The Entrepreneur Access to Capital Act, sponsored by Rep. Patrick T. McHenry, would add a "crowdfunding" exemption from the registration requirements under Section 4 of the Securities Act of 1933 and Section 12(g) of the Exchange Act. Crowdfunding generally refers to a capital raising method in which many investors contribute small amounts of capital for a common purpose. In order for a company to rely on the crowdfunding exemption, it can raise no more than $1 million (or $2 million if audited financial statements are provided to potential investors) within the previous 12-month period and the aggregate amount sold to any investor, within the previous 12-month period, is not more than $10,000 or 10% of such individual's annual income. The bill also provides for statutory disclosure in the event an intermediary between the issuers and the investor is used in the capital raise. If an intermediary is used, the intermediary must comply with various warning disclosures, take reasonable measures to reduce the risk of fraud, provide certain contact and other information to the SEC, require each potential investor to acknowledge an understanding of certain risks inherent in the offering, and carry out background checks on the issuer's principals, among other things. Many of these same requirements apply to issuers in the event they do not use intermediaries to assist them when relying on this exemption from registration. Any investor purchasing securities under this exemption may not transfer such securities during the one-year period beginning on the date of purchase unless the securities are sold to the issuer of such securities or an accredited investor. The bill also directs the SEC to issue rules no later than 180 days after enactment, as may be necessary, to carry out the Act, as well as to establish disqualification provisions of an issuer and an intermediary based on prior bad acts of its predecessors, affiliates, officers, directors or similar persons. The bill also exempts all investors relying on the crowdfunding exemption from being counted as "shareholders of record." The SEC has recognized this issue and is independently reviewing whether the definition of "held of record" should be changed.