Source: https://www.ncsl.org/research/financial-services-and-commerce/crowdfunding-securities-exemptions-2015-legislation.aspx
Timestamp: 2020-01-23 00:21:53
Document Index: 491932928

Matched Legal Cases: ['§502', '§502', '§409', '§409', '§409', '§409', '§8', '§35', '§35', '§35', '§3', '§3', '§ 3', '§230', '§230']

Crowdfunding Securities Exemptions 2015 Legislation
Heather Morton 1/8/2016
In the 2015 legislative session, 27 states have introduced 56 bills and resolutions regarding crowdfunding.
Crowdfunding Securities Exemption 2015 Legislation
Alaska H.B. 194 Repeals and re-enacts the Alaska Securities Act, including provisions relating to exempt securities and transactions. Relates to registration of securities, firms, and agents that offer or sell securities and investment advice. Relates to administrative, civil, and criminal enforcement provisions, including restitution and civil penalties for violations. Allows certain civil penalties to be used for an investor training fund. Establishes increased civil penalties for harming older Alaskans. Retains provisions concerning corporations organized under the Alaska Native Claims Settlement Act. Amends Rules 4, 5, 54, 65, and 90, Alaska Rules of Civil Procedure. Provides for an effective date.
Alaska S.B. 108
Repeals and re-enacts the Alaska Securities Act, including provisions relating to exempt securities and transactions. Relates to registration of securities, firms, and agents that offer or sell securities and investment advice. Relates to administrative, civil and criminal enforcement provisions, including restitution and civil penalties for violations. Allows certain civil penalties to be used for an investor training fund. Establishes increased civil penalties for harming older Alaskans. Retains provisions concerning corporations organized under the Alaska Native Claims Settlement Act. Amends Rules 4, 5, 54, 65, and 90, Alaska Rules of Civil Procedure. Provides for an effective date.
Signed by governor 4/1/15, Chapter 185
Exempts a securities transaction from statutory registration requirements relating to the sale of securities if the following criteria are met: a. The issuer of the security is a business entity organized under Arizona laws, authorized to do business in the state, and does business pursuant to the Securities Act. b. The transaction meets the requirement of the federal exemption for intrastate offerings pursuant to the Securities Act. c. The aggregate offering price of the securities complies with the following: i. The sum of all cash and other consideration to be received for all sales of securities does not exceed $1 million in a 12-month period, if the issuer has not undergone a financial audit of the prior fiscal year, ii. The sum of all cash and other consideration to be received for all sales of securities does not exceed $2.5 million in a 12-month period, if the issuer has undergone a financial audit of the prior fiscal year, iii. An offer or sale to an individual occupying similar status as the issuer, or to a person owning 10 percent or more of the outstanding shares of securities of the issuer does not count toward the monetary limitations. d. All sales that are part of the same offering, made in reliance on the exemption, meet all the terms and conditions of the exemption. Offers and sales that are made more than six months before the start of an offering or are made more than six months after the completion of an offering may not be considered part of the offering if certain conditions are met. e. The issuer does not accept more than $10,000 from any single purchaser unless the purchaser is an accredited investor pursuant to the Securities Act. f. The issuer submits the following information to the commission, unless waived, at least 10 days prior to the commencement of an offering of securities: i. A notice filing, ii. A copy of the disclosure document, iii. A copy of the escrow agreement, iv. Any other documents or information as required by the commission. g. All cash and other consideration paid for securities sold in relating to the exemption are deposited into a single escrow account maintained by a state authorized financial institution. Any information requested by the commission to determine compliance with requirements for the exemption is confidential and not subject to disclosure, with exception. h. Offers made in relation to the exemption state a target offering amount and an offering deadline of not less than 21 days and not more than 1 year from the date the offer is made. i. The sum of all cash and other consideration received held in escrow does not equal or exceed 80 percent of the target offering amount on expiration of the offering deadline or the early closing of the offering. j. A purchaser is permitted to cancel the commitment to invest at a defined time if certain conditions are met. k. At least five days before the early closing, the issuer closes an offering before the offering deadline after notice of the closing is delivered to each purchaser and posts the notice of closing on applicable websites. l. Before or as a result of the offering, the issuer is not a certain type of company as outline in this act or subject to the reporting requirements of the Securities Exchange Act of 1934. m. The issuer informs all prospective purchasers of securities that the securities have not been registered under federal or state laws and that the securities are subject to the limitations on resale. n. The issuer displays a notice regarding making an investment decision on the disclosure document. o. The issuer requires each purchaser to certify in