Wednesday, March 25, 2015

NC PACES Act Crowdfunding Bill Filed in NC Senate Today

The North Carolina Providing Access to Capital for Entrepreneurs and Small Business Act (S481, the NC PACES Act) was filed today in the North Carolina Senate. The primary sponsors of the bill are Senator Barringer, Senator Hise, and Senator Gunn. The NC PACES Act is a state securties law exemption that enables a new way to finance start-ups and small businesses in our state known as investment crowdfunding.

Senate Bill S481 is the stand alone version of the NC JOBS/PACES Act that our working group reviewed and recommended back in January, and that the Governor and Commerce Secretary Skvarla have been promoting. The working group consists of the NC JOBS/PACES Act private sector team of attorneys and crowdfunding business experts, the NC Secretary of State Securities Division, and the NC Commerce Department. This bill is based on the original NC JOBS Act, with some enhancements recommended by the working group.
Commerce Secretary John Skvarla

The North Carolina model allows startups and small business to raise capital as debt or equity, but with a couple of new ideas allowed by the exemption. Some key features of the exemption:

  • The exemption allows accredited or non-accredited North Carolina resident investors to invest in equity or debt offerings from a North Carolina company provided the disclosure, reporting, registration, and limits described in the exemption are followed.
  • A North Carolina company is allowed to promote the offering to North Carolina residents via the web or any other method provided the disclosure, reporting, registration, and limits described in the exemption are followed.
  • A North Carolina company may raise up to $1M with non-reviewed financials, or up the $2M with reviewed or audited financials.
  • Accredited North Carolina investors may invest any amount up to the offering limit, and non-accredited North Carolina investors may invest up to $5,000 annually per issuing company.

This is a financial investment model that is well understood by the start-up investment and small business services community. The NC PACES Act is also compatible with crowdfunding initiatives at the Federal level and with those being implemented in other states. Please see the FAQs for additional information about the bill. You can also see the text of the bill and follow the progress of S481.

Please contact your State Senator and express your support for S481, the NC PACES Act investment crowdfunding exemption.




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