LRBs0114/1
ARG:eev:rs
2013 - 2014 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO ASSEMBLY BILL 350
September 20, 2013 - Offered by Representatives Craig and Weininger.
AB350-ASA1,1,7 1An Act to renumber and amend 551.605 (3); to amend 551.102 (11) (o),
2551.305 (9), 551.401 (1), 551.402 (2) (b) and 551.402 (2) (f); and to create 227.01
3(13) (zz), 551.102 (4m), 551.102 (8m), 551.102 (9m), 551.202 (13) (ar), 551.202
4(14m), 551.202 (24m), 551.202 (26), 551.202 (27), 551.205, 551.206, 551.605 (3)
5(bm), 551.607 (2) (g) and 551.614 (1m) of the statutes; relating to: exemptions
6from securities registration requirements, reporting by certain financial
7institution holding companies, and granting rule-making authority.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB350-ASA1,1 8Section 1. 227.01 (13) (zz) of the statutes is created to read:
AB350-ASA1,1,109 227.01 (13) (zz) Adjusts, under s. 551.206, the amounts specified in s. 551.202
10(26) (c) 1. a. and 1. b. and (27) (c) 1. a. and 1. b.
AB350-ASA1,2 11Section 2. 551.102 (4m) of the statutes is created to read:
AB350-ASA1,2,3
1551.102 (4m) "Certified investor" means an individual who is a resident of this
2state and who, at the time of an offer or sale of securities, satisfies any of the
3following:
AB350-ASA1,2,74 (a) Has an individual net worth, or joint net worth with the individual's spouse,
5of at least $750,000. For purposes of calculating net worth under this paragraph, the
6individual's primary residence shall be included as an asset and indebtedness
7secured by the primary residence shall be included as a liability.
AB350-ASA1,2,118 (b) Had an individual income in excess of $100,000 in each of the two most
9recent years or joint income with the individual's spouse in excess of $150,000 in each
10of those years and has a reasonable expectation of reaching the same income level
11in the current year.
AB350-ASA1,3 12Section 3. 551.102 (8m) of the statutes is created to read:
AB350-ASA1,2,1513 551.102 (8m) "Financial institution holding company" means a bank holding
14company, as defined in 12 USC 1841 (a), or a savings and loan holding company, as
15defined in 12 USC 1467a (a) (1) (D).
AB350-ASA1,4 16Section 4. 551.102 (9m) of the statutes is created to read:
AB350-ASA1,2,1817 551.102 (9m) "Funding portal" has the meaning given in section 3 (a) (80) of
18the Securities Exchange Act of 1934 (15 USC 78c (a) (80)).
AB350-ASA1,5 19Section 5. 551.102 (11) (o) of the statutes is amended to read:
AB350-ASA1,2,2220 551.102 (11) (o) Any other person, other than an individual, of institutional
21character with total assets in excess of $10,000,000 $2,500,000 not organized for the
22specific purpose of evading this chapter.
AB350-ASA1,6 23Section 6. 551.202 (13) (ar) of the statutes is created to read:
AB350-ASA1,3,324 551.202 (13) (ar) A certified investor, or a person whom the issuer reasonably
25believes is a certified investor at the time of the sale or offer of the security, if the

1transaction meets the requirements of the federal exemption for intrastate offerings
2in section 3 (a) (11) of the Securities Act of 1933 (15 USC 77c (a) (11)) and Rule 147
3adopted under the Securities Act of 1933 (17 CFR 230.147).
AB350-ASA1,7 4Section 7. 551.202 (14m) of the statutes is created to read:
AB350-ASA1,3,85 551.202 (14m) (a) Any transaction pursuant to an offer directed by the offeror
6to not more than 100 residents of this state, excluding those persons designated in
7sub. (13) (a), (am), and (ar) but including persons exempt under sub. (24), if all of the
8following apply:
AB350-ASA1,3,119 1. The issuer is a business entity that is organized under the laws of this state
10and authorized to do business in this state, that has its principal office in this state,
11and that has a majority of its full-time employees working in this state.
AB350-ASA1,3,1412 2. No commission or other remuneration is paid or given, directly or indirectly,
13for any person's participation in the offer or sale of securities for the issuer unless the
14person is registered as a broker-dealer or agent under this chapter.
