  This protects the money and the transacting parties.   

What is an escrow agreement? 

An escrow agreement is a legal contract between a transacting party and an escrow agent.  The escrow agreement describes how an escrow account will work. 

What is an escrow agent? 

An escrow agent is a person or entity that holds property, money in this case, in trust for third parties while a transaction is finalized. 

Is an issuer required to have an escrow account? 

The NC PACES Act requires all issuers to have an escrow agreement as part of their offering.  Escrow protects the investor because the issuer cannot access the money until certain conditions are met.  Escrow also protects the issuer since the issuer will not get the money until the escrow agent has verified that the funds have cleared, and all conditions required by the law are met, such as residency requirements.  The issuer’s escrow agreement must direct all investor funds to an escrow account and held until the escrow agent releases the funds. 

What are the requirements for escrow accounts? 

Escrow accounts must be FDIC insured, held in a segregated account for each NC PACES Act offering, and be maintained by an escrow agent.  If the escrow agent is a lawyer, then they must comply with additional escrow account requirements.   

Does the NC PACES Act have any special requirements for escrow agreements? 

Under the NC PACES Act, escrow agreements must include all the contractual terms and other useful information such as: 

  • the name of the escrow agent, 
  • the bank or depository institution where the account will be held, 
  • the terms of when and how the issuer can access the money, and 
  • the terms of when and how investors can get their money back. 

There may also be additional requirements set forth by the bank or depository institution where the account is being held. 

Who can be an escrow agent according to the NC PACES Act? 

Generally, escrow agents can be a bank or depository institution, a registered securities broker-dealer, and a lawyer that is licensed in North Carolina, in good standing with the NC State Bar, and with at least one law office physically located in North Carolina. 

Is the escrow account and an interest-bearing account? 

There is no requirement that the escrow account be an interest-bearing account; however, it can be.  The escrow agreement will include information about whether the escrow account is interest-bearing or not. 

Who will have access to and execute the escrow agreement?

Any issuer using the NC PACES exemption must include a copy of the escrow agreement in the disclosure document it gives to investors and prospective investors.  The escrow agreement must also be filed with the North Carolina Department of the Secretary of State Securities Division.  Each party to the transaction must execute the agreement. 

Does the issuer have to tell investors if it changes the escrow agreement?

If the issuer makes any material changes to any of the disclosure documents, including the escrow agreement, it must notify the investors, prospective investors and the North Carolina Department of the Secretary of State Securities Division by filing an amendment to the agreement. 

When does the escrow agent release the funds in the escrow account to the issuer? 

The NC PACES Act requires the escrow agent to hold funds in the escrow account until at least 20% of the target fundraising goal is met.  After threshold is met, the escrow agent will release funds to the issuer. 

When does the escrow agent release the funds in the escrow account back to the investor? 

If the fundraising minimum target amount is not met by the fundraising deadline or if an investor requests that their money be returned prior to the 20% of the target fundraising goal being met, then the escrow agent will return money back to investors.  

How does the issuer or the investor receive notification when funds are released from the escrow account? 

The escrow agent and the issuer are required to file written notices to the North Carolina Department of the Secretary of State Securities Division and to investors upon release of funds from the escrow account. 

Funding Portal FAQs 

What is a funding portal? 

A funding portal is a business that provides the technology for businesses raising money using the NC PACES Act exemption with investors desiring to invest in those businesses.  The funding portal provides the platform, for these two groups to be connected.  A funding portal operating under the NC PACES Act must register with the North Carolina Department of the Secretary of State as a North Carolina Intrastate Funding Portal. 

Who apply to be a funding portal? 

Any business that has the capability to provide the required services can register as a funding portal if it is organized under or is authorized to do business under North Carolina law, and has its principal place of business in North Carolina. 

What is a “platform”? 

A “platform” is a website that provides access to information and allows people to communicate with each other online publicly using a communication channel. The NC PACES Act requires a funding portal to provide a platform that has a communication channel where investors, prospective investors, and issuers can share ideas or opinions about the businesses raising money through the NC PACES Act.  The platform must also provide a copy of each issuers’ disclosure document information about the progress being made toward each issuer’s goal. 

What can a funding portal not do? 

A Funding Portal cannot: 

  • Provide investment advice or make investment recommendations, 
  • Solicit purchases, sales or offers to buy the securities offered on its platform, 
  • Base compensation on performance for soliciting or selling securities listed on its platform, 
  • Hold, manage or handle investor funds, or 
  • Receive compensated based on the amount of securities sold. 

How does a funding portal charge for its services? 

Federal and state laws require that transaction-based compensation only be received by registered broker-dealers.  While a funding portal (that is not a broker-dealer) cannot receive transaction-based compensation on the amount of securities sold, a funding portal can charge fees based on: 

  • a subscription service, 
  • a flat fee for services, 
  • flat fees based on achieved milestones, or 
  • a combination of all three. 

The funding portal must include its proposed fee structure as part of its filing. The North Carolina Department of the Secretary of State Securities Division reviews the funding portal’s proposed fee structures as part of the registration process. 

How does a Funding Portal register? 

A funding portal must file a Form North Carolina Intrastate Funding Portal (Form NCFP) with the North Carolina Department of the Secretary of State Securities Division at least 10 days prior to posting any NC PACES Act securities offerings on its web site.  Registration expires on December 31st of each year.  A funding portal that wants to continue operating as a funding portal must renew its registration by filing an amended Form NCFP. 

How long does it take to get registered? 

It depends on many factors, including whether you have provided all the required information.  If the North Carolina Department of the Secretary of State Securities Division has questions they will contact you directly.  You will most likely hear from someone within one week. 

Does a funding portal help protect investors? 

The funding portal must perform some ensure that none of the businesses listed on its website or people associated with these businesses, are disqualified.  A funding portal must maintain certain records.  Funding portals and the people associated with them are required to observe and maintain high ethical standards of commercial honor, and fair principles of trade.  These are the same standards that apply to a registered broker-dealer. 

Can a funding portal choose who it does puts on its website? 

Actually, a funding portal is required to deny access to its platform to any business that it has reason to believe is subject to disqualification or conducting fraudulent activities. 

Can a funding portal invest in businesses that it has listed on its website? 

A funding portal can only invest in a business that is listed on its website if the interest received is received as compensation for the services that it is providing to the issuer and its offering.  Any interest that it does receive as compensation must be the same that is sold to investors.  A funding portal should read the rules carefully prior to accepting any interest in one of its issuers.