Amendment ASA1-AB350

AB350-ASA1,11,5 a. If the issuer has not undergone and made available to each prospective investor and the administrator the documentation resulting from a financial audit of its most recently completed fiscal year which complies with generally accepted accounting principles, $1,000,000 subject to adjustment under s. 551.206, 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 on the exemption under this subsection.

AB350-ASA1,11,11 b. If the issuer has undergone and made available to each prospective investor and the administrator the documentation resulting from a financial audit of its most recently completed fiscal year which complies with generally accepted accounting principles, $2,000,000 subject to adjustment under s. 551.206, 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 on the exemption under this subsection.

AB350-ASA1,11,16 2. An offer or sale to an officer, director, partner, trustee, or individual occupying similar status or performing similar functions with respect to the issuer or to a person owning 10 percent or more of the outstanding shares of any class or classes of securities of the issuer does not count toward the monetary limitation in subd. 1. a. and 1. b.

AB350-ASA1,11,18 (d) The issuer does not accept more than $5,000 from any single purchaser unless the purchaser is an accredited investor or certified investor.

AB350-ASA1,11,22 (e) No commission or other remuneration is paid or given, directly or indirectly, for any person's participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer or agent under this chapter. This paragraph does not apply if the offer or sale of the security is to a certified investor.

AB350-ASA1,11,24 (f) No general solicitation or general advertising is made in connection with the offer to sell or sale of the securities unless it has been permitted by the administrator.

AB350-ASA1,12,3 (g) All funds received from investors are deposited into a bank, savings bank, savings and loan association, or credit union chartered under the laws of this state, and all the funds are used in accordance with representations made to investors.

AB350-ASA1,12,9 (h) Before the 101st offer of the security, the issuer provides a notice to the administrator in writing or in electronic form, accompanied by the filing fee specified in s. 551.614 (1m). The administrator shall prescribe the form required for the notice and make the form available as an electronic document on the department of financial institutions Internet site. Notwithstanding s. 551.204 (1) and (3), the notice shall be limited to all of the following:

AB350-ASA1,12,11 1. Stating that the issuer is conducting an offering in reliance on the exemption under this subsection.

AB350-ASA1,12,12 2. Identifying the names and addresses of all of the following persons:

AB350-ASA1,12,13 a. The issuer.

AB350-ASA1,12,15 b. All persons who will be involved in the offer or sale of securities on behalf of the issuer.

AB350-ASA1,12,17 c. The bank, savings bank, savings and loan association, or credit union in which investor funds will be deposited.

AB350-ASA1,12,21 (i) The issuer is not, either before or as a result of the offering, an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 USC 80a-3), or subject to the reporting requirements of section 13 or 15 (d) of the Securities Exchange Act of 1934 (15 USC 78m or 78o (d)).

AB350-ASA1,12,24 (j) The issuer informs all purchasers that the securities have not been registered under this chapter and makes the disclosures required under subsection (f) of Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147 (f)).

AB350-ASA1,13,3 (k) No offer or sale of a different class or series of security has been made by the issuer in reliance on the exemption under this subsection or sub. (26) during the immediately preceding 12-month period.

AB350-ASA1,11 Section 11. 551.205 of the statutes is created to read:

AB350-ASA1,13,8 551.205 Additional provisions related to crowdfunding exemption for intrastate offerings through Internet sites. (1) All of the following requirements apply to an offer or sale of securities pursuant to the exemption under s. 551.202 (26):

AB350-ASA1,13,11 (a) Prior to any offer or sale of securities, the issuer shall provide to the Internet site operator evidence that the issuer is organized under the laws of this state and is authorized to do business in this state.

AB350-ASA1,13,15 (b) 1. The Internet site operator shall register with the division by filing a statement, which the administrator shall make available as an electronic document on the department of financial institutions Internet site, accompanied by the filing fee specified in s. 551.614 (1m), that includes all of the following:

AB350-ASA1,13,17 a. That the Internet site operator is a business entity organized under the laws of this state and authorized to do business in this state.

AB350-ASA1,13,19 b. That the Internet site is being utilized to offer and sell securities pursuant to the exemption under s. 551.202 (26).

AB350-ASA1,13,21 c. The identity and location of, and contact information for, the Internet site operator.

AB350-ASA1,13,23 d. Except as provided in subds. 2. and 4., that the Internet site operator is registered as a broker-dealer under s. 551.401.

