Micro Offering Safe Harbor Act

To amend the Securities Act of 1933 to exempt certain micro-offerings from the registration requirements of such Act, and for other purposes. 1. Short title This Act may be cited as the Micro Offering Safe Harbor Act 2. Exemptions for micro-offerings (a) In general Section 4 of the Securities Act of 1933 ( 15 U.S.C. 77d (1) in subsection (a), by adding at the end the following: (8) transactions meeting the requirements of subsection (f). ; and (2) by adding at the end the following: (f) Certain micro-Offerings (1) In general Except as provided in paragraph (2), the transactions referred to in subsection (a)(8) are transactions involving the sale of securities by an issuer (including all entities controlled by or under common control with the issuer) that meet all of the following requirements: (A) Pre-existing relationship Each purchaser has a substantive pre-existing relationship with an officer of the issuer, a director of the issuer, or a shareholder holding 10 percent or more of the shares of the issuer. (B) 35 or fewer purchasers There are no more than, or the issuer reasonably believes that there are no more than, 35 purchasers of securities from the issuer that are sold in reliance on the exemption provided under subsection (a)(8) during the 12-month period preceding such transaction. (C) Small offering amount The aggregate amount of all securities sold by the issuer, including any amount sold in reliance on the exemption provided under subsection (a)(8), during the 12-month period preceding such transaction, does not exceed $500,000. (2) Disqualification (A) In general The exemption provided under subsection (a)(8) shall not be available for a transaction involving a sale of securities if any person described in subparagraph (B) would have triggered disqualification pursuant to section 230.506(d) of title 17, Code of Federal Regulations. (B) Persons described The persons described in this subparagraph are the following: (i) The issuer. (ii) Any predecessor of the issuer. (iii) Any affiliated issuer. (iv) Any director, executive officer, other officer participating in the offering, general partner, or managing member of the issuer. (v) Any beneficial owner of 20 percent or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power. (vi) Any promoter connected with the issuer in any capacity at the time of such sale. (vii) Any investment manager of an issuer that is a pooled investment fund. (viii) Any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of securities. (ix) Any general partner or managing member of any such investment manager or solicitor. (x) Any director, executive officer, or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor. . (b) Exemption under State regulations Section 18(b)(4) of the Securities Act of 1933 ( 15 U.S.C. 77r(b)(4) (1) in subparagraph (F), by striking or (2) in subparagraph (G), by striking the period and inserting ; or (3) by adding at the end the following: (H) section 4(a)(8). . September 6, 2016 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

Summary: Micro Offering Safe Harbor Act This bill amends the Securities Act of 1933 to exempt from specified prohibitions against the sale or delivery after sale of unregistered securities, among other things, transactions involving the sale of securities by an issuer of micro-offerings that meet all of the following criteria: each purchaser has a substantive pre-existing relationship with either an officer or director of the issuer, or with a shareholder holding 10% or more of the issuer's shares; during the 12-month period preceding the transaction there are no more than 35 purchasers of such micro-offerings sold in reliance on this exemption; and the aggregate amount of all securities sold by the issuer (including any amount sold in reliance upon the exemption) during the 12-month period preceding the transaction does not exceed $500,000. The exemption provided under this bill is not available for a transaction involving a sale of securities if any of specified persons connected with their issuance would have triggered disqualification as a "bad actor" pursuant to regulations under the Act. The bill also exempts such micro-offerings from state regulation of securities offerings.