LANSING – The Michigan House Commerce Committee began work Wednesday on HB 5273, which would authorize the creation of local stock exchanges in Michigan to help implement the new crowdfunding law designed to help entrepreneurs launch their businesses.
Under PA 264 of 2013, businesses seeking investors through crowdfunding can avoid having to register the stocks sold to those investors.
The new bill would enable those purchasing shares in those companies to sell them to others on the local stock exchange, where trades would be limited to Michigan businesses and Michigan residents.
Under the bill, to qualify as a Michigan business, the business would have to meet the following criteria:
? Have at least 80 percent of its assets and those of its subsidiaries on a consolidated basis located in Michigan;
? Intend to use at least 80 percent of its net proceeds from the sale or resale of intrastate securities with Michigan operations; and
? Locate its principal office of business in Michigan.
Rep. Nancy Jenkins (R-Clayton), the sponsor of the bill and the crowdfunding law, said the latest legislation would keep Michigan on the leading edge. The bill would let residents know there is a market for any stocks they purchase, she said.
Rep. Vicki Barnett (D-Farmington Hills), a committee member, said she supports the concept of the legislation, but is concerned about ensuring safeguards against short sales and arbitrage to manipulate prices.
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