Bills Pass House, Offer More Funding Options
Last week, we told you in our weekly 'This Week in Entrepreneurship Policy' post that the House was examining a couple of bills “intended to make it easier for startups and other companies to raise capital.”
Both pieces of legislation –The Entrepreneur Access to Capital Act (HR 2930) & Access to Capital for Job Creators Act (HR 2940)—passed easily on Thursday with overwhelming support from both sides of the aisle.
HR 2940 (passed 413 – 11) removes the SEC ban that now prevents small companies from advertising to solicit investors. HR 2930 (passed 407 – 17) allows new firms to use crowdfunding to accept and pool donations of up to $1 million without having to register with the SEC. Specifically, the Act:
- Creates a crowdfunding exemption from SEC regulations for firms raising $5 million, with individual investments limited to $10,000 or 10 percent of an investor's annual income, whichever is lesser.
- Preempts Blue Sky Laws and eliminate the application of the ban on general solicitation for issuers relying on the crowdfunding exemption.
- Excludes crowdfunding investors from counting as shareholders for the purposes of calculating the 499-shareholder cap under 12(g) of the Securities Exchange Act.