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News & Press: WIPP Legislative Updates

SEC Simplifies Registration to Raise Capital

Monday, March 30, 2015  
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Policy Briefing Week of March 23

 

SEC Simplifies Registration to Raise Capital

The Securities and Exchange Commission (SEC) has put out new rules, hoping to accomplish two things for small business: (1) facilitate increased capital by providing investors with more investment options, and (2) ensure a more simplified SEC review for businesses raising up to $50 million.

While small businesses await the SEC’s crowdfunding rules pending since 2013, these changes reflect changes passed in the 2012 JOBS Act.  Under the new rules, companies raising up to $50 million in a 12-month period would be exempt from the SEC’s registration requirements, which have been known to be lengthy, complex, and expensive. The new rules increase the exemption cap from $5 million.

The SEC’s new regulations simplify state registration requirements. Previously, a company that wanted to offer shares to investors in a dozen states would undergo 13 reviews of separate securities laws (one in each state and one by the SEC). 

The new Reg A rules provide a more accessible path toward raising capital for small businesses while also encouraging strong investor protections. Small businesses are hoping that crowdfunding rules allowing companies to raise small amounts of money from mom-and-pop investors through online crowdfunding portals will be next.

The SEC’s press release and fact sheet can be found here.

 


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