Recently, the SEC’s Division of Corporation Finance Director indicated that the SEC was reviewing certain issues in an attempt to assist small businesses with capital formation.
The SEC is assessing a number of initiatives, including, but not limited to, if the number of shareholders, currently 500, triggering reporting requirements could be increased. Some have suggested that the Commission should increase the Securities Exchange Act of 1934 Section 12(g) level from 500 to 1,000. Of course, as my colleague, Jim Saksa, has pointed out in his blogs on the JOBS Act that this number has already been raised to 2,000.
Nonetheless, the Senate majority leader has indicated that there is a potential for advancement of certain issues under consideration by the SEC, and is actively working on moving legislation through the Senate to accomplish these changes. The Senate majority leader sought to advance a legislative plan to ease the regulatory burden on small businesses. Officially, the legislation would improve a small firm’s access to capital, as well as make it easier for these firms to sell their stock through IPO’s. The Senate Leader was very cautious stating these changes would still protect investor rights.
The legislation is scheduled for a hearing, and is expected to receive some support from the minority party.
In sum, clearly, given the economic uncertainties we still face, Congress and the SEC are attempting to find ways to improve access for small firms to raise capital and sell their stock into the public arena.