112TH CONGRESS 

1ST SESSION H. R. 1070 

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, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Small Company Cap3 ital Formation Act of 2011’’. 

4 SEC. 2. AUTHORITY TO EXEMPT CERTAIN SECURITIES. 

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

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

7 (1) by striking ‘‘(b) The Commission’’ and in8 serting the following: 

9 ‘‘(b) ADDITIONAL EXEMPTIONS.— 

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

11 The Commission’’; and 

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

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

14 shall by rule or regulation add a class of securities 

15 to the securities exempted pursuant to this section 

16 in accordance with the following terms and condi17 tions: 

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

19 securities offered and sold within the prior 12- 

20 month period in reliance on the exemption 

21 added in accordance with this paragraph shall 

22 not exceed $50,000,000. 

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

24 sold publicly. 

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

26 securities within the meaning of the Federal se-
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1 curities laws and the regulations promulgated 

2 thereunder. 

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

4 12(a)(2) shall apply to any person offering or 

5 selling such securities. 

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

7 offering prior to filing any offering statement, 

8 on such terms and conditions as the Commis9 sion may prescribe in the public interest or for 

10 the protection of investors. 

11 ‘‘(F) The Commission shall require the 

12 issuer to file audited financial statements with 

13 the Commission annually. 

14 ‘‘(G) Such other terms, conditions, or re15 quirements as the Commission may determine 

16 necessary in the public interest and for the pro17 tection of investors, which may include— 

18 ‘‘(i) a requirement that the issuer pre19 pare and electronically file with the Com20 mission and distribute to prospective inves21 tors an offering statement, and any related 

22 documents, in such form and with such 

23 content as prescribed by the Commission, 

24 including audited financial statements, a 

25 description of the issuer’s business oper-
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1 ations, its financial condition, its corporate 

2 governance principles, its use of investor 

3 funds, and other appropriate matters; and 

4 ‘‘(ii) disqualification provisions under 

5 which the exemption shall not be available 

6 to the issuer or its predecessors, affiliates, 

7 officers, directors, underwriters, or other 

8 related persons, which shall be substan9 tially similar to the disqualification provi10 sions contained in the regulations adopted 

11 in accordance with section 926 of the 

12 Dodd-Frank Wall Street Reform and Con13 sumer Protection Act (15 U.S.C. 77d 

14 note). 

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

16 securities may be exempted under a rule or regula17 tion adopted pursuant to paragraph (2): equity secu18 rities, debt securities, and debt securities convertible 

19 or exchangeable to equity interests, including any 

20 guarantees of such securities. 

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

22 terms and conditions as the Commission determines 

23 necessary in the public interest and for the protec24 tion of investors, the Commission by rule or regula25 tion may require an issuer of a class of securities ex-
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1 empted under paragraph (2) to make available to in2 vestors and file with the Commission periodic disclo3 sures regarding the issuer, its business operations, 

4 its financial condition, its corporate governance prin5 ciples, its use of investor funds, and other appro6 priate matters, and also may provide for the suspen7 sion and termination of such a requirement with re8 spect to that issuer. 

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

10 after the date of enactment of the Small Company 

11 Capital Formation Act of 2011 and every 2 years 

12 thereafter, the Commission shall review the offering 

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

14 shall increase such amount as the Commission deter15 mines appropriate. If the Commission determines 

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

17 Committee on Financial Services of the House of 

18 Representatives and the Committee on Banking, 

19 Housing, and Urban Affairs of the Senate on its 

20 reasons for not increasing the amount.’’. 

21 (b) TREATMENT AS COVERED SECURITIES FOR PUR22 POSES OF NSMIA.—Section 18(b)(4) of the Securities 

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

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

25 the end and inserting a semicolon; and 
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1 (2) by redesignating subparagraph (D) as sub2 paragraph (E), and inserting after subparagraph (C) 

3 the following: 

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

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

6 ‘‘(i) offered or sold on a national secu7 rities exchange; or 

8 ‘‘(ii) offered or sold to a qualified pur9 chaser, as defined by the Commission pur10 suant to paragraph (3) with respect to that 

11 purchase or sale.’’. 

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

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

14 3(b)’’ and inserting ‘‘section 3(b)(1)’’. 

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

16 ON REGULATION A OFFERINGS. 

17 The Comptroller General shall conduct a study on the 

18 impact of State laws regulating securities offerings, or 

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

20 (17 CFR 230.251 et seq.). The Comptroller General shall 

21 transmit a report on the findings of the study to the Com22 mittee on Financial Services of the House of Representa23 tives, and the Committee on Banking, Housing, and 
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1 Urban Affairs of the Senate not later than 3 months after 

2 the date of enactment of this Act. 

Passed the House of Representatives November 2, 

2011. 

Attest: 

Clerk. 
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