Friday, May 23, 2014

The Big Dog Weighs In...California House Passes Equity Crowdfunding Bill

According to an analysis if the proposed law, "this bill is closely modeled after the recent enacted equity crowdfunding exemption established in Maine..and will allow small businesses to raise up to $1 million in capital by selling small amounts of equity to individual investors. Small businesses will need to register with the California Department of Business Oversight, as well as, set a fundraising goal and deadline. This bill will allow individual investors to purchase up to $5,000 in equity from a single business."
Bill AB-2096 Highlights (click on the link at left to go to the bill)
"A) The aggregate amount of securities sold to all investors by the issuer within any 12-month period is not more than one million dollars ($1,000,000).
(B) The aggregate amount of securities sold to any investor by the issuer, including any amount sold during the 12-month period preceding the date of the transaction, (is) five thousand dollars ($5,000)...
(ii) For..offering amounts of one hundred thousand dollars ($100,000) or less,..the issuer must file:
(I) Income tax returns for the most recent year...
(II) Financial the CEO to be true and complete.
(iii) For offerings of more than one hundred thousand dollars ($100,000), but not more than five hundred thousand dollars ($500,000), financial statements reviewed by a public accountant who is independent of the issuer..
(iv) For offerings of more than five hundred thousand dollars ($500,000), audited financial statements.
(E) The issuer must have a separate bank account for all funds raised as part of the offering to be held until the time that the minimum offering amount is reached. If the minimum offering amount is not reached within one year of the effective date of the offering, the issuer shall return all funds to investors."
One thing to note: "the U.S. Treasury just gave the California State Treasurer $55,218,250 in federal funds from the JOBS Act to provide access to capital to small businesses through the California Pollution Control Financing Authority and the California Infrastructure and Economic Development Bank. This is the second of three disbursements."

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