Reg CF and the 12(g) Rule: Why Your Raise Needs a Transfer Agent
A successful Reg CF raise can bring thousands of investors onto your cap table. Here’s how to keep that from forcing you into full SEC reporting.
Short answer
Section 12(g) can force a company with many investors to become a full SEC-reporting company. Rule 12g-6 exempts your Reg CF investors from that count, but only if you stay current on annual reports, keep total assets under $25M, and use an SEC-registered transfer agent. Miss a condition and the exemption falls away.
What Section 12(g) is
Section 12(g) of the Securities Exchange Act requires a company to register with the SEC, becoming a public-style reporting company, once a class of its equity is held of record by enough people and it holds enough assets. A successful Reg CF raise with thousands of small investors can reach that threshold fast.
The 12(g) trigger: total assets over $10 million AND a class of equity held of record by 2,000 or more people, or 500 or more who are not accredited investors (15 U.S.C. 78l(g); 17 CFR 240.12g-1).
The fix: Rule 12g-6
Rule 12g-6 solves this. It excludes the securities sold in your Reg CF offering from the 12(g) holder-of-record count, so thousands of crowdfunding investors don’t push you into mandatory SEC reporting, as long as you meet three conditions:
You’re current on your Reg CF annual reports (Form C-AR).
Your total assets are $25 million or less, measured at your last fiscal year-end.
You’ve engaged an SEC-registered transfer agent (registered under Section 17A).
Reference: 17 CFR 240.12g-6. This page is educational, not legal advice.
Why the transfer agent is the condition you can’t skip
Of the three, the transfer agent is the one you actively put in place. Staying current on reports and tracking your assets are things you do over time. The transfer agent is something you must have. Without an SEC-registered transfer agent, the 12g-6 exemption doesn’t apply, and every Reg CF investor counts toward the threshold that can force you into full, costly SEC reporting.
What happens as you grow
If your total assets climb above $25 million, you don’t lose the exemption overnight. Rule 12g-6 gives you a two-year transition period to keep excluding your Reg CF holders, as long as you stay current on your reporting, before 12(g) registration is required. The $25M test is based on assets, not revenue.
What a transfer agent actually does
A transfer agent maintains the official record of who owns your securities and processes transfers. Beyond satisfying Rule 12g-6, it keeps your cap table clean and audit-ready as your investor base grows. Highlander provides SEC-registered transfer agent services alongside your raise, so the 12g-6 condition is handled from day one. See running a Reg CF raise with a built-in transfer agent.
Frequently asked questions
Do I really need a transfer agent for a Reg CF raise?
To use the 12g-6 exemption and avoid full SEC reporting once you have many investors, yes. An SEC-registered transfer agent is one of its conditions.
What counts as a “holder of record”?
A person or entity listed as owning securities on the company’s official register. Reg CF securities are excluded from that count when you meet the 12g-6 conditions.
Does using an SPV or crowdfunding vehicle change this?
Yes, in a specific way covered in our Reg CF SPV guide: for the 12(g) count, natural-person investors behind a vehicle are excluded, while entity investors are still counted. If you decide a vehicle is right for you, see how to set one up.
What happens if I skip the transfer agent?
The 12g-6 exemption doesn’t apply, and each Reg CF investor counts toward the 12(g) thresholds that can force full SEC reporting.
Are transfer agents required for Reg A or Reg D?
When do I need it in place?
If you expect your holder count to pass the 12(g) thresholds, line the transfer agent up as part of preparing your raise, so the condition is satisfied from the first investor. If you’re confident you’ll stay under them, it isn’t required, though many companies use one anyway to keep their records clean.
Key takeaways
The 12(g) trigger: 2,000 holders, or 500 non-accredited, plus over $10M in assets.
Rule 12g-6 excludes Reg CF securities if you meet three conditions.
An SEC-registered transfer agent is the condition you must actively put in place.
Above $25M in assets, you get a two-year transition.
The $25M test is an asset test, not revenue.
Keep reading
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