Earlier today, the U.S. House of Representatives passed the Accelerating Access to Capital Act aimed at facilitating the formation of capital for U.S. small businesses. The measure is a package of three bills: H.R. 4850 – the Micro Offering Safe Harbor Act, H.R. 4852 – the Private Placement Improvement Act, and its namesake, H.R. 2357 – the Accelerating Access to Capital Act.
The only change to the Micro Offering Safe Harbor Act since our post in March was the addition of “bad actor” disqualifiers to the proposed exemption. Notably, securities sold pursuant to a “micro offering” would be exempt from state blue sky regulation. View the revised text of the bill by clicking here.
There were no changes to the Private Placement Improvement Act as reported out of the House earlier today.
The Accelerating Access to Capital Act seeks to broaden the eligibility requirements of Form S-3 – the streamlined registration statement form. Specifically, the bill would require the SEC to amend certain of the transaction eligibility categories. First, General Instruction I.B.1 of Form S-3 would be amended to allow any issuer with at least one class of common equity securities listed and registered on a national securities exchange to use the short-form. Currently, only issuers with an aggregate market value of common equity held by non-affiliates of $75 million or more are eligible to use Form S-3 pursuant to I.B.1. Second, General Instruction I.B.6(c) to Form S-3 would be removed. This transactional eligibility requirement applies to offerings for cash that (a) represent less than one-third of the aggregate market value of the common equity held by non-affiliates of the registrant, (b) are not conducted by a shell company nor any registrant that has been a shell within the last twelve months, and (c) the registrant has at least one class of common equity securities listed and registered on a national securities exchange.
These two changes, taken together, have the potential to meaningfully expand the use of Form S-3 in public offerings of securities. To read the text of the Accelerating Access to Capital Act, click here.