The SEC has proposed several new measures to allow small businesses greater access to new capital and to ensure less-burdensome reporting requirements. These new measures include:
- A new, simpler disclosure regime for what will be known as “smaller reporting companies.” This new regime will apply to companies with up to a $75 million public float and will replace the rules that currently apply to “Small Businesses” and require SB Forms. Smaller reporting companies will instead comply with applicable provisions of Regulation S-K.
- Shelf registration for companies with a public float below $75 million. This new rule would allow smaller public companies that timely file their SEC reports but otherwise don’t meet current public float requirements to have the flexibility of shelf registration.
- A new category of securities purchasers who are exempt from registration. This amendment establishes a new Rule 507 of Regulation D which allows no registration and limited advertising for sales of securities to “qualified purchasers.” Also built into the rule are inflation adjustments for investors who currently qualify as “accredited.”
- Shortened holding periods under Rule 144. These shortened periods allow for faster resale of restricted securities for a more efficient use of capital. There is also a proposal to allow insiders to satisfy their Form 144 requirements by filing a Form 4.
- New exemptions from registration of compensatory employee stock options. This would ensure that registration requirements are not triggered by option granting practices alone.
- Finally, electronic filing of Form D, the form by which companies disclose securities transactions that are exempt from registration. Electronic filing would presumably allow for simpler reporting and review of exempt securities transactions.
Comments on the proposed amendments are due within 60 days of publication in the Federal Register.