AB350-ASA1,14,3 2. The Internet site operator is not required to register as a broker-dealer under s. 551.401 if all of the following apply with respect to the Internet site and its operator:

AB350-ASA1,14,4 a. It does not offer investment advice or recommendations.

AB350-ASA1,14,6 b. It does not solicit purchases, sales, or offers to buy the securities offered or displayed on the Internet site.

AB350-ASA1,14,9 c. Except as provided in sub. (3), it does not compensate employees, agents, or other persons for the solicitation or based on the sale of securities displayed or referenced on the Internet site.

AB350-ASA1,14,12 d. Except as provided in sub. (3), it is not compensated based on the amount of securities sold, and it does not hold, manage, possess, or otherwise handle investor funds or securities.

AB350-ASA1,14,16 e. Except as provided in sub. (3), the fee it charges an issuer for an offering of securities on the Internet site is a fixed amount for each offering, a variable amount based on the length of time that the securities are offered on the Internet site, or a combination of such fixed and variable amounts.

AB350-ASA1,14,18 f. It does not identify, promote, or otherwise refer to any individual security offered on the Internet site in any advertising for the Internet site.

AB350-ASA1,14,20 g. It does not engage in such other activities as the division, by rule, determines are prohibited of such an Internet site.

AB350-ASA1,14,23 3. If any change occurs in the information that an Internet site operator submits to the division in a statement filed under subd. 1., the Internet site operator shall notify the division within 30 days after the change occurs.

AB350-ASA1,15,7 4. The Internet site operator is not required to register as a broker-dealer under s. 551.401 if the Internet site operator is registered as a broker-dealer under the Securities Exchange Act of 1934 (15 USC 78o) or is a funding portal registered under the Securities Act of 1933 (15 USC 77d-1) and the Securities and Exchange Commission has adopted rules under authority of section 3 (h) of the Securities Exchange Act of 1934 (15 USC 78c (h)) and P.L. 112-106, section 304, governing funding portals. Nothing in this section requires an Internet site operator to register as a broker-dealer under the Securities Exchange Act of 1934 or as a funding portal under the Securities Act of 1933.

AB350-ASA1,15,11 (c) The issuer and the Internet site operator shall maintain records of all offers and sales of securities effected through the Internet site and shall provide ready access to the records to the division, upon request. The division may access, inspect, and review any Internet site registered under this subsection as well as its records.

AB350-ASA1,15,21 (2) An issuer of a security, the offer and sale of which is exempt under s. 551.202 (26), shall provide, free of charge, a quarterly report to the issuer's investors until no securities issued under s. 551.202 (26) are outstanding. An issuer may satisfy the reporting requirement of this subsection by making the information available on an Internet site if the information is made available within 45 days after the end of each fiscal quarter and remains available until the succeeding quarterly report is issued. An issuer shall file each quarterly report under this subsection with the division and, if the quarterly report is made available on an Internet site, the issuer shall also provide a written copy of the report to any investor upon request. The report shall contain all of the following:

AB350-ASA1,15,25 (a) 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 any affiliate of the issuer, or other compensation received.

AB350-ASA1,16,2 (b) An analysis by management of the issuer of the business operations and financial condition of the issuer.

AB350-ASA1,16,14 (3) If the Securities and Exchange Commission adopts rules under authority of section 3 (h) of the Securities Exchange Act of 1934 (15 USC 78c (h)) and P.L. 112-106, section 304, that authorize funding portals to receive commissions without registering as broker-dealers under the Securities Exchange Act of 1934, the division shall promulgate rules authorizing Internet site operators registered with the division under sub. (1) (b) that are not registered as broker-dealers under s. 551.401 to receive commissions. The division shall ensure that its rules authorizing commissions for Internet site operators are consistent with rules adopted by the Securities and Exchange Commission. The division's rules shall also ensure that Internet site operators that do not satisfy rules adopted by the Securities and Exchange Commission have the opportunity to operate in compliance with the requirements of this section.

AB350-ASA1,12 Section 12. 551.206 of the statutes is created to read:

AB350-ASA1,16,23 551.206 Adjustments. At 5-year intervals after January 1, 2014, the department of financial institutions shall adjust the monetary amounts specified in s. 551.202 (26) (c) 1. a. and 1. b. and (27) (c) 1. a. and 1. b. to reflect changes since January 1, 2014, in the consumer price index for all urban consumers, Milwaukee-Racine area average, as determined by the U.S. department of labor. Each adjustment shall be rounded to the nearest multiple of $50,000. Each adjustment under this section shall be published on the department of financial institutions Internet site.

