In March 2017, the Government-Business Forum on Small Business Capital Formation of the Securities and Exchange Commission published its final report from the 2016 forum held on November 17, 2016. The forum is held annually “to provide a platform to highlight perceived unnecessary impediments to small business capital formation.” Each year the SEC’s Office of Small Business Policy (a part of the Division of Corporation Finance) invites federal government agencies, the North American Securities Administrators Association (consisting of state securities, or Blue Sky, regulators), and small business and professional organizations to participate in the forum, and each forum puts forth a list of recommendations to improve the capital formation process for small businesses. The 2016 forum’s final report included 15 recommendations, organized based on the forum participants’ perception of importance and urgency, which included the following as the top two:
- maintain the monetary thresholds included in the accredited investor definition, but expand the categories of qualification for accredited investor based on various types of sophistication (including education, experience or training); and
- revise the definition of a smaller reporting company to include an issuer with a public float of less than $250 million or with annual revenues of less than $100 million, and extend the period of exemption from Section 404(b) of the Sarbanes-Oxley Act of 2002 (which requires a publicly held company’s auditor to attest to, and report on, management’s assessment of the effectiveness of the company’s internal control over financial reporting) for an additional five years for pre- or low-revenue companies after they cease to be emerging growth companies or smaller reporting companies.
The full Final Report from the 2016 forum can be viewed here.