Difference between revisions of "114-HR4855 Fix Crowdfunding Act"

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|Proposed in=114
 
|Proposed in=114
 
|Sponsored by=Rep. McHenry, Patrick T. (R-NC-10)
 
|Sponsored by=Rep. McHenry, Patrick T. (R-NC-10)
|Reviewing committee=House Financial Services
+
|Reviewing committee=House - Financial Services
 
|Has bill status=Died
 
|Has bill status=Died
 
|Has keywords=McCarthy
 
|Has keywords=McCarthy
 
}}
 
}}
(Sec. 2) This bill amends the Securities Act of 1933 to allow a crowdfunding issuer to sell shares through a crowdfunding vehicle.
+
====Sec. 2====
 +
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, typically composed of small individual contributions, and often via Internet platforms, either to invest in a company or to support an effort by others to accomplish a specific goal.)
 
(Crowdfunding is a method of capital formation in which groups of people pool money, typically composed of small individual contributions, and often via Internet platforms, 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:
 
A "crowdfunding vehicle" is a company that:
 +
*has purposes limited to acquiring, holding, and disposing securities issued by a single company in one or more transactions and made pursuant to crowdfunding exemption transaction requirements;
 +
*issues only one class of securities;
 +
*receives no compensation for such acquisition, holding, or disposition of securities;
 +
*is a co-issuer with the company whose securities it holds; and
 +
*meets specified requirements related to disclosure obligations and the use of investment advisers.
  
has purposes limited to acquiring, holding, and disposing securities issued by a single company in one or more transactions and made pursuant to crowdfunding exemption transaction requirements;
+
====Sec. 3====
issues only one class of securities;
+
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.
receives no compensation for such acquisition, holding, or disposition of securities;
 
is a co-issuer with the company whose securities it holds; and
 
meets specified requirements related to disclosure obligations and the use of investment advisers.
 
(Sec. 3) 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.
 
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.
  
 
==Bill Text==
 
==Bill Text==
 
Congressional Bills 114th Congress
 
From the U.S. Government Publishing Office
 
H.R. 4855 Received in Senate (RDS)
 
  
 
114th CONGRESS
 
114th CONGRESS
 
2d Session
 
2d Session
 
H. R. 4855
 
H. R. 4855
 +
IN THE SENATE OF THE UNITED STATES
 +
July 6, 2016
 +
Received
 +
 +
AN 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.
 +
 +
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 “Fix Crowdfunding 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), by inserting “by any of paragraphs (1) through (14) of” before “section 3(c)”; and
 +
 +
(2) in section 4(a)(6)(B), by inserting after “any investor” the following: “, other than a crowdfunding vehicle (as defined in section 2(a) of the Investment Company Act of 1940),”.
  
 +
(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), by adding at the end the following:
  
  
                  IN THE SENATE OF THE UNITED STATES
+
“(55) The term ‘crowdfunding vehicle’ means a company—
  
                              July 6, 2016
+
“(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;
  
                                Received
+
“(B) which issues only one class of securities;
  
_______________________________________________________________________
+
“(C) which receives no compensation in connection with such acquisition, holding, or disposition of securities;
  
                                AN ACT
+
“(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 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, where both the crowdfunding vehicle and the company whose securities it holds are co-issuers;
  
+
“(F) which is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202);
  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
+
“(G) the company whose securities it holds is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202); and
United States of America in Congress assembled,
 
  
SECTION 1. SHORT TITLE.
+
“(H) is advised by an investment adviser registered under the Investment Advisers Act of 1940 or registered as an investment adviser in the State in which the investment adviser maintains its principal office and place of business.”; and
  
    This Act may be cited as the ``Fix Crowdfunding Act''.
+
(2) in section 3(c), by adding at the end the following:
  
SEC. 2. CROWDFUNDING VEHICLES.
 
