By Irene Tordera,
- Both the issuer and the investors shall be resident in Michigan.
- The total amount raised by the issuer cannot exceed $1 million (or $2 million if the issuer has audited financial statements).
- Non accredited investors cannot invest more than $10,000 in a single offer.
- The issuer has to provide investors with a disclosure statement reporting information about the business, the offer and its risks.
While MILE currently does not differ significantly from other states’ crowdfunding exemptions, a law, which has been recently proposed, may change securities crowdfunding in Michigan, putting it in the forefront of the intrastate crowdfunding movement. In fact, Michigan is currently evaluating whether to create Michigan investment markets, that is secondary markets for the resale of securities purchased under MILE. In particular, the transactions taking place in these secondary markets would be handled by broker-dealers without registering under Federal regulations, but only with Michigan state. All the transactions in secondary markets would need to take place between Michigan resident and the related fees cannot exceed 5% of the transaction value. Providing an exit to investments, the creation of secondary markets may indeed foster Michigan intrastate crowdfunding, pushing more investors to give it a try. The law is still in a proposal phase, however if it will ever get signed Michigan would be the first US state to have a secondary market for securities crowdfunding. This innovation would of course bring in new challenges and issues to deal with, for instance how logistically Michigan investment markets would work. Also it is not to underestimate the following question: is a single state like Michigan able to generate a volume of intrastate securities large enough to justify the presence of a secondary market? ReferencesFranks, W.H. (2014). The state of crowdfunding in Michigan. Grand Rapid Business Journal. Ortel, N.M. (2014). Michigan Intrastate Crowdfunding and More. Foster Swift. Image credit: Jason Carpenter http://bit.ly/1uvHo8k