The measure is designed to help Maine start-ups raise funds from small investors.
J. Craig Anderson at the Portland Press Herald reports that a measure allowing Maine businesses to raise up to $1 million through “crowd investing” became law Monday.
The bill, L.D. 1512, “An Act To Increase Funding for Start-ups,” was approved overwhelmingly in both the House and Senate last month and allowed to take effect without the usual wait.The measure allows small businesses in Maine to raise up to $1 million by advertising and selling company shares to Maine residents, even those who do not meet federal “accredited investor” standards.
Businesses seeking investors now can advertise publicly on “crowd investing” websites such as Wefunder.com, which allows registered users to invest as little as $100 in the startup of their choosing.
The law prohibits the companies offering shares from selling more than $5,000 worth per year to any single investor. It only applies to investment activity between companies and investors located in Maine. A similar, federal law governs crowd-investment activity that crosses state lines, but the specific rules of conduct have yet to be approved by the U.S. Securities and Exchange Commission.
The Maine law’s sponsor, Senate President Justin Alfond, a Democrat from Portland, said its purpose is to enable small businesses in Maine to raise capital while giving residents a chance to invest in firms with high-growth potential.
“Maine is a great place to start a business. This new law will support entrepreneurs and increase investing opportunities for more Maine people,” Alfond said in a written statement. “Maine can be a national leader in turning great ideas into great jobs.”