  
    (a) Amendments to the Securities Act of 1933.--The Securities Act
+
(15) Any crowdfunding vehicle..
of 1933 (15 U.S.C. 77a et seq.) is amended--
 
            (1) in section 4A(f)(3), by inserting ``by any of
 
        paragraphs (1) through (14) of'' before ``section 3(c)''; and
 
            (2) in section 4(a)(6)(B), by inserting after ``any
 
        investor'' the following: ``, other than a crowdfunding vehicle
 
        (as defined in section 2(a) of the Investment Company Act of
 
        1940),''.
 
    (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), 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;
 
                    ``(B) which issues only one class of securities;
 
                    ``(C) which 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 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, where both the crowdfunding
 
                vehicle and the company whose securities it holds are
 
                co-issuers;
 
                    ``(F) which is current in its ongoing disclosure
 
                obligations under Rule 202 of Regulation Crowdfunding
 
                (17 CFR 227.202);
 
                    ``(G) the company whose securities it holds is
 
                current in its ongoing disclosure obligations under
 
                Rule 202 of Regulation Crowdfunding (17 CFR 227.202);
 
                and
 
                    ``(H) is advised by an investment adviser
 
                registered under the Investment Advisers Act of 1940 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), by adding at the end the following:
 
            ``(15) Any crowdfunding vehicle.''.
 
  
 
SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.
 
SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.
  
    Section 12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C.  
+
Section 12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is amended—
78l(g)(6)) is amended--
+
 
            (1) by striking ``The Commission'' and inserting the  
+
(1) by striking “The Commission” and inserting the following:
        following:
+
 
                    ``(A) In general.--The Commission'';
+
(A) IN GENERAL.—The Commission”;
            (2) by striking ``section 4(6)'' and inserting ``section
+
 
        4(a)(6)''; and
+
(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
+
(3) by adding at the end the following:
                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.''.
 
  
            Passed the House of Representatives July 5, 2016.
+
“(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.”.
  
            Attest:
+
Passed the House of Representatives July 5, 2016.
  
                                                KAREN L. HAAS,
+
Attest: karen l. haas,  
 +
Clerk
  
                                                                Clerk.
+
==Resources==
 +
[https://www.congress.gov/bill/114th-congress/house-bill/4855 Link to bill page]
  
[[Category: Legislation]] [[Category: McCarthy's Innovation Initiative]]
+
[[Category: Legislation]] [[Category: McCarthy]]

Latest revision as of 11:21, 14 April 2017

Legislation
Title 114-HR4855 Fix Crowdfunding Act
Congress 114
Sponsor Rep. McHenry, Patrick T. (R-NC-10)
Committee(s) House - Financial Services
Status Died
Keywords McCarthy
© edegan.com, 2016

Sec. 2

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, typically composed of small individual contributions, and often via Internet platforms, 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 in one or more transactions and made pursuant to crowdfunding exemption transaction requirements;
  • issues only one class of securities;
  • receives no compensation for such acquisition, holding, or disposition of securities;
  • is a co-issuer with the company whose securities it holds; and
  • meets specified requirements related to disclosure obligations and the use of investment advisers.

Sec. 3

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.

Bill Text

114th CONGRESS 2d Session H. R. 4855 IN THE SENATE OF THE UNITED STATES July 6, 2016 Received

AN 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.

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 “Fix Crowdfunding 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), by inserting “by any of paragraphs (1) through (14) of” before “section 3(c)”; and

(2) in section 4(a)(6)(B), by inserting after “any investor” the following: “, other than a crowdfunding vehicle (as defined in section 2(a) of the Investment Company Act of 1940),”.

(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), 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;

“(B) which issues only one class of securities;

“(C) which 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 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, where both the crowdfunding vehicle and the company whose securities it holds are co-issuers;

“(F) which is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202);

“(G) the company whose securities it holds is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202); and

“(H) is advised by an investment adviser registered under the Investment Advisers Act of 1940 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), 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.”.

Passed the House of Representatives July 5, 2016.

Attest: karen l. haas, Clerk

Resources

Link to bill page