writing an understanding and acknowledgement statement. p. The issuer obtains evidence from each prospective purchaser indicting in-state residency and, if applicable, investor accreditation. q. The issuer provides a disclosure document to each prospective purchaser at the time the offer of securities is made containing information which includes, a description of the company, terms and conditions of the securities and price per unit being offered, offering deadline and target offering amount, either the percentage of ownership represented by the offered securities or the valuation of the company implied by the price of the offered securities, current financial statements certified by the principal executive officer, and any additional information material to the offering. r. The exemption is not used if an issuer or person affiliated with the issuer or offering is subject to disqualification. s. The Commission may set aside disqualification if certain conditions are met. t. The sale is made exclusively through one or more internet websites that are operated by a dealer who is registered pursuant to statute and complies with the requirements for the offering or sale of securities on the website. u. The issuer makes and keeps all required accounts and other records that the Commission prescribes by rule or order. v. The issuer provides a quarterly report to the purchasers until no securities issued under the exemption are outstanding.
California A.B. 722
Existing law, the Corporate Securities Law of 1968, requires securities offered or sold in this state in an issuer or nonissuer transaction to be qualified through an application filed with the Commissioner of Business Oversight, unless exempt from the qualification requirements. That law makes it unlawful, for a person in connection with the offer, sale, or purchase of a security, to engage in fraudulent or misleading acts or omissions. This bill authorizes an applicant to file an application for qualification of the offer or sale of a security by crowdfunding permit if certain conditions are met, including that the total offering of securities by the applicant to be sold in a 12-month period, within or outside this state, is limited to $1 million, less a specified amount; the aggregate amount of securities sold to any investor, including any amount sold during the 12-month period preceding the date of the transaction, does not exceed the lesser of $5,000 or 10 percent of the net worth of that natural person; and the issuer will not, directly or indirectly, conduct any unsolicited telephone solicitation of the securities offered. This bill imposes a filing fee of $200 plus 1⁄5 of 2 percent of the aggregate value of the securities sought to be sold in this state. Existing law provides that any person who violates a condition of qualification of the offer or sale of a security is liable to any person acquiring the security sold in violation, who may sue to recover the consideration paid for such security with interest thereon at the legal rate or for damages, as specified. This bill extends that provision to a violation of a condition of qualification by permit authorized by this bill. This bill also requires a court to award reasonable attorney’s fees and costs, and authorizes the award of treble and punitive damages, to a prevailing purchaser in an action brought against any person who violates those conditions of qualification by permit authorized by this bill. Existing law imposes liability on any person who engages in specified unlawful activity to the person who purchases a security from him or sells a security to him, and authorizes the purchaser or seller to sue either for rescission or for damages. This bill provides that the plaintiff is not required to plead or prove that the defendant acted with scienter.
Signed by governor 4/13/15, Chapter 98
The act enacts the "Colorado Crowdfunding Act" to facilitate crowdfunding by authorizing on-line intermediaries to match a Colorado investor with a Colorado business that wishes to sell securities (an "issuer") pursuant to a simplified regulatory regime, including the following:
During any 12-month period: The aggregate amount sold to any single investor cannot exceed $5,000 unless the investor is an "accredited investor" as defined by the federal securities and exchange commission; and the sum of all consideration paid for an issuer's securities cannot exceed $1 million unless the issuer submits audited financial statements to the securities commissioner, in which case the cap is $2 million. Issuers must: Inform investors, in plain, nontechnical language, that the securities have not been registered pursuant to federal or state securities law and that the securities are subject to limitations on resale, and the investor must acknowledge the risks associated with the purchase; and provide a free quarterly report to investors that includes an analysis of the business operations and financial condition of the issuer and compensation to officers and directors, which report can simply be posted on the on-line intermediary's website. On-line intermediaries cannot offer investment advice or handle investor funds or securities, and must: Maintain records of securities transactions, which are subject to inspection by the division of securities; and be compensated only by a fixed amount for each offering, a variable amount based on the length of time that the securities are offered by the on-line intermediary, or a combination of the fixed and variable amounts. Crowdfunding cannot begin until the securities commissioner adopts rules to implement the act.
