Crowdfunding Enhancement Act

To amend provisions in the securities laws relating to regulation crowdfunding to raise the dollar amount limit and to clarify certain requirements and exclusions for funding portals established by such Act. 1. Short title This Act may be cited as the Crowdfunding Enhancement 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 4A(f)(3) ( 15 U.S.C. 77d–1(f)(3) by any of paragraphs (1) through (14) of section 3(c) (2) in section 4(a)(6)(B) ( 15 U.S.C. 77d(a)(6)(B) , other than a crowdfunding vehicle (as defined in section 2(a) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a) any investor (b) Amendments to the Investment Company Act of 1940 The Investment Company Act of 1940 ( 15 U.S.C. 80a–1 (1) in section 2(a) ( 15 U.S.C. 80a–2(a) (55) The term crowdfunding vehicle (A) whose purpose (as set forth in its organizational documents) is limited to acquiring, holding, and disposing securities issued by a single company in one or more transactions and made pursuant to section 4(a)(6) of the Securities Act of 1933 ( 15 U.S.C. 77d(a)(6) (B) that issues only 1 class of securities; (C) that receives no compensation in connection with such acquisition, holding, or disposition of securities; (D) no associated person of which receives any compensation in connection with such acquisition, holding or disposition of securities unless such person is acting as or on behalf of an investment adviser registered under the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–1 (E) the securities of which have been issued in a transaction made pursuant to section 4(a)(6) of the Securities Act of 1933 ( 15 U.S.C. 77d(a)(6) (F) that is current in its ongoing disclosure obligations under section 227.202 of title 17, Code of Federal Regulations; (G) the company whose securities it holds is current in its ongoing disclosure obligations under section 227.202 of title 17, Code of Federal Regulations; and (H) is advised by an investment adviser registered under the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–1 ; and (2) in section 3(c) ( 15 U.S.C. 80a–3(c) (15) Any crowdfunding vehicle. . 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) 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 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 issuer’s most recently completed semiannual period, computed by multiplying the aggregate worldwide number of shares of the issuer’s common equity securities held by non-affiliates by the price at which such securities were last sold (or the average bid and asked prices of such securities) in the principal market for such securities or, in the event the result of such public float calculation is zero, had annual revenues of less than $50,000,000 as of the issuer’s most recently completed fiscal year. .

Summary: Crowdfunding Enhancement 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 either to invest in a company or to support an effort by others to accomplish a specific goal.) A "crowdfunding vehicle" is a company that: has purposes limited to acquiring, holding, and disposing securities issued by a single company; issues only one class of securities; receives no compensation for such acquisition, holding, or disposition of securities; and meets other specified requirements, including those related to disclosure obligations and the use of investment 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 SEC 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 removes and replaces 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, and (2) annual revenues of less than $50 million.