Helping angels lead our startups

(a)

Definitions

In this section, and for the purposes of the revisions required under subsection (b)— (1)the term angel investor group means any group that— (A)is composed of accredited investors who are interested in investing personal capital in early-stage companies; (B)holds regular meetings and has defined processes and procedures for making investment decisions, either individually or among the membership of the group as a whole; and (C)is neither associated nor affiliated with brokers, dealers, or investment advisers; and (2)the term issuer means an issuer that— (A)is a business; (B)is not in bankruptcy or receivership; and (C)is not a blank check, blind pool, or shell company. (b)

Clarification of general solicitation

(1)

In general

Not later than 180 days after the date of enactment of this Act, the Securities and Exchange Commission shall revise sections 230.500 through 230.508 of title 17, Code of Federal Regulations (referred to in this subsection as Regulation D), to require that, in carrying out the prohibition against general solicitation or general advertising under section 230.502(c) of title 17, Code of Federal Regulations, the prohibition shall not apply to a presentation or other communication made by or on behalf of an issuer at an event— (A)sponsored by— (i)the United States; (ii)any territory of the United States; (iii)the District of Columbia; (iv)any State; (v)a political subdivision of any State or territory; (vi)an agency or public instrumentality of any entity described in clauses (i) through (v); (vii)a college, university, or other institution of higher education; (viii)a nonprofit organization; (ix)an angel investor group; (x)a venture forum, venture capital association, or trade association; or (xi)any other group, person, or entity that the Securities and Exchange Commission may, by rule, determine to be appropriate; (B)where any advertising for the event does not reference any specific offering of securities by the issuer; (C)the sponsor of which— (i)does not make investment recommendations or provide investment advice to attendees of the event; (ii)does not engage in an active role in any investment negotiations between the issuer and investors attending the event; (iii)does not charge attendees of the event any fees other than reasonable administrative fees; (iv)does not receive any compensation for— (I)making introductions between investors attending the event and issuers; or (II)investment negotiations between the parties described in subclause (I); (v)makes readily available to attendees of the event a disclosure not longer than 1 page in length, as prescribed by the Securities and Exchange Commission, describing the nature of the event and the risks of investing in the issuers presenting at the event; and (vi)does not receive any compensation with respect to the event that would require registration of the sponsor as— (I)a broker or a dealer under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); or (II)an investment advisor under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.); and (D)where no specific information regarding an offering of securities by the issuer is communicated or distributed by or on behalf of the issuer, other than— (i)that the issuer is in the process of offering securities or planning to offer securities; (ii)the type and amount of securities being offered; (iii)the amount of securities being offered that have already been subscribed for; and (iv)the intended use of proceeds of the offering. (2)

Rule of construction

Paragraph (1) may only be construed as requiring the Securities and Exchange Commission to amend Regulation D with respect to presentations and communications and not with respect to purchases or sales. (3)

No pre-existing substantive relationship by reason of event

Attendance at an event described in paragraph (1) shall not qualify, by itself, as establishing a pre-existing substantive relationship between an issuer and a purchaser for the purposes of section 230.506(b) of title 17, Code of Federal Regulations.