Federal

HALOS Act of 2023

Source: Congress.gov · 1,216 words in original text

What This Bill Does

This bill requires the Securities and Exchange Commission to change its rules about general solicitation and general advertising within 6 months of the law passing. The changes allow companies to make presentations or communicate with investors at certain events without breaking advertising rules, as long as the events meet specific requirements.

Who It Affects

Companies looking to raise money (called issuers), angel investors (wealthy individuals who invest their own money in early-stage companies), event sponsors including nonprofits and universities, and the Securities and Exchange Commission.

Key Provisions

• The Securities and Exchange Commission must revise its rules so that presentations by companies at qualifying events are not considered illegal general advertising (Sec. 2(b)) • Qualifying events must be sponsored by government agencies, colleges, nonprofits, angel investor groups, venture capital organizations, or other groups the Securities and Exchange Commission approves (Sec. 2(b)(1)) • Event sponsors cannot recommend investments, give investment advice, charge fees beyond reasonable administrative costs, or receive compensation for introductions or negotiations between investors and companies (Sec. 2(b)(3)) • Companies presenting at events can only communicate that they are offering securities and share basic information like the type of securities, amount offered, subscriptions received, and intended use of money raised (Sec. 2(b)(4)) • Simply attending an event does not automatically create a business relationship between a company and an investor (Sec. 2(d))

What Changes

Currently, companies cannot generally advertise investment opportunities. This bill creates an exception allowing companies to present at certain qualifying events and communicate about their securities offerings without violating advertising rules, provided the events and sponsors meet specific conditions.

Important Definitions

Angel investor group: A group of accredited investors (people who meet income or asset requirements) interested in investing their own money in early-stage companies that holds regular meetings and has set processes for making investment decisions, and is not connected to brokers or investment advisers (Sec. 2(a)(1)) Issuer: A company that is not bankrupt, not an investment company, and not a blank check or shell company (Sec. 2(a)(2))

Effective Date

The Securities and Exchange Commission must revise the rules within 6 months after the bill becomes law (Sec. 2(b))

IB Union Calendar No. 250 118TH CONGRESS 1ST SESSION H. R. 1553 [Report No. 118–310] To require the Securities and Exchange Commission to revise rules relating to general solicitation or general advertising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 10, 2023 Mr. LAWLER (for himself and Mr. GOTTHEIMER) introduced the following bill; which was referred to the Committee on Financial Services DECEMBER 12, 2023 Additional sponsor: Mr. NICKEL DECEMBER 12, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on March 10, 2023] VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1553.RH H1553 2 •HR 1553 RH A BILL To require the Securities and Exchange Commission to revise rules relating to general solicitation or general adver- tising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes. VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H1553.RH H1553 3 •HR 1553 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Helping Angels Lead 4 Our Startups Act of 2023’’ or the ‘‘HALOS Act of 2023’’. 5 SEC. 2. CLARIFICATION OF GENERAL SOLICITATION. 6 (a) DEFINITIONS.—For purposes of this Act and the 7 revision of rules required under this Act: 8 (1) ANGEL INVESTOR GROUP.—The term ‘‘angel 9 investor group’’ means any group that— 10 (A) is composed of accredited investors in- 11 terested in investing personal capital in early- 12 stage companies; 13 (B) holds regular meetings and has defined 14 processes and procedures for making investment 15 decisions, either individually or among the mem- 16 bership of the group as a whole; and 17 (C) is neither associated nor affiliated with 18 brokers, dealers, or investment advisers. 19 (2) ISSUER.—The term ‘‘issuer’’ means an issuer 20 that is a business, is not in bankruptcy or receiver- 21 ship, is not an investment company, and is not a 22 blank check, blind pool, or shell company. 23 (b) IN GENERAL.—Not later than 6 months after the 24 date of enactment of this Act, the Securities and Exchange 25 VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H1553.RH H1553 4 •HR 1553 RH Commission shall revise Regulation D (17 CFR 230.500 et 1 seq.) to require that in carrying out the prohibition against 2 general solicitation or general advertising contained in sec- 3 tion 230.502(c) of title 17, Code of Federal Regulations, the 4 prohibition shall not apply to a presentation or other com- 5 munication made by or on behalf of an issuer which is 6 made at an event— 7 (1) sponsored by— 8 (A) the United States or any territory 9 thereof, the District of Columbia, any State, a 10 political subdivision of any State or territory, or 11 any agency or public instrumentality of any of 12 the foregoing; 13 (B) a college, university, or other institu- 14 tion of higher education; 15 (C) a nonprofit organization; 16 (D) an angel investor group; 17 (E) a venture forum, venture capital asso- 18 ciation, or trade association; or 19 (F) any other group, person, or entity as 20 the Securities and Exchange Commission may 21 determine by rule; 22 (2) where any advertising for the event does not 23 reference any specific offering of securities by the 24 issuer; 25 VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H1553.RH H1553 5 •HR 1553 RH (3) the sponsor of which— 1 (A) does not make investment recommenda- 2 tions or provide investment advice to event 3 attendees; 4 (B) does not engage in an active role in any 5 investment negotiations between the issuer and 6 investors attending the event; 7 (C) does not charge event attendees any fees 8 other than reasonable administrative fees; 9 (D) does not receive any compensation for 10 making introductions between investors attend- 11 ing the event and issuers, or for investment nego- 12 tiations between such parties; 13 (E) makes readily available to attendees a 14 disclosure not longer than one page in length, as 15 prescribed by the Securities and Exchange Com- 16 mission, describing the nature of the event and 17 the risks of investing in the issuers presenting at 18 the event; and 19 (F) does not receive any compensation with 20 respect to such event that would require registra- 21 tion of the sponsor as a broker or a dealer under 22 the Securities Exchange Act of 1934, or as an in- 23 vestment advisor under the Investment Advisers 24 Act of 1940; and 25 VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H1553.RH H1553 6 •HR 1553 RH (4) where no specific information regarding an 1 offering of securities by the issuer is communicated or 2 distributed by or on behalf of the issuer, other than— 3 (A) that the issuer is in the process of offer- 4 ing securities or planning to offer securities; 5 (B) the type and amount of securities being 6 offered; 7 (C) the amount of securities being offered 8 that have already been subscribed for; and 9 (D) the intended use of proceeds of the offer- 10 ing. 11 (c) RULE OF CONSTRUCTION.—Subsection (b) may 12 only be construed as requiring the Securities and Exchange 13 Commission to amend the requirements of Regulation D 14 with respect to presentations and communications, and not 15 with respect to purchases or sales. 16 (d) NO PRE-EXISTING SUBSTANTIVE RELATIONSHIP 17 BY REASON OF EVENT.—Attendance at an event described 18 under subsection (b) shall not qualify, by itself, as estab- 19 lishing a pre-existing substantive relationship between an 20 issuer and a purchaser, for purposes of Rule 506(b). 21 VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H1553.RH H1553 VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H1553.RH H1553 Union Calendar No. 250 118TH CONGRESS 1ST SESSION H. R. 1553 [Report No. 118–310] A BILL To require the Securities and Exchange Commis- sion to revise rules relating to general solicitation or general advertising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other pur- poses. DECEMBER 12, 2023 Reported with an amendment, committed to the Com- mittee of the Whole House on the State of the Union, and ordered to be printed VerDate Sep 11 2014 23:59 Dec 12, 2023 Jkt 049200 PO 00000 Frm 00008 Fmt 6651 Sfmt 6651 E:\BILLS\H1553.RH H1553

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