II 

Calendar No. 222 

112TH CONGRESS 

1ST SESSION H. R. 1070 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 3, 2011 

Received; read the first time 

NOVEMBER 7, 2011 

Read the second time and placed on the calendar 

AN ACT 

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

of securities from such Act. 

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 Cap5 ital 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— 


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1 (1) by striking ‘‘(b) The Commission’’ and in2 serting the following: 

3 ‘‘(b) ADDITIONAL EXEMPTIONS.— 

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

5 The Commission’’; and 

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

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

8 shall by rule or regulation add a class of securities 

9 to the securities exempted pursuant to this section 

10 in accordance with the following terms and condi11 tions: 

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

13 securities offered and sold within the prior 12- 

14 month period in reliance on the exemption 

15 added in accordance with this paragraph shall 

16 not exceed $50,000,000. 

17 ‘‘(B) The securities may be offered and 

18 sold publicly. 

19 ‘‘(C) The securities shall not be restricted 

20 securities within the meaning of the Federal se21 curities laws and the regulations promulgated 

22 thereunder. 

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

24 12(a)(2) shall apply to any person offering or 

25 selling such securities. 


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

2 offering prior to filing any offering statement, 

3 on such terms and conditions as the Commis4 sion may prescribe in the public interest or for 

5 the protection of investors. 

6 ‘‘(F) The Commission shall require the 

7 issuer to file audited financial statements with 

8 the Commission annually. 

9 ‘‘(G) Such other terms, conditions, or re10 quirements as the Commission may determine 

11 necessary in the public interest and for the pro12 tection of investors, which may include— 

13 ‘‘(i) a requirement that the issuer pre14 pare and electronically file with the Com15 mission and distribute to prospective inves16 tors an offering statement, and any related 

17 documents, in such form and with such 

18 content as prescribed by the Commission, 

19 including audited financial statements, a 

20 description of the issuer’s business oper21 ations, its financial condition, its corporate 

22 governance principles, its use of investor 

23 funds, and other appropriate matters; and 

24 ‘‘(ii) disqualification provisions under 

25 which the exemption shall not be available 


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1 to the issuer or its predecessors, affiliates, 

2 officers, directors, underwriters, or other 

3 related persons, which shall be substan4 tially similar to the disqualification provi5 sions contained in the regulations adopted 

6 in accordance with section 926 of the 

7 Dodd-Frank Wall Street Reform and Con8 sumer Protection Act (15 U.S.C. 77d 

9 note). 

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

11 securities may be exempted under a rule or regula12 tion adopted pursuant to paragraph (2): equity secu13 rities, debt securities, and debt securities convertible 

14 or exchangeable to equity interests, including any 

15 guarantees of such securities. 

16 ‘‘(4) PERIODIC DISCLOSURES.—Upon such 

17 terms and conditions as the Commission determines 

18 necessary in the public interest and for the protec19 tion of investors, the Commission by rule or regula20 tion may require an issuer of a class of securities ex21 empted under paragraph (2) to make available to in22 vestors and file with the Commission periodic disclo23 sures regarding the issuer, its business operations, 

24 its financial condition, its corporate governance prin25 ciples, its use of investor funds, and other approVerDate Mar 15 2010 00:28 Nov 08, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1070.PCS H1070

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1 priate matters, and also may provide for the suspen2 sion and termination of such a requirement with re3 spect to that issuer. 

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

5 after the date of enactment of the Small Company 

6 Capital Formation Act of 2011 and every 2 years 

7 thereafter, the Commission shall review the offering 

8 amount limitation described in paragraph (2)(A) and 

9 shall increase such amount as the Commission deter10 mines appropriate. If the Commission determines 

11 not to increase such amount, it shall report to the 

12 Committee on Financial Services of the House of 

13 Representatives and the Committee on Banking, 

14 Housing, and Urban Affairs of the Senate on its 

15 reasons for not increasing the amount.’’. 

16 (b) TREATMENT AS COVERED SECURITIES FOR PUR17 POSES OF NSMIA.—Section 18(b)(4) of the Securities 

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

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

20 the end and inserting a semicolon; and 

21 (2) by redesignating subparagraph (D) as sub22 paragraph (E), and inserting after subparagraph (C) 

23 the following: 

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

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


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1 ‘‘(i) offered or sold on a national secu2 rities exchange; or 

3 ‘‘(ii) offered or sold to a qualified pur4 chaser, as defined by the Commission pur5 suant to paragraph (3) with respect to that 

6 purchase or sale.’’. 

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

8 Securities Act of 1933 is amended by striking ‘‘section 

9 3(b)’’ and inserting ‘‘section 3(b)(1)’’. 

10 SEC. 3. STUDY ON THE IMPACT OF STATE BLUE SKY LAWS 

11 ON REGULATION A OFFERINGS. 

12 The Comptroller General shall conduct a study on the 

13 impact of State laws regulating securities offerings, or 

14 ‘‘Blue Sky laws’’, on offerings made under Regulation A 

15 (17 CFR 230.251 et seq.). The Comptroller General shall 

16 transmit a report on the findings of the study to the Com17 mittee on Financial Services of the House of Representa18 tives, and the Committee on Banking, Housing, and 

19 Urban Affairs of the Senate not later than 3 months after 

20 the date of enactment of this Act. 

Passed the House of Representatives November 2, 

2011. 

Attest: KAREN L. HAAS, 

Clerk. 


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Calendar No. 222 

112TH CONGRESS 

1ST SESSION H. R. 1070 

AN ACT 

To amend the Securities Act of 1933 to require the 

a certain class of securities from such Act. Securities and Exchange Commission to exempt 

NOVEMBER 7, 2011 

Read the second time and placed on the calendar 


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