Proposed reforms from the SEC Government-Business Forum on Small Business Capital Formation
The Small Business Investment Incentive Act of 1980 requires the U.S. Securities and Exchange Commission to host an annual forum that focuses on the capital formation concerns of small business. Called the “SEC Government-Business Forum on Small Business Capital Formation,” this gathering has assembled every year since 1982. The purpose of the forum is to provide a platform for small business to propose legislation and rule changes that would reduce impediments to capital-raising by small business.
The 2009 forum is being held on November 19 in Washington DC. It will be available as a webcast.
At the 2008 forum, SEC Chairman Christopher Cox acknowledged the following in his opening remarks:
- For at least the past two decades, small businesses, which are 99% of all businesses, have bailed us out of every recession
- Small businesses have generated between two-thirds and three-quarters of all net new jobs, year-end and year-out
- Firms with fewer than 20 employees spend 45% more per employee on complying with federal regulations.
The following are some of the recommendations that came out of the 2008 forum:
- Adopt a new private offering exemption from the registration requirements of the Securities Act that does not prohibit general solicitation and advertising for transactions with purchasers who do not need all the protections of the Securities Act’s registration requirements.
- Currently, under Section 12(g) of the Securities Exchange Act of 1934, a company with 500 or more shareholders of record must register as a public company which triggers extensive reporting and other obligations – Exclude accredited investors from the 500 shareholders of record calculation.
- Establish a new system of scaled or proportional securities regulation for smaller public companies (recommendation from the Advisory Committee on Smaller Public Companies).
- Simplify the registration requirements for broker-dealers selling investments in small private companies (recommendation from the ABA Task Force on Private Placement Broker Dealers).