H.B. 5131
Requires the banking commissioner to (1) conduct a study of existing legislation in other states concerning investment crowdfunding exemptions for nonaccredited investors, and (2) make recommendations for the implementation of such legislation in Connecticut.
H.B. 6801
Passed House 5/20/15
The bill requires the Banking Department, within available appropriations, to conduct studies on (1) crowdfunding, (2) small business lending, and (3) alternative banking identification. The department must report its findings to specified legislative committees by Jan. 1, 2016. The bill also requires the Banking Department, by Jan. 1, 2016, to develop and make available a plain language and easily readable and understandable multilingual brochure on verification procedures for alternative forms of banking identification.
Signed by governor 6/16/15, Chapter 171
Exempts certain issuers and intermediaries from registration requirements relating to offer or sale of certain securities. Provides requirements for such issuers and intermediaries. Provides limitations on offers or sales of such securities. Prohibits use of specified exemptions from registration requirements in conjunction with another exemption from registration requirements. Provides appropriation.
Substituted by H.B. 275 4/28/15
Defines the term “intermediary” for purposes of the Florida Securities and Investor Protection Act. Exempts offers or sales of securities by certain issuers from registration requirements. Exempts the intrastate offering and sale of certain securities from certain regulatory requirements. Provides registration requirements for an intermediary. Requires an intermediary to comply with specified recordkeeping requirements. Includes an intermediary in the disciplinary provisions, etc.
H.B. 3091
Tabled 3/12/15
Amends the Illinois Securities Law of 1953. Creates an exemption from certain filing and registration requirements under the act for intrastate securities offerings that meet certain conditions, including that (1) the offering meets all of the requirements of the federal exemption for intrastate offerings provided under the Securities Exchange Act of 1933; (2) the aggregate purchase price of all securities sold by an issuer within any 12-month period does not exceed certain monetary limitations; and (3) the aggregate amount sold to any purchaser in an offering of securities made within any consecutive 12-month period does not exceed certain monetary limitations. Provides that an issuer may make an offering or sale of securities through the use of one or more qualified Internet portals, subject to certain requirements, including that (i) the Internet portal shall at all times be owned by a corporation or other legal entity that is either organized under the laws of, or is otherwise qualified to do business in, this state; (ii) the Internet portal shall establish and maintain commercially reasonable measures to limit access to any information concerning an offering or sale of the subject securities to residents of this state; and (iii) the Internet portal shall establish and maintain a secure method of communication through the Internet portal itself that will permit potential investors to communicate with one another and with representatives of the issuer about the offering. Requires the secretary of state to collect a $100 fee for securities offered or sold under the exemption created under this amendatory act; and a $300 fee for the registration and renewal of a qualified Internet portal.
H.B. 3429
Signed by governor 7/29/15, Public Act 99-0182
Amends the Securities Law of 1953. Creates an exemption from certain filing and registration requirements under the act for intrastate securities offerings that meet certain conditions, including that the offering meets all of the requirements of the federal exemption for intrastate offerings provided under the Securities Act. Provides for sales by means of registered Internet portals. Provides that certain exempt sales made to accredited investors must be made without general solicitation.
Illinois H.B. 3847
H.F. 454
Withdrawn 4/21/15
Relates to various matters involving insurance and the Insurance Division of the Department of Commerce and includes effective date provisions. Updates references to include current federal statutes. Provides an exemption from certain securities registration and filing requirements for offers and sales of securities known as intrastate crowdfunding and provides limitations and conditions on such offers and sales of securities in the state. Offers and sales of securities made pursuant to the exemption.
