"Crowd Funding" Legislation Advances

December 10, 2013

(Tuesday, Dec. 10) - The Senate Banking Committee last week approved legislation, already passed by the House, to allow Michigan companies to get capital to start and expand their firms via “crowd funding.” The bill now goes to the full Senate for approval.

House Bill 4996, which is supported by the Michigan Chamber, would allow state residents to invest in local start-ups and other businesses by raising many small amounts of money from a large number of people, typically over the Internet.

The legislation sets a fundraising cap of $1 million within a 12-month period if the issuer of shares does not provide an audit or $2 million if the issuer does provide an audit. It also sets a $10,000 cap on investments for non-accredited investors but no limit for accredited investors. The Securities and Exchange Commission defines an accredited investor as someone with a net worth of at least $1 million, or who has income of more than $200,000 in the previous two years.

House Bill 4996 is not intended to supplant traditional lending markets. Rather, the legislation is intended to help Michigan investors to invest in Michigan companies, especially when traditional lending is not an option.

Please contact Wendy Block with any questions at 517/371-7678 or wblock@michamber.com.