Why do my officers and directors need background checks?

If you are raising under Regulation Crowdfunding on Invown, background checks on your leadership are a regulatory requirement, not a platform preference. Reg CF offerings run through Invown Funding Portal LLC, an SEC-registered funding portal and FINRA member, and the rules give the portal and you separate responsibilities.

The portal’s check. SEC guidance explains that Rule 301(c)(1) requires the intermediary — the registered funding portal or broker-dealer — to conduct a background and securities-enforcement regulatory-history check on the issuer and its officers, directors, and beneficial owners of at least 20% of outstanding voting equity securities, measured by voting power. The portal may have to deny an issuer access when the rule’s conditions are met.

Your own inquiry. Separately, Rule 503 addresses whether the Reg CF exemption is unavailable because a covered person has a specified disqualifying event. SEC guidance says an issuer seeking the rule’s reasonable-care exception needs a factual inquiry appropriate to its circumstances. The portal’s check is not a substitute for your inquiry, and your internal checklist is not a substitute for the portal’s review. Rule 503’s covered-person list is also broader than your officers and directors: it names predecessors and affiliated issuers, general partners and managing members, promoters connected with the issuer, and people paid to solicit purchasers.

If a possible event turns up, do not conceal it and do not assume it disqualifies the raise. The rule includes event-specific terms, look-back periods, and limited exceptions or waiver paths, and a waiver is a Commission decision, not something a portal or issuer can grant itself. Give the complete record to qualified counsel and the portal and ask them to analyze it under the current rule.

Finally, completing the checks is an investor-protection step, not an endorsement. It does not mean the SEC, FINRA, or the portal endorses your company or its securities, and it should not be turned into a marketing claim.

For a preparation worksheet covering who to map and what records to gather, see the issuer preparation guide. For anything it does not cover, contact support.