Latest Policy Blog: Bills Passed House Offering More Money
On the Policy Forum Blog this week, Mark Marich broke down how two pieces of legislation, which both passed the House, would affect entrepreneurs and their ability to raise capital. One addresses the growing but controversial trend of crowdfunding. Learn a little about these two bills:
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.