Yesterday Washington State Governor Jay Inslee signed HB 2023, which will make equity crowdfunding legal in Washington State.
The highlights of the bill are:
- the bill will allow businesses organized and doing business in Washington State to raise up to $1M during any 12 month period
- accredited and non-accredited investors will be able to participate
- there are individual investor caps that track the federal equity crowdunding limits
- companies will have to first file with the Washington State Department of Financial Institutions (“DFI”) before they can proceed
- an escrow will be required
- portals will not be required (they are optional)
- companies will not be required to have audited financial statements to use the bill
- companies will be required to make ongoing disclosures to shareholders and the DFI
The next steps are summarized nicely in the bill:
The director must adopt rules to implement sections 2 and 3 of this act subject to RCW 21.20.450 including, but not limited to:
(1) Adopting rules for filing with the director under sections 3 and 4 of this act by October 1, 2014;
(2) Establishing filing and transaction fees sufficient to cover the costs of administering this section and sections 2 through 4 of this act by January 1, 2015; and
(3) Adopting any other rules to implement sections 3 and 4 of this act by April 1, 2015.
The director shall take steps and adopt rules to implement this section by the dates specified in this section.
The DFI will soon be issuing a notice commencing the rule making process. I will update this blog as soon as I see the notice has been published. You can also be on the lookout for it yourself at the DFI’s Rulemaking Docket.