Washington, D.C. – Today, Congressman Tom Emmer’s (MN-06) Micro Offering Safe Harbor Act passed out of the House of Representatives by a vote of 232-188. This is Emmer’s second bill to pass in the 115th Congress.
“Small business owners and entrepreneurs are the backbone of our society, and responsible for more than half of new jobs created each year,” said Emmer. “Unfortunately, for far too long, government regulations have tied their hands making it difficult to startup or expand. Today, the House of Representatives took a step to change that with the passage of the Micro Offering Safe Harbor Act. This legislation clarifies existing law so that small businesses and startups have more ways to access capital which is so vital to their success, getting them one step closer to achieving the American Dream.”
Small businesses accounted for 99.7 percent of all businesses in the United States last year, but only half of them have a survival rate of longer than five years. According to the National Small Business Association's 2016 Year-End Economic Report, only 69 percent of small businesses surveyed said they are able to get adequate financing.
The Micro Offering Safe Harbor Act brings clarity to the Securities Act of 1933. By defining what qualifies under the “non-public offering” exemption, this legislation will provide certainty to small business owners and entrepreneurs as they work to startup or grow their businesses. This legislation requires three specific criteria to be met simultaneously in order to trigger a safe harbor exemption for a security offering. These criteria ensure that:
- Each investor has a substantive pre-existing relationship with an owner;
- 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; and
- The aggregate amount of all securities sold by the issuers does not exceed $500,000 during the 12-month period preceding.
Additionally, Emmer introduced an amendment to enhance the existing anti-fraud provisions in the underlying bill and provide increased protection for Americans from bad actors trying to swindle and defraud investors.
The Micro Offering Safe Harbor Act is H.R. 2201. It was approved during the 114th Congress as part of the Accelerating Access to Capital Act (H.R. 2357). H.R. 2201 bill is supported by: the U.S. Chamber of Commerce, National Federation of Independent Businesses (NFIB), the National Small Business Association (NSBA), Heritage Action for America, the Small Business& Entrepreneurship Council and Engine, the “Voice of Startups in America.”