Title: Crowdfunding Enhancement Act
Policy area: Finance and Financial Sector

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:
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.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1031 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1031

   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.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 3, 2017

  Mr. Daines introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Crowdfunding Enhancement Act''.

SEC. 2. CROWDFUNDING VEHICLES.

    (a) Amendments to the Securities Act of 1933.--The Securities Act 
of 1933 (15 U.S.C. 77a et seq.) is amended--
            (1) in section 4A(f)(3) (15 U.S.C. 77d-1(f)(3)), by 
        inserting ``by any of paragraphs (1) through (14) of'' before 
        ``section 3(c)''; and
            (2) in section 4(a)(6)(B) (15 U.S.C. 77d(a)(6)(B)), by 
        inserting ``, 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))),'' after ``any investor''.
    (b) Amendments to the Investment Company Act of 1940.--The 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
            (1) in section 2(a) (15 U.S.C. 80a-2(a)), by adding at the 
        end the following:
            ``(55) The term `crowdfunding vehicle' means a company--
                    ``(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 et seq.) or registered as an 
                investment adviser in the State in which the investment 
                adviser maintains its principal office and place of 
                business;
                    ``(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)), if both 
                the crowdfunding vehicle and the company whose 
                securities it holds are co-issuers;
                    ``(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 et seq.) or registered as an 
                investment adviser in the State in which the investment 
                adviser maintains its principal office and place of 
                business.''; and
            (2) in section 3(c) (15 U.S.C. 80a-3(c)), by adding at the 
        end the following:
            ``(15) Any crowdfunding vehicle.''.

SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.

    Section 12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 
78l(g)(6)) is amended--
            (1) by striking ``The Commission'' and inserting the 
        following:
                    ``(A) In general.--The Commission'';
            (2) by striking ``section 4(6)'' and inserting ``section 
        4(a)(6)''; and
            (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.''.
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