Crowdfunding Amendments Act

To amend the Securities Act of 1933 to subject crowdfunding vehicles to the jurisdiction of the Securities and Exchange Commission, and for other purposes. 1. Short title This Act may be cited as the Crowdfunding Amendments Act 2. Crowdfunding vehicles (a) Amendments to the Securities Act of 1933 The Securities Act of 1933 ( 15 U.S.C. 77a (1) in section 2(a) ( 15 U.S.C. 77b(a) (20) The term crowdfunding vehicle 15 U.S.C. 80a–3(c)(15)(B) ; (2) in section 4(a)(6) ( 15 U.S.C. 77d(a)(6) (A) in subparagraph (A)— (i) by inserting , other than a crowdfunding vehicle, sold to all investors (ii) by inserting other than a crowdfunding vehicle, the issuer, (B) in subparagraph (B), in the matter preceding clause (i), by inserting , other than a crowdfunding vehicle, any investor (3) in section 4A(f) ( 15 U.S.C. 77d–1(f) (A) in the matter preceding paragraph (1), by striking Section 4(6) Section 4(a)(6) (B) in paragraph (3), by inserting by any of paragraphs (1) through (14) of section 3(c) (b) Amendments to the Investment Company Act of 1940 Section 3(c) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3(c) (15) (A) Any crowdfunding vehicle. (B) For purposes of this paragraph, the term crowdfunding vehicle (i) the purpose of which (as set forth in the organizational documents of the company) is limited to acquiring, holding, and disposing of securities issued by a single company in one or more transactions made under section 4(a)(6) of the Securities Act of 1933 ( 15 U.S.C. 77d(a)(6) (ii) that issues only 1 class of securities; (iii) that receives no compensation in connection with the acquisition, holding, or disposition of securities described in clause (i); (iv) no investment adviser or associated person of which receives any compensation on the basis of a share of capital gains upon, or capital appreciation of, any portion of the funds of an investor of the company; (v) the securities of which have been issued in a transaction made under section 4(a)(6) of the Securities Act of 1933 ( 15 U.S.C. 77d(a)(6) (vi) that is current with respect to ongoing reporting requirements under section 227.202 of title 17, Code of Federal Regulations, or any successor regulation; (vii) that holds securities of a company that is subject to ongoing reporting requirements under section 227.202 of title 17, Code of Federal Regulations, or any successor regulation; and (viii) that is advised by an investment adviser that is— (I) registered under the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–1 (II) required to— (aa) disclose to the investors of the company any fees charged by the investment adviser; and (bb) obtain approval from a majority of the investors of the company with respect to any increase in the fees described in item (aa). . (c) Amendments to the Investment Advisers Act of 1940 The Investment Advisers Act of 1940 ( 15 U.S.C. 80b–1 (1) in section 202(a) ( 15 U.S.C. 80b–2(a) (A) by redesignating the second paragraph (29) as paragraph (31); and (B) by adding at the end the following: (32) The term crowdfunding vehicle 15 U.S.C. 80a–3(c)(15)(B) (33) (A) The term crowdfunding vehicle adviser (B) A determination, for the purposes of subparagraph (A), regarding whether an investment adviser acts as an investment adviser solely with respect to crowdfunding vehicles shall not include any consideration of the activity of any affiliate of the investment adviser. ; (2) in section 203 ( 15 U.S.C. 80b–3 (o) Crowdfunding vehicle advisers (1) In general A crowdfunding vehicle adviser shall be required to register under this section. (2) Tailored requirements As necessary or appropriate in the public interest and for the protection of investors, and to promote efficiency, competition, and capital formation, the Commission may tailor the requirements under section 275.206(4)–2 of title 17, Code of Federal Regulations, with respect to the application of those requirements to a crowdfunding vehicle adviser. ; and (3) in section 203A(a) (15 U.S.C. 80b–3a(a))— (A) in paragraph (1)— (i) in subparagraph (A), by striking or (ii) in subparagraph (B), by striking the period at the end and inserting ; or (iii) by adding at the end the following: (C) is a crowdfunding vehicle adviser. ; and (B) in paragraph (2)— (i) in subparagraph (A), by inserting a crowdfunding vehicle adviser, unless the investment adviser is (ii) in subparagraph (B)(ii), in the matter preceding subclause (I), by inserting except with respect to a crowdfunding vehicle adviser, has assets 3. Crowdfunding exemption from registration Section 12(g)(6) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78l(g)(6) (1) by striking The Commission (A) In general The Commission ; (2) in subparagraph (A), as so designated, by striking section 4(6) section 4(a)(6) (3) by adding at the end the following: (B) Treatment of securities issued by certain issuers (i) In general An exemption under subparagraph (A) shall be unconditional for securities offered by an issuer that had a public float of less than $75,000,000, as of the last business day of the most recently completed semiannual period of the issuer, which shall be calculated in accordance with clause (ii). (ii) Calculation (I) In general A public float described in clause (i) shall be calculated by multiplying the aggregate worldwide number of shares of the common equity securities of an issuer that are held by non-affiliates by the price at which those securities were last sold (or the average bid and asked prices of those securities) in the principal market for those securities. (II) Calculation of zero If a public float calculation under subclause (I) with respect to an issuer is zero, an exemption under subparagraph (A) shall be unconditional for securities offered by the issuer if the issuer had annual revenues of less than $50,000,000, as of the most recently completed fiscal year of the issuer. .

Summary: Crowdfunding Amendments Act This bill amends the Securities Act of 1933 to allow a crowdfunding issuer to sell shares through a crowdfunding vehicle. (Crowdfunding is a method of capital formation in which groups of people pool money to invest in a company or to support an effort to accomplish a specific goal.) A "crowdfunding vehicle" is defined as a company that: has purposes limited to acquiring, holding, and disposing only one class of crowdfunding securities issued by a single company; receives no compensation for doing so; and meets other specified requirements, including those related to reporting obligations and the use of investment advisers. The bill amends the Investment Advisers Act of 1940 to provide for the registration of crowdfunding vehicle advisers. The bill amends the Securities Exchange Act of 1934 to revise the conditions upon which the Securities and Exchange Commission (SEC) shall exempt securities issued in crowdfunding transactions from registration requirements. Under current law, holders of crowdfunded shares do not count toward the shareholder threshold beyond which an issuer is required to register its securities with the SEC, provided that the issuer: (1) is current in its annual reporting obligations, (2) retains the services of a registered transfer agent, and (3) has less than $25 million in assets. The bill maintains this exemption but alters the conditions upon which it applies. Specifically, holders of crowdfunded shares shall not count toward the shareholder threshold if the issuer has: (1) a public float of less than $75 million, or (2) a public float of $0 and annual revenues of less than $50 million.