On 1 November 2017, the U.S. House of Representatives passed two bills designed to promote capital formation by (i) providing for extended JOBS Act testing-the-waters provisions to all companies, (ii) revising the definition of an “accredited investor” to allow a larger number of individuals to be eligible for participation in private placements and (iii) implementing the SEC’s earlier expansion of confidential submission of draft registration statements by a non-emerging growth company (non-EGC) for its IPO and during the one-year period after going public. The bills have not reached the Senate floor yet. The bills would only become law if passed by the Senate and signed by the President.
In particular, H.R. 3903, the Encouraging Public Offerings Act of 2017, would expand certain JOBS Act provisions by allowing non-EGCs to undertake communications with institutional investors prior to the filing of a registration statement in order to measure investor interest and by providing for confidential submission of registration statements in connection with an IPO and during the one-year period after going public.
In addition, H.R. 1585, the Fair Investment Opportunities for Professional Experts Act, provides for an amended definition of “accredited investor” to include licensed or registered brokers and investment advisors and “any person determined by SEC regulation to have professional knowledge” related to a particular investment through education or job experience, as verified by FINRA or a similar self-regulatory organisation.
The bills are available at:
- https://financialservices.house.gov/uploadedfiles/bills-115hr3903ih.pdf (Encouraging Public Offerings Act of 2017);
- https://www.congress.gov/115/bills/hr1585/BILLS-115hr1585rh.pdf (Fair Investment Opportunities for Professional Experts Act)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
