TheCorporateCounsel.net

I frequently whine to my colleagues about how whenever it’s my week to blog, substantive topics seem to dry up and I’m reduced to blogging about things like the mortal dangers posed by pickleball. This week, however, I’ve got nothing to whine about, and a big reason for that is that Acting SEC Chair Mark Uyeda is making news this week every time he opens his mouth.

The latest example of this occurred yesterday, in opening remarks that Commissioner Uyeda delivered at a meeting of the SEC’s Small Business Advisory Committee.  If you work with small, unlisted companies, this excerpt from those remarks suggests that a really big and helpful change might be in the works:

This afternoon, the Committee will discuss the challenges faced by small public companies that are not listed on a national securities exchange. I believe that scaled disclosure requirements is important for smaller companies, as the costs for preparing disclosure can disproportionately burden smaller companies. Small public companies that are not listed on an exchange may face even more unique challenges. For example, unlisted companies with a public float of less than $75 million are ineligible to use shelf registration statements.

There may also be investor protection concerns associated with small companies whose stock have relatively low liquidity and may be more prone to manipulation. However, do these concerns justify not permitting small companies – that may be in greater need for capital than larger, listed companies – to use shelf registration statements and quickly access the capital markets when timing and other conditions are ideal?

Unlisted companies face a lot of challenges when trying to raise capital in public offerings, and while the ability to streamline the offering process by using shelf registration statements for primary deals won’t address them all, it will definitely make it easier for those companies to give the public capital markets a shot.

– John Jenkins