The second transaction exemption to securities registration created by the bill
is similar to the first. Under the second exemption, an offer or sale of a security by
an issuer is exempt from registration if the offer or sale is conducted in accordance
with specified requirements, including the following: 1) the issuer of the security is
a business entity organized under the laws of this state and authorized to do business
in this state; 2) the transaction meets exemption requirements under federal law and
rules of the SEC for intrastate securities offerings; 3) with certain exceptions, the
amount of money to be received for sales of the security in reliance on the exemption
does not exceed either $2,000,000 or $1,000,000, adjusted every five years for
inflation, depending on whether the issuer has or has not, respectively, undergone
a financial audit and made it available; 4) the issuer does not accept more than
$5,000 from any single purchaser unless the purchaser is an accredited investor
under state law; 5) no commission or other remuneration is paid for any person's
participation in the offer or sale of securities unless the person is registered as a
broker-dealer or securities agent; 6) unless permitted by the division, no general
solicitation or general advertising is made for the securities; 7) all funds received
from investors are deposited into a financial institution chartered in this state, and
all the funds are used in accordance with representations made to investors; 8) before
the 100th sale of the security, the issuer pays a $50 fee and provides a notice of the
offering to the division containing specified information; 9) the issuer is not an

investment company or an SEC reporting company; 10) the issuer informs all
purchasers that the securities have not been registered and makes disclosures
required by SEC rule, including disclosures related to limitations on resale of the
securities; and 11) the issuer has not made an offer or sale of a different class or series
of security under either of these two additional transaction exemptions during the
immediately preceding 12-month period.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB350,1 1Section 1. 227.01 (13) (zz) of the statutes is created to read:
AB350,5,32 227.01 (13) (zz) Adjusts, under s. 551.206, the amounts specified in s. 551.202
3(26) (c) 1. a. and 1. b. and (27) (c) 1. a. and 1. b.
AB350,2 4Section 2. 551.102 (1g) of the statutes is created to read:
AB350,5,105 551.102 (1g) "Accredited investor," except as provided in ss. 551.401 (2) (cm),
6551.403 (2) (a) 2m., and 551.405 (2) (a) 2m., has the meaning given in Rule 501 (a)
7(1), (2), (3), (4), (7), and (8) adopted under the Securities Act of 1933 (17 CFR 230.501
8(a) (1), (2), (3), (4), (7), and (8)) and also means any person who comes within any of
9the following categories, or whom the issuer reasonably believes comes within any
10of the following categories, at the time of the sale of the securities to that person:
AB350,5,1211 (a) 1. Subject to subd. 2., any natural person whose individual net worth, or
12joint net worth with that person's spouse, exceeds $750,000.
AB350,6,213 2. For purposes of calculating net worth under subd. 1., the person's primary
14residence shall be included as an asset and indebtedness secured by the primary
15residence shall be included as a liability. This subdivision does not apply to any
16calculation of a person's net worth made in connection with a purchase of securities
17in accordance with a right to purchase the securities if the right was held by the
18person on July 20, 2010, the person qualified as an accredited investor under 17 CFR

1230.501 (a) (5) on the basis of net worth at the time the person acquired the right, and
2the person held securities of the same issuer, other than this right, on July 20, 2010.
AB350,6,63 (b) Any natural person who had an individual income in excess of $100,000 in
4each of the two most recent years or joint income with that person's spouse in excess
5of $150,000 in each of those years and has a reasonable expectation of reaching the
6same income level in the current year.
AB350,3 7Section 3. 551.102 (11) (o) of the statutes is amended to read:
AB350,6,108 551.102 (11) (o) Any other person, other than an individual, of institutional
9character with total assets in excess of $10,000,000 $2,500,000 not organized for the
10specific purpose of evading this chapter.
AB350,4 11Section 4. 551.201 (3) (d) of the statutes is created to read:
AB350,6,1512 551.201 (3) (d) A bank holding company, as defined in 12 USC 1841 (a), or
13savings and loan holding company, as defined in 12 USC 1467a (a) (1) (D), with no
14significant assets other than securities of one or more entities specified in par. (a),
15(b), or (c).
AB350,5 16Section 5. 551.202 (13) (am) (intro.) of the statutes is amended to read:
AB350,6,2417 551.202 (13) (am) (intro.) An accredited investor, as defined in Rule 501 (a)
18adopted under the Securities Act of 1933 (17 CFR 230.501 (a)),
provided that prior
19to the sale in this state to an accredited investor described in Rule 501 (a) (5) or (6)
20adopted under the Securities Act of 1933
s. 551.102 (1g) (a) or (b), the seller files a
21consent to service of process with the administrator in the form required under s.
