Securities and Exchange Commission Approves New Rules for Reporting and Capital-Raising for Smaller Public Companies
SCALED DISCLOSURE AND REPORTING REQUIREMENTS
Facilitate reporting by eliminating the current "small business" regulatory system and moving small business issuers into the regular public company system. Scale that system to facilitate reporting by all smaller companies. The proposed changes include:
- Designating a new group of issuers, called "smaller reporting companies." This group would include all issuers (i.e., small business issuers and other non-accelerated filers) with less than $75 million of public equity float;
- Moving the rules in Regulation S-B to Regulation S-K. (Presumably, the financial statement requirements of Regulation S-B would be moved to Regulation S-X.) All smaller reporting companies would be allowed to comply with the smaller company versions of the rules; and
- Eliminating the small business issuer (S-B) forms. Instead, smaller reporting companies would use the regular forms, and would identify themselves by a checkbox on the facing page.
SHELF REGISTRATION ELIGIBILITY
The SEC will adopt amendments to change the instructions to Form S-3 and Form F-3, allowing companies with less than $75 million in pubic float to register primary offerings of their securities on those forms, providing that such companies:
1) Meet the other eligibility conditions for the use of Form S-3 or Form F-3;
2) Are not "shell companies" and have not been shell companies for at least one year before filing the registration statement; and
3) Do not sell more than the equivalent of 20% of their public float in primary offerings registered on Form S-3 or Form F-3, over any one-year period.
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