114-HR4850 Micro Offering Safe Harbor Act

Legislation
Title	114-HR4850 Micro Offering Safe Harbor Act
Congress	114
Sponsor	Rep. Emmer, Tom (R-MN-6)
Committee(s)	House - Financial Services
Status	Died
Keywords	McCarthy
© edegan.com, 2016

This bill amends the Securities Act of 1933 to exempt from specified prohibitions against the sale or delivery after sale of unregistered securities, among other things, transactions involving the sale of securities by an issuer of micro-offerings that meet all of the following criteria:

• each purchaser has a substantive pre-existing relationship with either an officer or director of the issuer, or with a shareholder holding 10% or more of the issuer's shares;
• during the 12-month period preceding the transaction there are no more than 35 purchasers of such micro-offerings sold in reliance on this exemption; and
• the aggregate amount of all securities sold by the issuer (including any amount sold in reliance upon the exemption) during the 12-month period preceding the transaction does not exceed $500,000.

The exemption provided under this bill is not available for a transaction involving a sale of securities if any of specified persons connected with their issuance would have triggered disqualification as a "bad actor" pursuant to regulations under the Act.

The bill also exempts such micro-offerings from state regulation of securities offerings.

Bill Text

Union Calendar No. 561

114th CONGRESS 2d Session H. R. 4850 [Report No. 114–723]

To amend the Securities Act of 1933 to exempt certain micro-offerings from the registration requirements of such Act, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES March 23, 2016 Mr. Emmer of Minnesota (for himself, Mr. Messer, Mr. Barr, Mr. Royce, Mr. Chabot, Mr. Tipton, Mr. Brooks of Alabama, and Mr. Williams) introduced the following bill; which was referred to the Committee on Financial Services

September 6, 2016 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on March 23, 2016]

A BILL To amend the Securities Act of 1933 to exempt certain micro-offerings from the registration requirements of such Act, and for other purposes.

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 “Micro Offering Safe Harbor Act”.

SEC. 2. EXEMPTIONS FOR MICRO-OFFERINGS.

(a) In General.—Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is amended—

(1) in subsection (a), by adding at the end the following:

“(8) transactions meeting the requirements of subsection (f).”; and

(2) by adding at the end the following:

“(f) Certain Micro-Offerings.—

“(1) IN GENERAL.—Except as provided in paragraph (2), the transactions referred to in subsection (a)(8) are transactions involving the sale of securities by an issuer (including all entities controlled by or under common control with the issuer) that meet all of the following requirements:

“(A) PRE-EXISTING RELATIONSHIP.—Each purchaser has a substantive pre-existing relationship with an officer of the issuer, a director of the issuer, or a shareholder holding 10 percent or more of the shares of the issuer.

“(B) 35 OR FEWER PURCHASERS.—There are no more than, or the issuer reasonably believes that there are no more than, 35 purchasers of securities from the issuer that are sold in reliance on the exemption provided under subsection (a)(8) during the 12-month period preceding such transaction.

“(C) SMALL OFFERING AMOUNT.—The aggregate amount of all securities sold by the issuer, including any amount sold in reliance on the exemption provided under subsection (a)(8), during the 12-month period preceding such transaction, does not exceed $500,000.

“(2) DISQUALIFICATION.—

“(A) IN GENERAL.—The exemption provided under subsection (a)(8) shall not be available for a transaction involving a sale of securities if any person described in subparagraph (B) would have triggered disqualification pursuant to section 230.506(d) of title 17, Code of Federal Regulations.

“(B) PERSONS DESCRIBED.—The persons described in this subparagraph are the following:

“(i) The issuer.

“(ii) Any predecessor of the issuer.

“(iii) Any affiliated issuer.

“(iv) Any director, executive officer, other officer participating in the offering, general partner, or managing member of the issuer.

“(v) Any beneficial owner of 20 percent or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power.

“(vi) Any promoter connected with the issuer in any capacity at the time of such sale.

“(vii) Any investment manager of an issuer that is a pooled investment fund.

“(viii) Any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of securities.

“(ix) Any general partner or managing member of any such investment manager or solicitor.

“(x) Any director, executive officer, or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor.”.

(b) Exemption Under State Regulations.—Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended—

(1) in subparagraph (F), by striking “or” at the end;

(2) in subparagraph (G), by striking the period and inserting “; or”; and

(3) by adding at the end the following:

“(H) section 4(a)(8).”.

Union Calendar No. 561

114th CONGRESS

    2d Session

H. R. 4850 [Report No. 114–723] A BILL To amend the Securities Act of 1933 to exempt certain micro-offerings from the registration requirements of such Act, and for other purposes. September 6, 2016 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

Resources

Link to bill page