By Scott E. Fiducci
To facilitate investment in Wisconsin businesses, on November 7, 2013 Governor Scott Walker signed the CASE (crowdfunding and securities exemptions) for Jobs Act (2013 Wisconsin Act 52) (the “Act”) into law, creating a state securities law exemption enabling Wisconsin businesses to raise up to $2 Million via online crowdfunding campaigns. Similar to the crowdfunding provisions of the federal Jumpstart Our Business Startups (JOBS) Act, Wisconsin joins only two other states – Kansas and Georgia – in enacting state-level securities law exemptions permitting crowdfunding.
The Act permits Wisconsin companies to sell equity and debt securities to Wisconsin investors through internet sites registered with the Wisconsin Department of Financial Institutions (i.e., crowdfunding). A company that desires to sell securities via crowdfunding will be required to make certain limited disclosures to investors, including a description of the company, its business, management, and past (and projected future) performance, investment risk factors, the pricing of and restrictions on the securities issued, and future offerings that could dilute an investor’s interest. The company can raise up to $1 Million in any 12-month period, with no more than $10,000 coming from any individual non-accredited or non-certified investor. If the company submits to financial audit and provides the audit results to potential investors, the company is permitted to raise up to $2 Million.
While the Wisconsin exemption is similar to the crowdfunding exemption in the federal JOBS Act, the Act is designed to be more cost-efficient, streamlined, and flexible than the federal model. Wisconsin anticipates finalizing the regulations and implementing the crowdfunding system by May 2014.
This new legislation provides a helpful tool for Wisconsin startups and other businesses that are seeking additional equity or debt financing. We will continue to keep you apprised of this opportunity as it is finalized and implemented. In the interim, if you have any questions about crowdfunding and whether it might be useful for the financial needs of your Wisconsin business, contact your Davis & Kuelthau, s.c. attorney or the author, Scott E. Fiducci, at 414.225.1428 / sfiducci@dkattorneys.com.