H.F. 632
Signed by governor 7/2/15
H.S.B. 139
Became H.F. 632 4/9/15
Amends Code §502.103 to update references in Code chapter 502 to include current federal statutes. New Code §502.202(24) provides an exemption from certain securities registration and filing requirements for offers and sales of securities known as intrastate crowdfunding and provides limitations and conditions on such offers and sales of securities in the state. All offers and sales of securities made pursuant to the exemption must be made through a broker-dealer’s Internet site. “Intrastate crowdfunding” is defined as the offer or sale of a security by an issuer in a transaction that is available for purchase only by Iowa residents and by business organizations located in Iowa and organized and registered under Iowa law. This provision takes effect Jan. 1, 2016.
S.F. 346
Relates to various matters involving insurance and the Insurance Division of the Department of Commerce and includes effective date provisions. Updates references to include current federal statutes. Provides an exemption from certain securities registration and filing requirements for offers and sales of securities known as intrastate crowdfunding and provides limitations and conditions on such offers and sales of securities in the state. Relates to cemeteries. Relates to long-term care insurance.
Iowa S.S.B. 1086
Signed by governor 3/19/15, Act 24
Creates a new section of KRS 292.410 to 291.415 to establish requirements for an exemption to the Securities Act of 1933 for investments not to exceed $10,000 by Kentucky residents via the Internet, offered by an issuer that is a business entity organized and authorized under Kentucky law and in accordance with the Federal Jobs Act of 2012, with the total of investments not to exceed a total of $1 million or $2 million depending on whether the issuer has undergone a financial audit for the recently completed fiscal yea. Create a new section of KRS 292.410 to 291.415 to establish requirements for Internet website operators who operate a website for the sale of securities, pursuant to Section 1 of this Act, including registration with and examination by the commissioner of the Department of Financial Institutions. Designate the acts as the Kentucky Intrastate Crowdfunding Exemption.
H.F. 3, First Special Session
Signed by governor 6/13/15, Chapter 1
S.F. 2, First Special Session
Appropriates money to various departments, including the Department of Economic Development, the Housing Finance Agency and Explore Minnesota Tourism. Relates to workforce housing, unemployment insurance, insurance fraud, MNvest, job and workforce development, manufacturing, business expansion, certain supervisory colleges, distributed generation, electric rates, Destination Medical Center taxing, guaranteed asset protection waivers, no-fault insurance issues, certain license fees and other matters.
H.F. 843
Passed House 4/22/15
Appropriates money for the Departments of Employment and Economic Development, Labor and Industry, and Commerce, the Bureau of Mediation Services, Housing Finance Agency, Explore Minnesota Tourism, Workers' Compensation Court of Appeals, Public Utilities Commission, Pollution Control Agency and Department of Administration. Relates to policy changes, minimum wage, unemployment insurance employer taxes, delivered fuels, energy conservation provisions, renewable fuels, greenhouse gas emissions and MNvest registration exemption.
H.F. 1437
Vetoed by governor 5/23/15
Relates to jobs. Appropriates money to the Departments of Employment and Economic Development, Labor and Industry, and Commerce. Makes changes to housing, unemployment insurance and energy provisions. Creates various jobs and workforce development programs. Regulates insurance. Allows additional unemployment insurance benefits for certain poultry workers and steelworkers. Appoints task forces. Relates to jobs and economic development appropriations. Relates economic development grants and MNvest registration exemption.
Relates to state government; appropriates money for agriculture, environment, natural resources, jobs, and economic development. Provides for animal health and agricultural utilization research. Makes policy and technical changes to various agricultural related provisions, including provisions related to pesticide control, plant protection, nursery law, seeds and loans. Modifies license exclusions for the direct sale of certain prepared food. Specifies MNvest registration exemption.
