Nebraska State Senate has introduced Bill LB 226, which initiates a model for Nebraska equity crowdfunding.
Designed to work like other crowdfunding platforms like Gofundme, instead of accepting donations, an equity crowdfunding platform gives state resident investors a share in the business raising capital.
The Nebraska Department of Banking & Finance would manage the program. Nebraska crowdfunding companies interested in using the new exemption would be required to pay a $200 filing fee, submit documentation to prospective investors, and provide an escrow agreement with a financial institution where investments will be deposited.
Investors, who must be state residents, will be allowed to make deposits into the escrow fund through a crowdfunding web portal. The company must specify the fundraising time period and investment goal, and investors can cancel their investments if the goal amount is not raised by the deadline. The business raising funds (the Issuer) must also disclose all terms and conditions of the securities being offered. The business cannot access funds until the goal amount has been met or exceeded.
Bill LB 226 has not yet been presented to the full legislature, it is expected said that the Banking, Commerce & Insurance Committee would be sending it out unanimously with one minor amendment.
Different from any other proposed bill this session affecting Nebraska business, LB 156, the Nebraska crowdfunding bill could potentially pass before the main budget bills. However, it still requires a priority designation, or else the bill must be scheduled for debate along with other bills with no committee opposition and no General Fund impact.
Under the Nebraska crowdfunding bill, investors (state residents) are required to certify that they understand that investments are a high-risk, and that they may lose all of their investment. Investment limits are also established for both accredited (high net worth/high income institutions or individuals) and non-accredited investors.