Illinois Adopts Intrastate Online Investing Exemption

In May 2015, Illinois passed a legislation allowing companies to invest in smaller companies through equity crowdfunding platforms. The new legislation will encourage diversification and help Illinois become a more small business-friendly state.

The law establish the following rules:

• Investors:

Non-accredited investors, with a net worth of less than $1 million and who make less than $200,000 per year can invest through online platforms in local SMEs. However they can not exceed $5,000 per year. There is no limit, instead for accredited investors.

• Companies:
  

Those issuers with audited financial statements can raise up to $4 million per year, and those without can raise up to $1 million per year.

• Platforms:
  

The digital investing portals, as well as the issuers, must establish commercially reasonable measures for limiting access to information about Illinois residents. They are also exempt from registering as broker-dealer or investment advisers, provided some conditions are met. The rules also state that the  portal shall be owned by an entity organized, or otherwise qualified to do business, in Illinois and in good standing.

The bill which was only recently approved will make Illinois the 19th state adopting an intrastate crowdfunding exemption. It is still a question of what will happen to all these intrastate legal frameworks when Title IV of the JOBS Act will enter into effect.

References
Zeoli, A. (2015). Illinois Crowdfunding Bill Gets Approval in Both House & Senate. Crowdfundinsider

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About the author - Irene Tordera

Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.