Missouri H.B. 1151
This bill specifies that the offer or sale of a security by an issuer must be exempt from the requirements of §§409.3-101 to 409.3-106 and §409.5-504, RSMo, and each issuer's agent must be exempt from the requirements of subsection (a) of §409.4-402 if the offer or sale is conducted in accordance with the following requirements: (1) The issuer must be a business or organization formed under Missouri law and registered with the secretary of state; (2) The transaction must meet the requirements of the federal exemption for intrastate offerings in specified federal law; (3) The sum of all cash and other consideration to be received for all sales of the security in reliance upon this exemption must not exceed $1 million, less the total amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance upon this exemption; (4) The issuer must not accept an amount, not to exceed 10 percent of any single purchaser's federal adjusted gross income, of more than $10,000 from any single purchaser unless the person is an accredited investor as defined by Rule 501 of specified federal regulation; (5) A commission or other remuneration must not be paid or given for any person's participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer or agent; (6) All funds received from investors must be deposited into a bank or depository institution authorized to do business in Missouri, and all the funds must be used in accordance with representations made to investors; (7) The issuer must provide a notice in writing or electronic form to the administrator before the use of any general solicitation of investors occurs or the 25th sale, whichever occurs first. The notice must contain the names and addresses of the issuer, all peeople involved in the offer or sale of the securities, and the bank or other depository institution where funds will be deposited; and (8) The issuer must inform all purchasers that the securities have not been registered and, therefore, cannot be resold unless the securities are registered or qualify for an exemption from registration. The issuer must make the disclosures required by specified rule. The exemption cannot be used in conjunction with any other exemption under these regulations or §409.2-202 except for offers and sales to controlling persons of the issuer.
Signed by governor 4/1/15, Chapter 163
Allows securities issuers to engage in securities transactions if conducted within this state. Provides an effective date. Relates to a nonissuer isolated transaction, whether effected through a broker-dealer or not. Allows a nonissuer distribution of an outstanding security by a broker-dealer if the securities are reported by the automated quotation system. Requires an offerer of securities to meet residency requirements and consideration shall not exceed a specified amount; relates to investments.
L.B. 226
Amends §8-1111, Revised Statutes Cumulative Supplement, 2014; to authorize crowdfunding as prescribed and to exempt crowdfunding from registration; and to repeal the original section.
Signed by governor 6/5/15, Chapter 362
This bill authorizes the administrator to adopt regulations consistent with the federal Jumpstart Our Business Startups Act (Pub. L. No. 112-106), including regulations relating to the creation and oversight of funding portals for the purchase of securities.
Nevada S.B. 365
Provides for an exemption from the requirement to register for certain offerings for the sale of securities made through certain Internet websites. Establishes certain requirements relating to an issuer of a security who qualifies for such an exemption. Provides for the registration of certain operators of Internet websites who post offerings for the sale of securities not required to be registered. Provides other matters properly relating thereto.
A.B. 2073
Signed by governor 11/9/15, Chapter 128
Substituted 7/23/15
Exempts certain offers and sales of securities from registration.
Restores various tax credits and incentives for economic development. Enacts the Jump-start Our Business Start-ups Act.
Enacts the Jump-start Our Business Start-ups Act. Enacts the New Markets Jobs Act of 2015.
S.R. 611
Adopted 4/14/15, Resolution Chapter 205
Requests the commissioner of the Department of Business Banking Regulation to conduct a study and make recommendations on the legislation necessary to implement crowdfunding in the state of Rhode Island.
Amends the Code of Laws of South Carolina, 1976, by adding article 10 to chapter 6, title 12 so as to enact the "South Carolina Small Business Tax Incentives Act", allowing various income tax deductions and credits for resident taxpayers for investment in qualified businesses in this state and to allow a jobs tax credit and an additional tax credit for qualified research expenses for such businesses. Amends §35-1-202, relating to transactions that are exempt from the requirements of specific provisions of securities law including registration requirements, so as to exempt any offer or sale of a security by an issuer if the offer or sale is conducted in accordance with §35-1-205; and by adding §35-1-205 so as to authorize certain qualified companies in this state to solicit investments from qualified resident investors in this state to enable them to raise money on an intrastate basis.
H.B. 1629
Became law without governor’s signature 6/17/15
The bill amends the Securities Act to require the State Securities Board to adopt rules to regulate and facilitate online intrastate crowdfunding applicable to certain authorized small business development entities.
Texas H.B. 2580
Relates to crowdfunding portal regulations.
Texas H.B. 3425
Relates to the creation of an intrastate investment market for purposes of trading securities issued under the intrastate crowdfunding exemption from federal securities laws.
