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Navigating Florida’s Revamped Securities Laws

In 2023 and 2024, Florida lawmakers overhauled Chapter 517, the Florida Securities and Investor Protection Act, ushering in a new era for businesses and investors. Effective October 1, 2024, these changes make it easier for Florida companies to raise capital locally while strengthening protections against fraud. 

The reforms cover three key areas:

1. Modernized registration and licensing rules
2. New and expanded capital-raising exemptions
3. Stronger investor protection and enforcement tools

This blog dives into the new exemptions and rescission rights, offering a clear guide for businesses and investors.

Registration Exemptions 

The most far-reaching reform measures involved expanded capital-raising opportunities within the state, particularly for small and developing businesses. For years, Florida’s securities laws made it tough for local businesses—especially startups and small enterprises—to raise funds without jumping through complex regulatory hoops. Before 2024, businesses were limited to two exemptions: (i) one restricted to accredited investors (plus up to 35 non-accredited investors) with no advertising allowed, and (ii) a “crowdfunding” exemption so restrictive it was rarely used. These outdated rules clashed with the federal intrastate exemption under the Securities Act of 1933, which allows states to regulate in-state offerings. The 2024 reforms, effective October 1, change the game by introducing flexible exemptions that align with federal rules like Regulation Crowdfunding and Rule 147, making it easier for businesses to tap into local capital.

The reforms didn’t happen overnight. The Business Law Section of The Florida Bar pushed for years to loosen these restrictions, often facing pushback from state regulators wary of fraud, especially targeting Florida’s senior population. A shift in leadership at the Office of Financial Regulation (OFR) paved the way for collaboration, balancing business-friendly policies with robust investor protections. The result? A set of reforms that make Florida a more attractive place to start and grow a business.

Here’s a breakdown of the most important new tools for Florida businesses:

1. Limited Offering Exemption (up to $5 million) 

Businesses can now raise up to $5 million from an unlimited number of investors (both accredited and non-accredited).  The principal elements of the exemption are:

• Offerings up to $2.5 million can be conducted directly or through a registered dealer or intermediary, giving businesses flexibility. 
• Businesses can advertise freely, but missteps in disclosures trigger Florida’s tough anti-fraud laws.
• There’s no cap on the number of investors, accredited or not, opening the door to broad participation.
• Non-accredited investors are limited to $10,000 per 12 months, while accredited investors face no cap.
• A detailed disclosure document, including financials, must be submitted in advance to the OFR and to all prospective investors.
• A target amount of investments must be set and disclosed. All investor funds must be deposited in a federally insured bank authorized to do business in Florida until the target amount is reached.. If the target amount is not met within a year,  investors must be refunded.
• Only for-profit businesses with clear operations (no “blank-check” companies) qualify.

2. Invest Local Exemption (up to $500,000) 

For smaller ventures, the Invest Local Exemption offers a streamlined way to raise up to $500,000. Key features mirror the Limited Offering Exemption but with a shorter timeline:

• The offering may, but need not be, conducted through a registered dealer or intermediary.
• Issuers may engage in general advertising and solicitation, with any material misstatements or omissions being subject to the statute’s antifraud enforcement provisions.
• No limit on the number of accredited and non-accredited investors.
• Non-accredited investors can invest up to $10,000 annually; accredited investors have no limit.
• A disclosure document must be submitted in advance to the OFR and to all prospective investors.
• A target amount of investments must be set and disclosed. All investor funds must be deposited in a federally insured bank authorized to do business in Florida until the target amount is reached.. If the target amount is not met within 180 days, investors must be refunded.
• Only for-profit businesses with clear operations (no “blank-check” companies) qualify.

3. Accredited Investor Exemption

Florida now offers a simplified exemption for offerings targeting accredited investors, aligning with the North American Securities Administrators Association’s model. Here’s what it entails:

• Sales are limited to accredited investors (or those reasonably believed to be).
• Investors must intend to hold securities for investment, not quick resale.
• Advertising is allowed, even if non-accredited investors see it, as long as sales are restricted.
• The exemption is not available to so-called “blank-check” companies with undefined business operations.

4. Testing the Waters: Gauging Investor Interest

Florida’s new “testing the waters” rules let businesses gauge interest without commitment. Requirements include:

• No money or commitments can be accepted during this phase.
• All statements must be truthful to avoid anti-fraud penalties.
• Collect contact info, but make clear there’s no obligation.
• Communications made in accordance with the rules don’t count as formal solicitation.

5. “Demo-Day” Presentations

Inspired by Federal Rule 148, companies can present offerings at carefully structured seminars and meetings—but with restrictions:

• Events must be hosted by a university, government, nonprofit, or angel group.
• No specific securities can be mentioned in event ads.
• More than one issuer must be present at the event.
• Sponsors can’t offer investment advice or take fees for introductions.
• Issuers can only share basic offering details, like type, amount, and use of funds.

6. Integration Safe Harbors

Florida now aligns with federal Rule 152, ensuring that offerings are spaced appropriately (e.g., six months apart) and aren’t combined, giving businesses more flexibility to raise capital as needed.

7. Streamlined Rescission Rights

The reform legislation significantly modified Florida’s rescission rights framework. Previously, investors had a three-day window to cancel their investment, starting from either (1) the date of payment or (2) notification of rescission rights. For issuers who failed to properly disclose the rescission right, this created an indefinite window for investors to cancel their investments. The 2024 reforms clarify this. Investors now have exactly three days from payment to rescind. This change reduces risk for issuers while preserving investor rights, aligning Florida with modern securities practices.

Stronger Investor Protections 

Florida didn’t just expand business opportunities—it also beefed up investor safeguards.  

• Securities Guaranty Fund payouts increased from $10,000 to $15,000, or up to $25,000 for seniors/vulnerable adults 
• Aggregate cap raised from $100,000 to  $250,000 per wrongdoer 
• Civil penalties doubled (now up to $20,000 for individuals, higher if seniors are victims)
•  Broader liability for aiders, abettors, and control persons 
• Modernized “boiler room” definition to include emails, texts, social media, and chat rooms

Eligibility requires:

• A court judgment confirming a violation.
• Applying any recovered funds to the judgment.
• Being a Florida resident or business at the time of the violation.

Conclusion

Florida’s overhaul of its Investor Protection Act is a big win for local businesses looking to raise capital—and for investors who deserve stronger safeguards. The new exemptions make it easier for startups and small businesses to raise funds, while stronger enforcement and investor protections build trust in the market. 

If you have questions about raising capital for your company or need to hire a securities attorney, Hamilton & Associates Law Group, P.A. is ready to assist you. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Brenda Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.

To speak with a Securities Attorney, please contact us at (561) 416-8956 or by email at info@securitieslawyer101.com.

Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com