AB350-ASA1,13 Section 13. 551.305 (9) of the statutes is amended to read:

AB350-ASA1,17,6 551.305 (9) Periodic reports. While a registration statement is effective, a rule adopted or order issued under this chapter may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering. No report may be required under this subsection of a financial institution holding company.

AB350-ASA1,14 Section 14. 551.401 (1) of the statutes is amended to read:

AB350-ASA1,17,11 551.401 (1) Registration requirement. It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under sub. (2) or (4) or s. 551.205 (1) (b) 2.

AB350-ASA1,15 Section 15. 551.402 (2) (b) of the statutes is amended to read:

AB350-ASA1,17,14 551.402 (2) (b) An individual who represents a broker-dealer that is exempt under s. 551.205 (1) (b) 2. or 551.401 (2) or (4).

AB350-ASA1,16 Section 16. 551.402 (2) (f) of the statutes is amended to read:

AB350-ASA1,17,21 551.402 (2) (f) An individual who represents a broker-dealer registered in this state under s. 551.401 (1) or exempt from registration under s. 551.205 (1) (b) 2. or 551.401 (2) in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of $100,000,000 acting for the account of others pursuant to discretionary authority in a signed record.

AB350-ASA1,17 Section 17. 551.605 (3) of the statutes is renumbered 551.605 (3) (am), and 551.605 (3) (am) (intro.), as renumbered, is amended to read:

AB350-ASA1,18,5 551.605 (3) (am) (intro.) Subject to section 15 (h) of the Securities Exchange Act and section 222 of the Investment Advisers Act of 1940, and except as provided in par. (bm), the administrator may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this chapter. A Except as provided in par. (bm), a rule adopted or order issued under this chapter may establish:

AB350-ASA1,18 Section 18. 551.605 (3) (bm) of the statutes is created to read:

AB350-ASA1,18,12 551.605 (3) (bm) 1.   Except as provided in subd. 2., a financial institution holding company whose securities have been registered under this chapter shall not be required to prepare or distribute to shareholders or provide to the department of financial institutions, at any time after such registration, any financial statements, financial information, annual reports, or other periodic reports except to the extent required under ss. 180.1620 and 180.1622.

AB350-ASA1,18,18 2. Each financial institution holding company whose securities have been registered under this chapter and are held by 100 or more persons in this state shall distribute to the security holders not more than 120 days after the end of each fiscal year the annual financial statements prepared under s. 180.1620. This subdivision does not apply to a financial institution holding company that has any securities registered under section 12 of the Securities Exchange Act of 1934 (15 USC 78l).

AB350-ASA1,18,21 3. If any financial statement is required of a financial institution holding company under this chapter, the financial institution holding company shall not be required to do any of the following:

AB350-ASA1,18,23 a. Except as may be required under s. 180.1620, have the financial statement prepared in accordance with generally accepted accounting principles.

AB350-ASA1,18,25 b. Have the financial statement examined and reported upon or reviewed by or compiled by any certified public accountant.

AB350-ASA1,19 Section 19. 551.607 (2) (g) of the statutes is created to read:

AB350-ASA1,19,5 551.607 (2) (g) Any information or record received under s. 551.202 (26) (k) relating to payments for securities, the copy of the disclosure statement provided to the administrator under s. 551.202 (26) (f) 2., and any information or record obtained by the division under s. 551.205 (1) (c).

AB350-ASA1,20 Section 20. 551.614 (1m) of the statutes is created to read:

AB350-ASA1,19,11 551.614 (1m) Filing fees relating to certain registration exemptions. There shall be a nonrefundable filing fee of $50 for every notice of claim of exemption filed under s. 551.202 (26) (f) 1., a nonrefundable filing fee of $50 for every notice provided under s. 551.202 (27) (h), and a nonrefundable filing fee of $100 for every statement filed under s. 551.205 (1) (b) 1.

AB350-ASA1,21 Section 21. Initial applicability.

AB350-ASA1,19,15 (1) The treatment of sections 551.102 (4m) and (11) (o), 551.202 (13) (ar), 551.202 (14m), and 551.202 (24m) of the statutes first applies to securities offered or sold on the effective date of this subsection.

AB350-ASA1,19,19 (2) The treatment of sections 551.102 (8m) and (9m), 551.202 (26) and (27), 551.205, 551.401 (1), 551.402 (2) (b) and (f), 551.607 (2) (g), and 551.614 (1m) of the statutes first applies to securities offered or sold on the first day of the 7th month beginning after the effective date of this subsection.

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