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 Securi-
ties and Exchange Commission to exempt a certain class 
of securities from such Act. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Company Cap-
ital Formation Act of 2011’’. 
SEC. 2. AUTHORITY TO EXEMPT CERTAIN SECURITIES. 
(a) IN GENERAL.—Section 3(b) of the Securities Act 
of 1933 (15 U.S.C. 77c(b)) is amended— 
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(1) by striking ‘‘(b) The Commission’’ and in-
serting the following: 
‘‘(b) ADDITIONAL EXEMPTIONS.— 
‘‘(1) SMALL ISSUES EXEMPTIVE AUTHORITY.— 
The Commission’’; and 
(2) by adding at the end the following: 
‘‘(2) ADDITIONAL
ISSUES.—The Commission 
shall by rule or regulation add a class of securities 
to the securities exempted pursuant to this section 
in accordance with the following terms and condi-
tions: 
‘‘(A) The aggregate offering amount of all 
securities offered and sold within the prior 12- 
month period in reliance on the exemption 
added in accordance with this paragraph shall 
not exceed $50,000,000. 
‘‘(B) The securities may be offered and 
sold publicly. 
‘‘(C) The securities shall not be restricted 
securities within the meaning of the Federal se-
curities laws and the regulations promulgated 
thereunder. 
‘‘(D) The civil liability provision in section 
12(a)(2) shall apply to any person offering or 
selling such securities. 
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‘‘(E) The issuer may solicit interest in the 
offering prior to filing any offering statement, 
on such terms and conditions as the Commis-
sion may prescribe in the public interest or for 
the protection of investors. 
‘‘(F) The Commission shall require the 
issuer to file audited financial statements with 
the Commission annually. 
‘‘(G) Such other terms, conditions, or re-
quirements as the Commission may determine 
necessary in the public interest and for the pro-
tection of investors, which may include— 
‘‘(i) a requirement that the issuer pre-
pare and electronically file with the Com-
mission and distribute to prospective inves-
tors an offering statement, and any related 
documents, in such form and with such 
content as prescribed by the Commission, 
including audited financial statements, a 
description of the issuer’s business oper-
ations, its financial condition, its corporate 
governance principles, its use of investor 
funds, and other appropriate matters; and 
‘‘(ii) disqualification provisions under 
which the exemption shall not be available 
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to the issuer or its predecessors, affiliates, 
officers, directors, underwriters, or other 
related persons, which shall be substan-
tially similar to the disqualification provi-
sions contained in the regulations adopted 
in accordance with section 926 of the 
Dodd-Frank Wall Street Reform and Con-
sumer Protection Act (15 U.S.C. 77d 
note). 
‘‘(3) LIMITATION.—Only the following types of 
securities may be exempted under a rule or regula-
tion adopted pursuant to paragraph (2): equity secu-
rities, debt securities, and debt securities convertible 
or exchangeable to equity interests, including any 
guarantees of such securities. 
‘‘(4) 
PERIODIC
DISCLOSURES.—Upon 
such 
terms and conditions as the Commission determines 
necessary in the public interest and for the protec-
tion of investors, the Commission by rule or regula-
tion may require an issuer of a class of securities ex-
empted under paragraph (2) to make available to in-
vestors and file with the Commission periodic disclo-
sures regarding the issuer, its business operations, 
its financial condition, its corporate governance prin-
ciples, its use of investor funds, and other appro-
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priate matters, and also may provide for the suspen-
sion and termination of such a requirement with re-
spect to that issuer. 
‘‘(5) ADJUSTMENT.—Not later than 2 years 
after the date of enactment of the Small Company 
Capital Formation Act of 2011 and every 2 years 
thereafter, the Commission shall review the offering 
amount limitation described in paragraph (2)(A) and 
shall increase such amount as the Commission deter-
mines appropriate. If the Commission determines 
not to increase such amount, it shall report to the 
Committee on Financial Services of the House of 
Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate on its 
reasons for not increasing the amount.’’. 
(b) TREATMENT AS COVERED SECURITIES FOR PUR-
POSES OF NSMIA.—Section 18(b)(4) of the Securities 
Act of 1933 (15 U.S.C. 77r(b)(4)) is amended— 
(1) in subparagraph (C), by striking ‘‘; or’’ at 
the end and inserting a semicolon; and 
(2) by redesignating subparagraph (D) as sub-
paragraph (E), and inserting after subparagraph (C) 
the following: 
‘‘(D) a rule or regulation adopted pursuant 
to section 3(b)(2) and such security is— 
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