AB350-ASA1,3,1615 3. No general solicitation or general advertising is made in connection with the
16offer to sell or sale of the securities unless it has been permitted by the administrator.
AB350-ASA1,3,1817 (b) The exemption under this subsection and the exemption under sub. (27)
18may be used in conjunction with each other.
AB350-ASA1,8 19Section 8. 551.202 (24m) of the statutes is created to read:
AB350-ASA1,3,2120 551.202 (24m) Any offer or sale of its securities by an issuer to resident of this
21state if all of the following apply:
AB350-ASA1,3,2422 (a) The issuer is a business entity that is organized under the laws of this state
23and authorized to do business in this state, that has its principal office in this state
24and that has a majority of its full-time employees working in this state.
AB350-ASA1,4,3
1(b) The aggregate number of persons holding directly or indirectly all of the
2issuer's securities, after the securities to be issued are sold, does not exceed 100,
3exclusive of persons under sub. (13) (a), (am), and (ar).
AB350-ASA1,4,64 (c) No commission or other remuneration is paid or given, directly or indirectly,
5for soliciting any person in this state in connection with the offer to sell or sale of the
6securities, except to broker-dealers and agents licensed in this state.
AB350-ASA1,4,87 (d) No advertising is published in connection with the offer to sell or sale of the
8securities unless it has been permitted by the division of securities.
AB350-ASA1,9 9Section 9. 551.202 (26) of the statutes is created to read:
AB350-ASA1,4,1110 551.202 (26) An offer or sale of a security by an issuer if the offer or sale is
11conducted in accordance with all of the following requirements:
AB350-ASA1,4,1312 (a) The issuer of the security is a business entity organized under the laws of
13this state and authorized to do business in this state.
AB350-ASA1,4,1614 (b) The transaction meets the requirements of the federal exemption for
15intrastate offerings in section 3 (a) (11) of the Securities Act of 1933 (15 USC 77c (a)
16(11)) and Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147).
AB350-ASA1,4,2017 (c) 1. Except as provided in subd. 2., the sum of all cash and other consideration
18to be received for all sales of the security in reliance on the exemption under this
19subsection, excluding sales to any accredited investor, certified investor, or
20institutional investor, does not exceed the following amount:
AB350-ASA1,5,221 a. If the issuer has not undergone and made available to each prospective
22investor and the administrator the documentation resulting from a financial audit
23of its most recently completed fiscal year which complies with generally accepted
24accounting principles, $1,000,000 subject to adjustment under s. 551.206, less the
25aggregate amount received for all sales of securities by the issuer within the 12

1months before the first offer or sale made in reliance on the exemption under this
2subsection.
AB350-ASA1,5,83 b. If the issuer has undergone and made available to each prospective investor
4and the administrator the documentation resulting from a financial audit of its most
5recently completed fiscal year which complies with generally accepted accounting
6principles, $2,000,000 subject to adjustment under s. 551.206, less the aggregate
7amount received for all sales of securities by the issuer within the 12 months before
8the first offer or sale made in reliance on the exemption under this subsection.
AB350-ASA1,5,139 2. An offer or sale to an officer, director, partner, trustee, or individual
10occupying similar status or performing similar functions with respect to the issuer
11or to a person owning 10 percent or more of the outstanding shares of any class or
12classes of securities of the issuer does not count toward the monetary limitation in
13subd. 1. a. and 1. b.
AB350-ASA1,5,1514 (d) The issuer does not accept more than $5,000 from any single purchaser
15unless the purchaser is an accredited investor or certified investor.
AB350-ASA1,5,1816 (e) The offering under this subsection is made exclusively through one or more
17Internet sites and each Internet site is registered with the division under s. 551.205
18(1) (b).
AB350-ASA1,5,2319 (f) Not less than 10 days prior to the commencement of an offering of securities
20in reliance on the exemption under this subsection, the issuer files a notice with the
21administrator, in writing or in electronic form as prescribed by the administrator,
22which the administrator shall make available as an electronic document on the
23department of financial institutions Internet site, containing all of the following:
AB350-ASA1,6,3
11. A notice of claim of exemption from registration, specifying that the issuer
2will be conducting an offering in reliance on the exemption under this subsection,
3accompanied by the filing fee specified in s. 551.614 (1m).