Enacting clause struck 3/12/15
This bill: modifies an existing exemption to provide for an intrastate exemption from registration and disclosure requirements. Modifies the division's authority with regard to the exemption; addresses intrastate portals or websites. Makes technical changes.
Signed by governor 3/23/15, Chapter 400
Signed by governor 3/19/15, Chapter 354
Creates an exemption from the securities, broker-dealer, and agent registration requirements of the Securities Act for any security issued by a Virginia entity if (i) the offering is conducted in accordance with the federal exemption for intrastate offerings in §3(a)(11) of the Securities Act of 1933 and Securities Exchange Commission Rule 147; (ii) the offer and sale are made only to Virginia residents; (iii) the aggregate price of the securities offered under the exemption does not exceed $2 million or such other amount as the State Corporation Commission (SCC) establishes by rule or order; (iv) the maximum amount that may be invested by a purchaser who is not an accredited investor is $10,000 or such other amount as the SCC establishes by rule or order; (v) compensation is not paid to employees, agents, or other people for the solicitation or based on the sale of such securities unless they are registered as a broker-dealer or agent, except as permitted by the SCC; (vi) neither the issuer nor any related person is subject to disqualification; and (vii) the security is sold in an offering conducted in compliance with conditions established by rule or order of the SCC, which may include requirements that proceeds from purchasers be placed in escrow in a depository institution located in the Commonwealth. The SCC may assess a filing fee not to exceed $500. The SCC is required to report annually on the implementation of the measure. The measure will expire on July 1, 2020.
Virginia H.B. 1384
Creates an exemption from the securities, broker-dealer, and agent registration requirements of the Securities Act for an offer or sale of a security by an issuer, or an individual who represents an issuer in an offer or sale, for investments colloquially referred to as crowdfunding. To qualify for the exemption, the transaction is required to meet specific conditions, including the requirements of the federal exemption for intrastate offerings in §3(a)(11) of the Securities Act of 1933 and SEC Rule 147. The amount to be received for all sales of the security in reliance upon this exemption shall not exceed $2 million. The measure expires July 1, 2020.
Incorporated into S.B. 763 1/26/15
Creates an exemption from the securities, broker-dealer, and agent registration requirements of the Securities Act for an offer or sale of a security by an issuer, or an individual who represents an issuer in an offer or sale, if (i) the issuer of the security is a for-profit business entity formed under the laws of the Commonwealth; (ii) the transaction meets the requirements of the federal exemption for intrastate offerings in § 3(a)(11) of the Securities Act of 1933 and 17 C.F.R. §230.147; (iii) the sum of all cash and other consideration to be received for all sales of the security in reliance upon this exemption does not exceed $1 million, less the aggregate amount received for all sales of securities by the issuer within the 12 months preceding the first offer or sale made in reliance upon the exemption; (iv) the issuer does not accept more than $10,000 from any single purchaser unless the purchaser is an accredited investor as defined by 17 C.F.R. §230.501; (v) all funds received from investors are required to be deposited into a bank or depository institution authorized to do business in the Commonwealth and used in accordance with representations made to investors; (vi) the issuer files a notice with the State Corporation Commission (SCC) specifying that the issuer is conducting an offering in reliance upon this exemption and containing the names and addresses of the issuer, all persons who will be involved in the offer or sale of securities on behalf of the issuer, and the bank or other depository institution in which investor funds will be deposited; (vii) the issuer is not an investment company or subject to certain reporting requirements of the Securities Exchange Act of 1934; and (viii) the issuer informs all purchasers that the securities have not been registered and are subject to limitations on resales. The exemption shall not be available if the issuer or related person has committed specified acts, including having sold or permitted the sale through an Internet website of a security to an investor who is not a resident of the Commonwealth. The SCC shall charge a filing fee of $250 per filing, which may be increased to an amount not to exceed $500 per filing as necessary to defray the costs of administering the exemption. The measure will expire on July 1, 2020.
Washington S.B. 5683
Requires the director of the Department of Financial Institutions to adopt by rule a crowdfunding form to be used as a short-form registration statement for small securities offerings.
Passed House 2/24/15
Creates the West Virginia Small Business Capital Act; and exempts the offer and sale of certain securities from the Uniform Securities Act.
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