Secretary of State Elaine F. Marshall congratulated the General Assembly for passage of new state crowdfunding legislation, saying it strikes a balance between investor protection and opening up new ways to invest.
The legislation, SB 481, also known as the Providing Access to Capital for Entrepreneurs and Small Business, or “PACES Act,” passed June 21.
The PACES Act will create North Carolina’s first set of state laws to allow and to regulate investing through the crowdfunding platform, where large numbers of local and small investors can invest in new business ventures or existing ones seeking to expand.
“All over our state, many new and small businesses find it difficult to access financial capital to start their venture, or to fund expanding their operations,” Marshall said in a news release. “A new form of capital formation has emerged in the marketplace in recent years — crowdfunding — that allows companies to openly solicit and sell to Main Street investors, through the Internet and elsewhere, and this legislation will permit small investors to invest this way in North Carolina.”
Marshall praised the PACES Act for its focus on helping small businesses and startup entrepreneurs, saying, “In an era where access to capital is extremely challenging, crowdfunding has the potential to be an innovative new way to infuse much needed financial capital into these sectors.”
Marshall said it contained the right mix of investor protections and limits. “As we enter these new uncharted financial regulatory waters,” she said, “we must remain vigilant in our efforts to protect investors and the public from scams and fraud.