22551.611. Failure to file the consent as required is a cause for administrative action
23by the administrator under s. 551.604 but does not result in the loss of this
24exemption. This consent is not required to be filed if any of the following apply:
AB350,6 25Section 6. 551.202 (14) (a) (intro.) of the statutes is amended to read:
AB350,7,5
1551.202 (14) (a) (intro.) Subject to par. (b), any transaction pursuant to an offer
2directed by the offeror to not more than 25 50 persons in this state excluding those
3persons designated in sub. (13) but including persons exempt under sub. (24), during
4any period of 12 consecutive months whether or not the offeror or any of the offerees
5is then present in this state if all of the following apply:
AB350,7 6Section 7. 551.202 (24) of the statutes is amended to read:
AB350,7,137 551.202 (24) Any offer or sale of its securities by an issuer, having its principal
8office in this state, if the aggregate number of persons holding directly or indirectly
9all of the issuer's securities, after the securities to be issued are sold, does not exceed
1025 50, exclusive of persons under sub. (13), if no commission or other remuneration
11is paid or given directly or indirectly for soliciting any person in this state, except to
12broker-dealers and agents licensed in this state, and if no advertising is published
13unless it has been permitted by the division of securities.
AB350,8 14Section 8. 551.202 (26) of the statutes is created to read:
AB350,7,1615 551.202 (26) An offer or sale of a security by an issuer if the offer or sale is
16conducted in accordance with all of the following requirements:
AB350,7,1817 (a) The issuer of the security is a business entity organized under the laws of
18this state and authorized to do business in this state.
AB350,7,2119 (b) The transaction meets the requirements of the federal exemption for
20intrastate offerings in section 3 (a) (11) of the Securities Act of 1933 (15 USC 77c (a)
21(11)) and Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147).
AB350,7,2522 (c) 1. Except as provided in subd. 2., the sum of all cash and other consideration
23to be received for all sales of the security in reliance on the exemption under this
24subsection, excluding sales to any accredited investor or institutional investor, does
25not exceed the following amount:
AB350,8,7
1a. If the issuer has not undergone and made available to each prospective
2investor and the administrator the documentation resulting from a financial audit
3of its most recently completed fiscal year which complies with generally accepted
4accounting principles, $1,000,000 subject to adjustment under s. 551.206, less the
5aggregate amount received for all sales of securities by the issuer within the 12
6months before the first offer or sale made in reliance on the exemption under this
7subsection.
AB350,8,138 b. If the issuer has undergone and made available to each prospective investor
9and the administrator the documentation resulting from a financial audit of its most
10recently completed fiscal year which complies with generally accepted accounting
11principles, $2,000,000 subject to adjustment under s. 551.206, less the aggregate
12amount received for all sales of securities by the issuer within the 12 months before
13the first offer or sale made in reliance on the exemption under this subsection.
AB350,8,1814 2. An offer or sale to an officer, director, partner, trustee, or individual
15occupying similar status or performing similar functions with respect to the issuer
16or to a person owning 10 percent or more of the outstanding shares of any class or
17classes of securities of the issuer does not count toward the monetary limitation in
18subd. 1. a. and 1. b.
AB350,8,2019 (d) The issuer does not accept more than $5,000 from any single purchaser
20unless the purchaser is an accredited investor.
AB350,8,2321 (e) The offering under this subsection is made exclusively through one or more
22Internet sites and each Internet site is registered with the division under s. 551.205
23(1) (b).
AB350,9,324 (f) Not less than 10 days prior to the commencement of an offering of securities
25in reliance on the exemption under this subsection, the issuer files a notice with the

1administrator, in writing or in electronic form as prescribed by the administrator,
2which the administrator shall make available as an electronic document on the
3department of financial institutions Internet site, containing all of the following:
AB350,9,64 1. A notice of claim of exemption from registration, specifying that the issuer
5will be conducting an offering in reliance on the exemption under this subsection,
6accompanied by the filing fee specified in s. 551.614 (1m).
