IB 

Union Calendar No. 135 

112TH CONGRESS 

1ST SESSION H. R. 1070 

[Report No. 112–206] 

To amend the Securities Act of 1933 to authorize the Securities and Exchange Commission to exempt a certain class of securities from such 

Act. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 14, 2011 

Mr. SCHWEIKERT (for himself, Mr. GARRETT, Mr. WESTMORELAND, Mr. 

JONES, and Mrs. BIGGERT) introduced the following bill; which was referred to the Committee on Financial Services 

SEPTEMBER 14, 2011 

Additional sponsors: Mr. CANSECO, Mr. MANZULLO, Mr. DUNCAN of Tennessee, Ms. ESHOO, Mrs. BACHMANN, Mr. STIVERS, Mr. DAVID SCOTT

of Georgia, Mr. NEUGEBAUER, Mr. WALSH of Illinois, Mr. PAULSEN, Mr. 

MARCHANT, Mr. QUAYLE, Mr. CULBERSON, Mr. PRICE of Georgia, Mr. 

ROE of Tennessee, and Ms. HAYWORTH

SEPTEMBER 14, 2011 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on March 14, 2011] 


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A BILL 

To amend the Securities Act of 1933 to authorize the Securities and Exchange Commission to exempt a certain class 

of securities from such Act. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Company Capital 

5 Formation Act of 2011’’. 

6 SEC. 2. AUTHORITY TO EXEMPT CERTAIN SECURITIES. 

7 (a) IN GENERAL.—Section 3(b) of the Securities Act 

8 of 1933 (15 U.S.C. 77c(b)) is amended— 

9 (1) by striking ‘‘(b) The Commission’’ and in10 serting the following: 

11 ‘‘(b) ADDITIONAL EXEMPTIONS.— 

12 ‘‘(1) SMALL ISSUES EXEMPTIVE AUTHORITY.— 

13 The Commission’’; and 

14 (2) by adding at the end the following: 

15 ‘‘(2) ADDITIONAL ISSUES.—The Commission 

16 shall by rule or regulation add a class of securities to 

17 the securities exempted pursuant to this section in ac18 cordance with the following terms and conditions: 

19 ‘‘(A) The aggregate offering amount of all 

20 securities sold within the prior 12-month period 

21 in reliance on the exemption added in accord22 ance with this paragraph shall not exceed 

23 $50,000,000. 

24 ‘‘(B) The securities may be offered and sold 

25 publicly. 


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1 ‘‘(C) The securities shall not be restricted se2 curities within the meaning of the Federal secu3 rities laws and the regulations promulgated 

4 thereunder. 

5 ‘‘(D) The civil liability provision in section 

6 12(a)(2) shall apply to any person offering or 

7 selling such securities. 

8 ‘‘(E) The issuer may solicit interest in the 

9 offering prior to filing any offering statement, on 

10 such terms and conditions as the Commission 

11 may prescribe in the public interest or for the 

12 protection of investors. 

13 ‘‘(F) The Commission shall require the 

14 issuer to file audited financial statements with 

15 the Commission annually. 

16 ‘‘(G) Such other terms, conditions, or re17 quirements as the Commission may determine 

18 necessary in the public interest and for the pro19 tection of investors, which may include— 

20 ‘‘(i) a requirement that the issuer pre21 pare and electronically file with the Com22 mission and distribute to prospective inves23 tors an offering statement, and any related 

24 documents, in such form and with such con25 tent as prescribed by the Commission, which 


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1 shall include a description of the issuer’s 

2 business operations, its financial condition, 

3 its corporate governance principles, its use 

4 of investor funds, and other appropriate 

5 matters; and 

6 ‘‘(ii) disqualification provisions under 

7 which the exemption shall not be available 

8 based upon the disciplinary history of the 

9 issuer or its predecessors, affiliates, officers, 

10 directors, underwriters, or other related per11 sons, which shall be substantially similar to 

12 the disqualification provisions contained in 

13 the regulations adopted in accordance with 

14 section 926 of the Dodd-Frank Wall Street 

15 Reform and Consumer Protection Act (15 

16 U.S.C. 77d note). 

17 ‘‘(3) LIMITATION.—Only the following types of 

18 securities may be exempted under a rule or regulation 

19 adopted pursuant to paragraph (2): equity securities, 

20 debt securities, and debt securities convertible or ex21 changeable to equity interests, including any guaran22 tees of such securities. 

23 ‘‘(4) PERIODIC DISCLOSURES.—Upon such terms 

24 and conditions as the Commission determines nec25 essary in the public interest and for the protection of 


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1 investors, the Commission by rule or regulation may 

2 require an issuer of a class of securities exempted 

3 under paragraph (2) to make available to investors 

4 periodic disclosures regarding the issuer, its business 

5 operations, its financial condition, its corporate gov6 ernance principles, its use of investor funds, and other 

7 appropriate matters, and also may provide for the 

8 suspension and termination of such a requirement 

9 with respect to that issuer. 

10 ‘‘(5) ADJUSTMENT.—Not later than 2 years after 

11 the date of enactment of the Small Company Capital 

12 Formation Act of 2011 and every 2 years thereafter, 

13 the Commission shall review the offering amount lim14 itation described in paragraph (2)(A) and shall in15 crease such amount as the Commission determines ap16 propriate. If the Commission determines not to in17 crease such amount, it shall report to the Committee 

18 on Financial Services of the House of Representatives 

19 and the Committee on Banking, Housing, and Urban 

20 Affairs of the Senate on its reasons for not increasing 

21 the amount.’’. 

22 (b) TREATMENT AS COVERED SECURITIES FOR PUR23 POSES OF NSMIA.—Section 18(b)(4) of the Securities Act 

24 of 1933 (15 U.S.C. 77r(b)(4)) is amended— 


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1 (1) in subparagraph (C), by striking ‘‘; or’’ at 

2 the end and inserting a semicolon; and 

3 (2) by redesignating subparagraph (D) as sub4 paragraph (E), and inserting after subparagraph (C) 

5 the following: 

6 ‘‘(D) a rule or regulation adopted pursuant 

7 to section 3(b)(2) and such security is— 

8 ‘‘(i) offered or sold through a broker or 

9 dealer; 

10 ‘‘(ii) offered or sold on a national secu11 rities exchange; or 

12 ‘‘(iii) sold to a qualified purchaser as 

13 defined by the Commission pursuant to 

14 paragraph (3).’’. 

15 (c) CONFORMING AMENDMENT.—Section 4(5) of the 

16 Securities Act of 1933 is amended by striking ‘‘section 3(b)’’ 

17 and inserting ‘‘section 3(b)(1)’’. 


emcdonald on DSK5VPTVN1PROD with BILLS
Union Calendar No. 135 

112TH CONGRESS 

1ST SESSION H. R. 1070 

[Report No. 112–206] 

A BILL 

To amend the Securities Act of 1933 to authorize 

empt a certain class of securities from such Act. the Securities and Exchange Commission to exSEPTEMBER 14, 2011 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


emcdonald on DSK5VPTVN1PROD with BILLS