With very little fanfare, the House of Representatives passed legislation earlier this month that could very well transform how filmmakers finance their films.
The Entrepreneur Access to Capital Act, among other things, exempts crowdfunding from the scope of the Securities Act of 1933.
This is a major development as the Securities Act and the various states’ “blue sky laws” have been major impediments to capital formation by independent filmmakers for decades.
Such laws restricted early stage investing to high net worth individuals and institutions, and precluded businesses from advertising exempt offerings to the public.
Under the new bill, there will no longer be any restrictions on investment offerings as long as they do not exceed $2 million, with each investor contributing no more than the higher of $10,000 or 10% of their annual income. The new law also mandates that states do not impose their own restrictions on these types of offerings.
The legislation has been sent to the Senate for approval. If it is signed into law, the Securities and Exchange Commission will be given 90 days to issue rules on using it. If this legislation is passed into law, you will be able to offer investments in your film on crowdfunding platforms like Kickstarter and IndieGoGo, assuming they allow it.
If they don’t, there will certainly be new competitors that will.
Read more about the new law HERE.