AB350-ASA1,6,54 2. A copy of the disclosure statement to be provided to prospective investors in
5connection with the offering, containing all of the following:
AB350-ASA1,6,116 a. A description of the company, its type of entity, the address and telephone
7number of its principal office, its history, its business plan, and the intended use of
8the offering proceeds, including any amounts to be paid, as compensation or
9otherwise, to any owner, executive officer, director, managing member, or other
10person occupying a similar status or performing similar functions on behalf of the
11issuer.
AB350-ASA1,6,1312 b. The identity of all persons owning more than 10 percent of the ownership
13interests of any class of securities of the company.
AB350-ASA1,6,1614 c. The identity of the executive officers, directors, managing members, and
15other persons occupying a similar status or performing similar functions in the name
16of and on behalf of the issuer, including their titles and their prior experience.
AB350-ASA1,6,2417 d. The terms and conditions of the securities being offered and of any
18outstanding securities of the company; the minimum and maximum amount of
19securities being offered, if any; either the percentage ownership of the company
20represented by the offered securities or the valuation of the company implied by the
21price of the offered securities; the price per share, unit, or interest of the securities
22being offered; any restrictions on transfer of the securities being offered; and a
23disclosure of any anticipated future issuance of securities that might dilute the value
24of securities being offered.
AB350-ASA1,7,5
1e. The identity of any person who has been or will be retained by the issuer to
2assist the issuer in conducting the offering and sale of the securities, including any
3Internet site operator but excluding persons acting solely as accountants or
4attorneys and employees whose primary job responsibilities involve the operating
5business of the issuer rather than assisting the issuer in raising capital.
AB350-ASA1,7,76 f. For each person identified as required under subd. 2. e., a description of the
7consideration being paid to the person for such assistance.
AB350-ASA1,7,98 g. A description of any litigation or legal proceedings involving the company or
9its management.
AB350-ASA1,7,1210 h. The names and addresses, including the Uniform Resource Locator, of each
11Internet site that will be used by the issuer to offer or sell securities under this
12subsection.
AB350-ASA1,7,1613 i. Any additional information material to the offering, including, if appropriate,
14a discussion of significant factors that make the offering speculative or risky. This
15discussion shall be concise and organized logically and may not be limited to risks
16that could apply to any issuer or any offering.
AB350-ASA1,7,2417 3. An escrow agreement with a bank, savings bank, savings and loan
18association, or credit union chartered under the laws of this state in which the
19investor funds will be deposited, providing that all offering proceeds will be released
20to the issuer only when the aggregate capital raised from all investors is equal to or
21greater than the minimum target offering amount specified in the business plan as
22necessary to implement the business plan and that all investors may cancel their
23commitments to invest if that target offering amount is not raised by the time stated
24in the disclosure document.
AB350-ASA1,8,6
1(g) The issuer is not, either before or as a result of the offering, an investment
2company, as defined in section 3 of the Investment Company Act of 1940 (15 USC
380a-3
), or an entity that would be an investment company but for the exclusions
4provided in section 3 (c) of the Investment Company Act of 1940 (15 USC 80a-3 (c)),
5or subject to the reporting requirements of section 13 or 15 (d) of the Securities
6Exchange Act of 1934 (15 USC 78m or 78o (d)).
AB350-ASA1,8,117 (h) The issuer informs all prospective purchasers of securities offered under
8this subsection that the securities have not been registered under federal or state
9securities law and that the securities are subject to limitations on resale. The issuer
10shall display the following legend conspicuously on the cover page of the disclosure
11document:
AB350-ASA1,9,312 IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON
13THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE
14OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE
15SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
16STATE SECURITIES COMMISSION OR DIVISION OR OTHER REGULATORY
17AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
18CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
19DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
20OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
21TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
22RESOLD EXCEPT AS PERMITTED BY SUBSECTION (e) OF SEC RULE 147 (17
23CFR 230.147
(e)) AS PROMULGATED UNDER THE SECURITIES ACT OF 1933,
24AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
25PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS

1SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
2FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
3TIME.