AB350,9,87 2. A copy of the disclosure statement to be provided to prospective investors in
8connection with the offering, containing all of the following:
AB350,9,149 a. A description of the company, its type of entity, the address and telephone
10number of its principal office, its history, its business plan, and the intended use of
11the offering proceeds, including any amounts to be paid, as compensation or
12otherwise, to any owner, executive officer, director, managing member, or other
13person occupying a similar status or performing similar functions on behalf of the
14issuer.
AB350,9,1615 b. The identity of all persons owning more than 10 percent of the ownership
16interests of any class of securities of the company.
AB350,9,1917 c. The identity of the executive officers, directors, managing members, and
18other persons occupying a similar status or performing similar functions in the name
19of and on behalf of the issuer, including their titles and their prior experience.
AB350,9,2420 d. The terms and conditions of the securities being offered and of any
21outstanding securities of the company, the minimum and maximum amount of
22securities being offered, if any, and either the percentage ownership of the company
23represented by the offered securities or the valuation of the company implied by the
24price of the offered securities.
AB350,10,5
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.
AB350,10,76 f. For each person identified as required under subd. 2. e., a description of the
7consideration being paid to the person for such assistance.
AB350,10,98 g. A description of any litigation or legal proceedings involving the company or
9its management.
AB350,10,1210 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.
AB350,10,1613 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.
AB350,10,2417 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.
AB350,11,6
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)).
AB350,11,117 (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:
AB350,12,312 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.
AB350,12,54 (i) The issuer requires each purchaser to certify in writing or electronically as
5follows:
AB350,12,66 I UNDERSTAND AND ACKNOWLEDGE THAT:
AB350,12,87 I am investing in a high-risk, speculative business venture. I may lose all of
8my investment, and I can afford the loss of my investment.
AB350,12,129 This offering has not been reviewed or approved by any state or federal
10securities commission or division or other regulatory authority and that no such
11person or authority has confirmed the accuracy or determined the adequacy of any
12disclosure made to me relating to this offering.
AB350,12,1613 The securities I am acquiring in this offering are illiquid, that there is no ready
14market for the sale of such securities, that it may be difficult or impossible for me to
15sell or otherwise dispose of this investment, and that, accordingly, I may be required
16to hold this investment indefinitely.
AB350,12,1917 I may be subject to tax on my share of the taxable income and losses of the
18company, whether or not I have sold or otherwise disposed of my investment or
19received any dividends or other distributions from the company.
AB350,12,2020 .... (Signature)
AB350,12,2321 (j) The issuer obtains from each purchaser of a security offered under this
22subsection evidence that the purchaser is a resident of this state and, if applicable,
23is an accredited investor.
AB350,13,224 (k) All payments for purchase of securities offered under this subsection are
25directed to and held by the financial institution specified in par. (f) 3. The bank or

1depository institution shall notify the administrator of the receipt of payments for
2securities. This information shall be confidential as provided in s. 551.607 (2) (g).
AB350,13,63 (L) The issuer of securities offered under this subsection provides a copy of the
4disclosure document provided to the administrator under par. (f) 2. to each
5prospective investor at the time the offer of securities is made to the prospective
6investor.
AB350,13,97 (m) No offer or sale of a different class or series of security has been made by
8the issuer in reliance on the exemption under this subsection or sub. (27) during the
9immediately preceding 12-month period.
AB350,9 10Section 9. 551.202 (27) of the statutes is created to read:
AB350,13,1211 551.202 (27) An offer or sale of a security by an issuer if the offer or sale is
12conducted in accordance with all of the following requirements:
AB350,13,1413 (a) The issuer of the security is a business entity organized under the laws of
14this state and authorized to do business in this state.
AB350,13,1715 (b) The transaction meets the requirements of the federal exemption for
16intrastate offerings in section 3 (a) (11) of the Securities Act of 1933 (15 USC 77c (a)
17(11)) and Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147).
AB350,13,2118 (c) 1. Except as provided in subd. 2., the sum of all cash and other consideration
19to be received for all sales of the security in reliance on the exemption under this
20subsection, excluding sales to any accredited investor or institutional investor, does
21not exceed the following amount:
AB350,14,322 a. If the issuer has not undergone and made available to each prospective
23investor and the administrator the documentation resulting from a financial audit
24of its most recently completed fiscal year which complies with generally accepted
25accounting principles, $1,000,000 subject to adjustment under s. 551.206, less the

1aggregate amount received for all sales of securities by the issuer within the 12
2months before the first offer or sale made in reliance on the exemption under this
3subsection.
