The SEC’s annual Government-Business Forum on Small Business Capital Formation is sure to focus heavily on various means to remove current legislative and regulatory burdens on the ability to raise capital. I attended last year’s Forum, which focused on many of these issues, but this year, the industry can point to several bills that have passed the House of Representatives by overwhelming margins designed to facilitate capital-raising by amending current exemptions from registration or adopting new ones. In addition, two industry organizations have staged a rally in Washington to coincide with the Forum urging the U.S. Senate and the SEC to adopt a proposal for crowdfund investing.
The three House bills that were passed by significant margins and subsequently sent to the Senate include (1) H.R. 1070 (the “Small Company Capital Formation Act of 2011”), which would increase the exemption under Section 3(b) of the Securities Act of 1933 from $5 million to $50 million; (2) H.R. 2930 (the “Entrepreneur Access to Capital Act”), which would add a new Section 4(6) to the Securities Act thereby creating a “crowdfunding” exemption from registration; and (3) H.R. 2940 (the “Access to Capital for Job Creators Act”) which would require the SEC to remove the prohibition on general solicitation or advertising for offerings under Rule 506.
The passage by the Senate of any of all of these bills would mark a significant change in the legislative and regulatory obstacles currently facing exempt offerings of securities. The Forum will bring these issues to the forefront and may provide a much-needed push for the Senate and the SEC to carefully consider revising the available exemptions from registration under the Securities Act of 1933.
For additional information about the SEC Forum on Small Business Capital Forum or the status of the recent legislative proposals, contact us at (619) 278-0020 to schedule your consultation.