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Sept. 8 — The House passed a package of capital formation legislation Sept. 8 designed to roll back Securities and Exchange Commission regulations on smaller offerings of securities, both public and private.
H.R. 2357 is sponsored by Rep. Ann Wagner (R-Mo.) and includes the text of two other bills, all of which previously were approved by the House Financial Services Committee.
The bill would broaden the types of public companies that can use shelf registration and reduce registration requirements for small private offerings.
The measure passed 236-178, mostly along party lines. The other bills were sponsored by Reps. Tom Emmer (R-Minn.) and Scott Garrett (R-N.J.).
The bill's first section would allow any company traded on a public exchange to take advantage of Form S-3 shelf registration, a simpler form for offerings. Under current law, companies can use that form if their market capitalization exceeds $75 million.
Democrats have warned that the measure would allow microcap companies to issue shares too quickly.
In terms of private offerings, part of the bill would waive 1933 Securities Act registration requirements for “micro-offerings,” provided the total raised is under $500,000 and no more than 35 investors are involved, all of whom have an existing relationship with the issuer. It also would preempt state laws on those offerings.
A different section of the bill would lessen requirements for issuers using general solicitations under '33 Act Regulation D's Rule 506. General solicitation allows issuers to broadly advertise private offerings to investors.
The White House threatened a veto of the bill, criticizing all three parts. “These bills would undermine not only the health and integrity of our markets, but the very capital formation process they claim to promote,” the administration said in a policy statement.
The U.S. Chamber of Commerce backed the bill. Senate action is unlikely.
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For the bill, visit http://docs.house.gov/billsthisweek/20160905/CPRT-114-HPRT-RU00-HR2357.pdf
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