This bill is a proposed crowdfunding law that would allow Minnesota businesses to raise capital by selling securities online to Minnesota investors in an intrastate offering.

Section 1, subdivision 1 establishes definitions for purposes of the bill. A “MNvest issuer” is a Minnesota business where generally 80 percent of the entity’s assets are located in Minnesota and 80 percent of the entity’s revenues are derived from operation of a business in Minnesota.

Subdivision 2 provides the exemption from Minnesota securities law for MNvest offerings.

Subdivision 3 establishes the requirements that a MNvest offering must meet. An issuer may not raise more than $2,000,000 in a 12 month period, unless its financial statements have been audited or reviewed by a public accountant. In that case the issuer can raise up to $5,000,000. No single person may purchase more than $10,000 in an offering unless the person is an accredited investor (wealthy person).

Subdivision 4 establishes required disclosures to prospective MNvest purchasers through the MNvest portal (internet web site operated by portal operator) including business information, financial statements, terms and conditions of the offering, material risks, and warning legend.

Subdivision 5 requires the portal operator to obtain from the prospective purchaser a certification that the purchaser understands that the investment is likely high-risk.

Subdivision 6 establishes requirements for the MNvest portal. MNvest offerings may not be viewed on the MNvest portal by a prospective purchaser until the portal operator verifies through reasonable steps that the purchaser is a Minnesota resident.

Subdivision 7 requires an entity other than a broker-dealer wishing to become a portal operator to make specified filings with the administrator and pay a filing fee. Prohibited practices and record keeping requirements are set forth.

Subdivision 8 provides that insignificant failures to comply fully with the act will not result in loss of exemption if the issuer made a good faith attempt to comply.

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