Office of Securities Implements Crowdfunding in Maine: New Rule Will Make it Easier for Small Businesses to Raise Capital

Governor Paul R. LePage joined Maine Securities Administrator Judith Shaw today in announcing the final implementation of Maine's new seed capital formation registration rule, informally known as Fund-ME. The rule, which took effect January 1, 2015, makes it easier for small businesses to raise capital while still providing protections for investors.

Fund-ME allows Maine businesses to raise up to $1 million, and generally permits individuals to invest up to $5,000 in each business during a 12-month period. Small businesses and entrepreneurs taking advantage of this new method for raising capital would provide offering documents to potential investors, including a subscription agreement and a completed Fund-ME offering circular.

"Maine's Office of Securities has developed a promising new opportunity for small businesses to get off the ground or expand their operations by more easily allowing investors to provide needed funds," Governor LePage said. "Fund-ME should provide an effective, streamlined way for businesses to gain access to capital, for jobs to be created and for investors to have new options when it comes to backing Maine companies."

"Consumers may be familiar with crowdfunding websites; however, Maine's new rule doesn't rely on a web platform and allows for everyday investors to participate directly in the development of a Maine business," Administrator Shaw said. "This opportunity would not have been possible without the efforts of the Governor and his staff and other interested parties, especially Senator Justin Alfond who supported this effort through legislation last year. This is an exciting development for Maine's entrepreneurs."

Crowdfunding legislation has also been enacted at the federal level. The JOBS Act was signed into law in April of 2012 and authorized the Securities and Exchange Commission (SEC) to write federal rules for crowdfunding. Although the SEC rules have not been finalized, several states, including Maine, have enacted their own crowdfunding rules to encourage small business development.

Shaw noted that Maine's crowdfunding opportunity works differently than the approach taken by many other states, as it allows businesses to raise money from investors outside of Maine. The new crowdfunding rule, and the documents Maine businesses will need to file with the Office, can be found at www.investors.maine.gov.

Small businesses and consumers are encouraged to contact the Maine Office of Securities with questions regarding Fund-ME at 1-877-624-8551 (toll free in Maine) or (207) 624-8551. Shaw also reminded consumers that the Office of Securities' staff is eager to assist investors before they make any investment decisions. The Office can provide general information about investment professionals and products, including online investment opportunities. More information is available at www.investors.maine.gov.