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H.R. 2201 (115th): Micro Offering Safe Harbor Act


The text of the bill below is as of Nov 13, 2017 (Referred to Senate Committee). The bill was not enacted into law.

Summary of this bill

Source: Republican Policy Committee

H.R. 2201 amends the Securities Act of 1933 to exempt certain micro-offering from the Act’s registration requirements. This will allow small businesses to operate with confidence that they are not in violation of the law when making a non-public securities offering, so long as:

  • Each purchaser has a substantive pre-existing relationship with an officer, director, or shareholder with 10% or more of the shares of the issuer;
  • 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 during the 12-month period preceding the transaction; and
  • The aggregate amount of all securities sold by ...

IIB

115th CONGRESS

1st Session

H. R. 2201

IN THE SENATE OF THE UNITED STATES

November 13, 2017

Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs

AN ACT

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

1.

Short title

This Act may be cited as the Micro Offering Safe Harbor Act.

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

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).

.

Passed the House of Representatives November 9, 2017.

Karen L. Haas,

Clerk.