House Bill 3429 has updated the consolidated law of Illinois to allow HNW individuals and others to invest in small businesses in that state.

The new legislation goes into effect on 1 January 2016. Crowdfunding, the act of funding a project or venture by raising many small amounts of money from a large number of people, has become a favourite for HNWs in recent years. In exchange for funds, the investors receive small ownership interests in the enterprises they help. The new law creates an Illinois intrastate exemption, which allows Illinois residents to directly invest in Illinois small businesses online. At the moment, 15 US states have already passed similar legislation, including neighboring states such as Indiana, Wisconsin and Michigan.

The legislation, signed by the state governor on 29 July, amends the Illinois Securities Law 1953. It creates an exemption from certain filing and registration requirements under the Act for intrastate securities offerings that meet certain conditions. Among other things, it stipulates that:

• the offering in question should meet all of the requirements of the federal exemption for intrastate offerings provided under the Securities Act 1933;
• the aggregate purchase price of all securities sold by an issuer within any 12-month period does not exceed $3,000,000 (or $5,000,000 if the issuer has undergone and made available certain financial statements to specified persons); and
• the aggregate amount sold to any purchaser in an offering of securities made within any consecutive 12-month period does not exceed certain monetary limitations.

The law also says, for the first time, that an issuer may make an offering or sale of securities through the use of one or more 'qualified' Internet portals.