AB350,14,94 b. If the issuer has undergone and made available to each prospective investor
5and the administrator the documentation resulting from a financial audit of its most
6recently completed fiscal year which complies with generally accepted accounting
7principles, $2,000,000 subject to adjustment under s. 551.206, less the aggregate
8amount received for all sales of securities by the issuer within the 12 months before
9the first offer or sale made in reliance on the exemption under this subsection.
AB350,14,1410 2. An offer or sale to an officer, director, partner, trustee, or individual
11occupying similar status or performing similar functions with respect to the issuer
12or to a person owning 10 percent or more of the outstanding shares of any class or
13classes of securities of the issuer does not count toward the monetary limitation in
14subd. 1. a. and 1. b.
AB350,14,1615 (d) The issuer does not accept more than $5,000 from any single purchaser
16unless the purchaser is an accredited investor.
AB350,14,1917 (e) No commission or other remuneration is paid or given, directly or indirectly,
18for any person's participation in the offer or sale of securities for the issuer unless the
19person is registered as a broker-dealer or agent under this chapter.
AB350,14,2120 (f) No general solicitation or general advertising is made in connection with the
21offer to sell or sale of the securities unless it has been permitted by the administrator.
AB350,14,2422 (g) All funds received from investors are deposited into a bank, savings bank,
23savings and loan association, or credit union chartered under the laws of this state,
24and all the funds are used in accordance with representations made to investors.
AB350,15,6
1(h) Before the 100th sale of the security, the issuer provides a notice to the
2administrator in writing or in electronic form, accompanied by the filing fee specified
3in s. 551.614 (1m). The administrator shall prescribe the form required for the notice
4and make the form available as an electronic document on the department of
5financial institutions Internet site. Notwithstanding s. 551.204 (1) and (3), the
6notice shall be limited to all of the following:
AB350,15,87 1. Stating that the issuer is conducting an offering in reliance on the exemption
8under this subsection.
AB350,15,99 2. Identifying the names and addresses of all of the following persons:
AB350,15,1010 a. The issuer.
AB350,15,1211 b. All persons who will be involved in the offer or sale of securities on behalf of
12the issuer.
AB350,15,1413 c. The bank, savings bank, savings and loan association, or credit union in
14which investor funds will be deposited.
AB350,15,1815 (i) The issuer is not, either before or as a result of the offering, an investment
16company, as defined in section 3 of the Investment Company Act of 1940 (15 USC
1780a-3
), or subject to the reporting requirements of section 13 or 15 (d) of the
18Securities Exchange Act of 1934 (15 USC 78m or 78o (d)).
AB350,15,2119 (j) The issuer informs all purchasers that the securities have not been
20registered under this chapter and makes the disclosures required under subsection
21(f) of Rule 147 adopted under the Securities Act of 1933 (17 CFR 230.147 (f)).
AB350,15,2422 (k) No offer or sale of a different class or series of security has been made by
23the issuer in reliance on the exemption under this subsection or sub. (26) during the
24immediately preceding 12-month period.
AB350,10 25Section 10. 551.205 of the statutes is created to read:
AB350,16,4
1551.205 Additional provisions related to crowdfunding exemption for
2intrastate offerings through Internet sites.
(1) All of the following
3requirements apply to an offer or sale of securities pursuant to the exemption under
4s. 551.202 (26):
AB350,16,75 (a) Prior to any offer or sale of securities, the issuer shall provide to the Internet
6site operator evidence that the issuer is organized under the laws of this state and
7is authorized to do business in this state.
AB350,16,118 (b) 1. The Internet site operator shall register with the division by filing a
9statement, which the administrator shall make available as an electronic document
10on the department of financial institutions Internet site, accompanied by the filing
11fee specified in s. 551.614 (1m), that includes all of the following:
AB350,16,1312 a. That the Internet site operator is a business entity organized under the laws
13of this state and authorized to do business in this state.
AB350,16,1514 b. That the Internet site is being utilized to offer and sell securities pursuant
15to the exemption under s. 551.202 (26).
AB350,16,1716 c. The identity and location of, and contact information for, the Internet site
17operator.
AB350,16,1918 d. Except as provided in subd. 2., that the Internet site operator is registered
19as a broker-dealer under s. 551.401.
AB350,16,2220 2. The Internet site operator is not required to register as a broker-dealer
21under s. 551.401 if all of the following apply with respect to the Internet site and its
22operator:
AB350,16,2323 a. It does not offer investment advice or recommendations.
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