SEC To Form Advisory Committee on Small and Emerging Companies

by Glen Shapiro, LawAndTax-News.com, New York

19 September 2011

The United States’ Securities and Exchange Commission (SEC) has announced the formation of an Advisory Committee on Small and Emerging Companies (ACSEC), which will focus on the interests and priorities of small businesses and smaller public companies.

The ACSEC is intended to provide a formal mechanism through which the SEC can receive advice and recommendations specifically related to privately held small businesses and publicly traded companies with less than USD250m in public market capitalization.

“Our capital markets are a critical source of funding for emerging companies and smaller public companies,” said SEC Chairman Mary Schapiro. “That is why a key component in our agency’s mission is to facilitate capital formation while at the same time protecting investors. This new advisory committee will increase the input we receive from the small business community.”

The ACSEC will therefore advise and consult with the SECC on such issues as capital raising through private placements and public securities offerings; trading in the securities of small and emerging and small publicly traded companies; and the public reporting requirements of such companies.

It was emphasized that the SEC regularly takes steps to reduce the regulatory burdens on small businesses in raising capital in a manner consistent with investor protection. The ACSEC will provide the SEC with advice in connection with this important on-going process.

For example, it was noted that, recently, SEC staff have begun a review of the SEC’s rules relating to the triggers for public reporting and the rules restricting general solicitation in private securities offerings. The SEC will seek input from the new committee in these two areas, among others.

It is said that up to 20 voting members will be appointed to the ACSEC who can effectively represent those directly affected by, interested in, and/or qualified to provide advice to the SEC on its rules, regulations, and policies for the smaller business sector. Non-voting observers from the North American Securities Administrators Association and the Small Business Administration may also be named.

In addition, the SEC also is in the process of re-establishing an Investor Advisory Committee. That committee, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, would replace an earlier Investor Advisory Committee that the SEC had set up in June 2009 under the Federal Advisory Committee Act.

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