An Act To Increase Funding for Start-ups
Sec. 1. 32 MRSA §16202, sub-§25, as enacted by PL 2005, c. 65, Pt. A, §2, is amended to read:
Sec. 2. 32 MRSA §16202, sub-§26, as amended by PL 2009, c. 500, §1, is further amended to read:
Sec. 3. 32 MRSA §16202, sub-§27 is enacted to read:
(1) If the issuer has not undergone and provided the documentation resulting from a financial audit that was performed the previous year and that met generally accepted accounting principles, $1,000,000 less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance upon the exemption provided by this subsection; or
(2) If the issuer has undergone and provided the documentation resulting from a financial audit that was performed the previous year and that met generally accepted accounting principles, $2,000,000 less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance upon the exemption provided by this subsection.
Beginning in 2018, and every 5 years thereafter, the administrator shall adjust the maximum amount of cash and other consideration allowed under this paragraph to reflect the cumulative change in the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index;
(1) Specifies that the issuer is conducting an offering in reliance upon the exemption provided by this subsection; and
(2) Contains the names and addresses, including Internet website addresses, of the issuer and all persons who will be involved in the offer or sale of securities on behalf of the issuer, and the bank or other depository institution in which investor funds will be deposited;
(1) The amount of compensation received by each director and executive officer, including cash compensation earned since the previous report and on an annual basis and any bonuses, stock options, other rights to receive securities of the issuer or an affiliate of the issuer or other compensation received; and
(2) An analysis of the business operations and financial condition of the issuer; and
(1) Has not filed a registration statement that is the subject of a pending proceeding or examination under 15 United States Code, Section 77h and has not been the subject of a refusal order or stop order under 15 United States Code, Section 77h;
(2) Is not subject to a pending proceeding under 17 Code of Federal Regulations, Section 230.258 (2013) or to an order entered under 17 Code of Federal Regulations, Section 230.258 (2013);
(3) Has not been convicted of a felony or misdemeanor in connection with the purchase or sale of a security or involving the making of a false filing related to the offer or sale of a security;
(4) Is not subject to an order, judgment or decree of a court of competent jurisdiction or regulatory authority, including non-United States regulatory authorities, preliminarily, temporarily or permanently restraining or enjoining that person from engaging in or continuing conduct or a practice in connection with the purchase or sale of a security or involving the making of a false filing related to the offer or sale of a security;
(5) Is not subject to a United States Postal Service false representation order entered under 39 United States Code, Section 3005 and is not subject to a temporary restraining order or preliminary injunction entered under 39 United States Code, Section 3007 with respect to conduct alleged to have violated 39 United States Code, Section 3005.
The provisions of this paragraph do not apply if, upon a showing of good cause and without prejudice to any other action by the administrator, the administrator determines that it is not necessary under the circumstances that an exemption be denied, and the issuer establishes that it made factual inquiry into whether any disqualification existed under this paragraph but did not know, and in the exercise of reasonable care could not have known, that a disqualification existed under this paragraph. The nature and scope of the inquiry required by an issuer varies based on the circumstances of the issuer and the other offering participants.
The exemption provided in this subsection may not be used in conjunction with any other exemption under this chapter, except that offers and sales to controlling persons do not count toward the limitation in paragraph C. For purposes of this subsection, "controlling person" means an officer, director, partner or trustee, or an individual occupying a similar status or performing similar functions with respect to the issuer or to a person owning 10% or more of the outstanding shares of any class or classes of securities of the issuer.
The administrator shall adopt rules to protect investors who purchase securities under this subsection. Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
The purpose of this bill is to promote and encourage the growth of Maine small businesses by facilitating the ability of a business to raise capital by selling small amounts of equity to a wider pool of small investors with fewer restrictions. This bill exempts from existing restrictions regarding registration and advertising an issuer transaction or sale if the issuer transaction or sale meets certain conditions, including:
1. The issuer of the security must be a business entity formed and registered under Maine law;
2. The purchasers of the securities must be Maine residents;
3. The size of the offering may not exceed $1,000,000 if the issuer has not undergone, and provided documentation from, a financial audit in the previous year;
4. The size of the offering may not exceed $2,000,000 if the issuer has undergone, and provided documentation from, a financial audit in the previous year;
5. The issuer may not accept more than $2,000 from any single purchaser unless the purchaser is an accredited investor under rules adopted by the federal Securities and Exchange Commission; and
6. The issuer requires from all purchasers a written acknowledgement that the purchaser assumes the risks associated with the investment.