AB350-ASA1,9,54 (i) The issuer requires each purchaser to certify in writing or electronically as
5follows:
AB350-ASA1,9,66 I UNDERSTAND AND ACKNOWLEDGE THAT:
AB350-ASA1,9,97 I am investing in a high-risk, speculative business venture. I may lose all of
8my investment, or under some circumstances more than my investment, and I can
9afford this loss.
AB350-ASA1,9,1310 This offering has not been reviewed or approved by any state or federal
11securities commission or division or other regulatory authority and that no such
12person or authority has confirmed the accuracy or determined the adequacy of any
13disclosure made to me relating to this offering.
AB350-ASA1,9,1714 The securities I am acquiring in this offering are illiquid, that there is no ready
15market for the sale of such securities, that it may be difficult or impossible for me to
16sell or otherwise dispose of this investment, and that, accordingly, I may be required
17to hold this investment indefinitely.
AB350-ASA1,9,2018 I may be subject to tax on my share of the taxable income and losses of the
19company, whether or not I have sold or otherwise disposed of my investment or
20received any dividends or other distributions from the company.
AB350-ASA1,9,2121 .... (Signature)
AB350-ASA1,9,2422 (j) The issuer obtains from each purchaser of a security offered under this
23subsection evidence that the purchaser is a resident of this state and, if applicable,
24is an accredited investor or certified investor.
AB350-ASA1,10,4
1(k) All payments for purchase of securities offered under this subsection are
2directed to and held by the financial institution specified in par. (f) 3. The bank or
3depository institution shall notify the administrator of the receipt of payments for
4securities. This information shall be confidential as provided in s. 551.607 (2) (g).
AB350-ASA1,10,85 (L) The issuer of securities offered under this subsection provides a copy of the
6disclosure document provided to the administrator under par. (f) 2. to each
7prospective investor at the time the offer of securities is made to the prospective
8investor.
AB350-ASA1,10,119 (m) No offer or sale of a different class or series of security has been made by
10the issuer in reliance on the exemption under this subsection or sub. (27) during the
11immediately preceding 12-month period.
AB350-ASA1,10 12Section 10. 551.202 (27) of the statutes is created to read:
AB350-ASA1,10,1413 551.202 (27) An offer or sale of a security by an issuer if the offer or sale is
14conducted in accordance with all of the following requirements:
AB350-ASA1,10,1615 (a) The issuer of the security is a business entity organized under the laws of
16this state and authorized to do business in this state.
AB350-ASA1,10,1917 (b) The transaction meets the requirements of the federal exemption for
18intrastate offerings in section 3 (a) (11) of the Securities Act of 1933 (15 USC 77c (a)
19(11)) and Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147).
AB350-ASA1,10,2320 (c) 1. Except as provided in subd. 2., the sum of all cash and other consideration
21to be received for all sales of the security in reliance on the exemption under this
22subsection, excluding sales to any accredited investor, certified investor, or
23institutional investor, does not exceed the following amount:
AB350-ASA1,11,524 a. If the issuer has not undergone and made available to each prospective
25investor and the administrator the documentation resulting from a financial audit

1of its most recently completed fiscal year which complies with generally accepted
2accounting principles, $1,000,000 subject to adjustment under s. 551.206, less the
3aggregate amount received for all sales of securities by the issuer within the 12
4months before the first offer or sale made in reliance on the exemption under this
5subsection.
AB350-ASA1,11,116 b. If the issuer has undergone and made available to each prospective investor
7and the administrator the documentation resulting from a financial audit of its most
8recently completed fiscal year which complies with generally accepted accounting
9principles, $2,000,000 subject to adjustment under s. 551.206, less the aggregate
10amount received for all sales of securities by the issuer within the 12 months before
11the first offer or sale made in reliance on the exemption under this subsection.
AB350-ASA1,11,1612 2. An offer or sale to an officer, director, partner, trustee, or individual
13occupying similar status or performing similar functions with respect to the issuer
14or to a person owning 10 percent or more of the outstanding shares of any class or
15classes of securities of the issuer does not count toward the monetary limitation in
16subd. 1. a. and 1. b.
AB350-ASA1,11,1817 (d) The issuer does not accept more than $5,000 from any single purchaser
18unless the purchaser is an accredited investor or certified investor.
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