Section 1 Short title
This Act may be cited as the “Crowdfunding Enhancement Act”.
Crowdfunding Enhancement Act
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.
Sec. 2 Crowdfunding vehicles
Amendments to the Securities Act of 1933— The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended—
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
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”.
Amendments to the Investment Company Act of 1940— The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended—
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.”
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—
by striking “The Commission” and inserting the following:
“(A) In general—The Commission”
by striking “section 4(6)” and inserting “section 4(a)(6)”; and
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.”