In recent years, crowdfunding has been a hot topic. What does it require? What is involved? Well, the answer to those questions all depends on your specific situation. While the marks of a business-friendly state are all over Texas, including no state income taxes and numerous corporate headquarters, some commercial endeavors may actually be presented with more challenge and regulation when it comes to securities. Specifically, if you want to operate a crowdfunding offering only in Texas under the Rule 139.25 Texas intrastate crowdfunding exemption from securities offering registration, you’re going to have to make certain disclosures. Fortunately, this part of meeting the requirements of Texas intrastate crowdfunding under Rule 139.25 is very achievable.

Disclosure Statement

Intrastate crowdfunding in Texas under Rule 139.25 requires the business to make available to each prospective investor (i.e. the people or entities who you are offering the securities to) a disclosure statement with certain information. The disclosure statement must be made available when the offering documents themselves are made available through a crowdfunding portal. This same disclosure statement must also be filed with the Securities Commissioner as part of the notice filing requirements for the Rule 139.25 registration exemption. The disclosure statement should include all material information to the offering as well as a description of what makes the business venture speculative or risky. The rules go on to specify that the disclosure statement should at a minimum include:

  1. a general description of the business venture;
  2. the history of the business’ operations and organization;
  3. management of the business and its principal owners;
  4. how the proceeds from the offering will be used;
  5. financial information about the business;
  6. a description of the securities that are being offered in the offering; and
  7. any litigation or legal proceedings.

Part of the disclosure regarding the financial information about the business are the financial statements. Businesses must provide current financial statements certified by a principal executive officer that are true and complete in all material respects. If the business has had prepared audited financial statements or has had financial statements reviewed within the 3 years before the timing of the offering, then these must also be provided to prospective investors along with the disclosure statement

            The disclosure statement must also include at a minimum the following risks. However, the following risks are a bare minimum and are related specifically to offering risks and not additional business and market risks that should also be included.

  1. No market exists for the securities sold in the offering; it may be difficult or impossible for an investor to sell or otherwise dispose of their investment; and an investor may be required to hold their investment indefinitely;
  2. The securities offered for sale have not been registered under federal or state securities laws, and cannot be resold unless the securities are registered or qualify for an exemption from registration under federal and state law;
  3. In making an investment decision, prospective investors must rely on their own examination of the business and the terms of the offering, including the merits and risks involved; and
  4. No federal or state securities commission or regulatory authority has confirmed the accuracy or determined the adequacy of the disclosure statement or any other information on the crowdfunding website.


            The disclosure statement requirements described here are only a bare minimum of what you’ll need to include in your disclosure statement if you plan on conducting an intrastate crowdfunding offering in Texas under Rule 139.25. There are also further requirements to a sale of securities to residents in the state of Texas through a crowdfunding portal under Rule 139.25. In order to better understand the securities requirements that apply to your particular business and funding model, it’s best to seek appropriate and professional counsel to assist you in deciding what is needed and best for your business. The legal professionals at Dodson Legal Group would love to find out more about your business and help you figure out the best method to achieve successful funding for your business. Call us today to schedule a consultation at 844-4DODSON.