Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. DAINES. Mr. President, entrepreneurship is a bedrock of Montana, a relationship well understicod by the Small Business Administration, SBA. In fact, the SBA recognizes over 115,000 small businesses in the state, making up 97.4 percent of all businesses. These organizations employ nearly 236,000 Montanans, or 67.4 percent of the state workforce.

While there are many harmful regulations coming out of Washington these days, the Securities and Exchange Commission, SEC, issued a rule last October to give entrepreneurs an important tool in their belt to get their/dreams up and running. This rule was the crowdfunding rule, which allows entrepreneurs to raise up to $1 million annually without having to incur the costs of expensive SEC registration.

With this rule, entrepreneurs can now raise capital to grow their business and create jobs without incurring expenses ordinarily reserved for established companies able to become publicly traded. In fact, Treasure State Internet & Telegraph is one startup in my home town of Bozeman, Montana that has been able to use this important new rule.

I am pleased today to support Montana's entrepreneurs by introducing the Crowdfunding Enhancement Act. This bill will make it easier for startups using crowdfunding to grow by creating a ``longer runway'' for costly filings. In this way, startups won't be penalized with costly paperwork by growing too fast growth. This bill also makes it easier to attract more capital once it reaches the current crowdfunding limits.
With passage, this bill is a win for Montana and all our entrepreneurs.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be printed in the Record, as follows:

S. 3453

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 ``Crowdfunding Enhancement Act''.

SEC. 2. CROWDFUNDING VEHICLES.

(a) Amendments to the Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended--
(1) in section 4A(f)(3), by inserting ``by any of paragraphs (1) through (14) of'' before ``section 3(c)''; and
(2) in section 4(a)(6)(B), by inserting after ``any investor'' the following: ``, other than a crowdfunding vehicle (as defined in section 2(a) of the Investment Company Act of 1940),''.
(b) Amendments to the Investment Company Act of 1940.--The Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a), by adding at the end the following:

``(55) The term `crowdfunding vehicle' means a company-- ``(A) whose purpose (as set forth in its organizational documents) is limited to acquiring, holding, and disposing securities issued by a single company in one or more transactions and made pursuant to section 4(a)(6) of the Securities Act of 1933;
``(B) which issues only one class of securities; ``(C) which receives no compensation in connection with such acquisition, holding, or disposition of securities; ``(D) no associated person of which receives any compensation in connection with such acquisition, holding or disposition of securities unless such person is acting as or on behalf of an investment adviser registered under the Investment Advisers Act of 1940 or registered as an investment adviser in the State in which the investment adviser maintains its principal office and place of business; ``(E) the securities of which have been issued in a transaction made pursuant to section 4(a)(6) of the Securities Act of 1933, where both the crowdfunding vehicle and the company whose securities it holds are co-issuers; ``(F) which is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202);

``(G) the company whose securities it holds is current in its ongoing disclosure obligations under Rule 202 of Regulation Crowdfunding (17 CFR 227.202); and ``(H) is advised by an investment adviser registered under the Investment Advisers Act of 1940 or registered as an investment adviser in the State in which the investment adviser maintains its principal office and place of business.''; and
(2) in section 3(c), by adding at the end the following:
``(15) Any crowdfunding vehicle.''.

SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.

Section 12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is amended--
(1) by striking ``The Commission'' and inserting the following:
``(A) In general.--The Commission'';
(2) by striking ``section 4(6)'' and inserting ``section 4(a)(6)''; and
(3) by adding at the end the following:

``(B) Treatment of securities issued by certain issuers.-- An exemption under subparagraph (A) shall be unconditional for securities offered by an issuer that had a public float of less than $75,000,000 as of the last business day of the issuer's most recently completed semiannual period, computed by multiplying the aggregate worldwide number of shares of the issuer's common equity securities held by non-affiliates by the price at which such securities were last sold (or the average bid and asked prices of such securities) in the principal market for such securities or, in the event the result of such public float calculation is zero, had annual revenues of less than $50,000,000 as of the issuer's most recently completed fiscal year.''.

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