Fix Crowdfunding Act
| Date | Chamber | What was voted on | Result | Yes–No | |
|---|---|---|---|---|---|
| Jul 5, 2016 | House · vote #350 | On Motion to Suspend the Rules and Pass, as Amended | Passed | 394–4 | See who voted → |
Fix Crowdfunding Act
(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.
Received in the Senate.