R. Cromwell Coulson, CEO of OTC Markets, explained that Reg A+ securities offerings are perfect for smaller companies. Yet the SEC missed an opportunity to improve access to capital and support small company growth. Coulson believes expanding issuer eligibility to all smaller reporting companies is win for the economy as well as a boost for SMEs.
“Online capital raising better serves small public companies and their investors as opposed to the traditional opaque, private offering processes that are restricted to the wealthy and well connected,” stated Coulson. “Fighting to extend Reg. A+ to the thousands of smaller companies that have invested the time and resources in being fully SEC reporting is imperative, not only to these companies but to the American economy as a whole. We must modernize securities regulations to embrace the efficiencies of the internet age.”
Reg A+ or Title IV of the JOBS Act allows smaller companies to raise up to $50 million in a scaled environment. As traditional IPOs have dramatically declined, due to excessive regulations, Reg A+ has been viewed as cracking the door open to allow small companies to raise capital from a wider audience. However, as currently written, Reg. A+ excludes all SEC Reporting Companies – companies that already meet the SEC’s high disclosure standards.
OTC Markets points to the fact that online securities offerings under Reg. A+ also provide significant investor protection including a permanent record, or audit trail, of disclosures made to potential investors. The transparency of a public, online capital raising platform better serves small companies, investors and regulators in contrast to traditional, opaque offering processes which cater to larger institutional investors.
The petition from OTC Markets is embedded below.
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