The North American Securities Administrators Association (NASAA) announced Tuesday that its members have voted to approve a streamlined multistate review protocol for small companies looking to raise capital.
The protocal would ease regulatory compliance costs for companies trying to raise funds under Title IV of the Jumpstart Our Business Startups Act, the state securities regulators say.
Under the new program, Regulation A filings would be made in one place and distributed electronically to all states, NASAA said. Lead examiners would be appointed as the primary point of contact for a filer, and each state would be given 10 business days for review.
Lead examiners alone will interact with issuers to resolve any deficiencies.
Andrea Seidt, NASAA president and Ohio securities commissioner, said in a statement that this approval “is an important first step toward creating a state-level filing and review program that eases regulatory hurdles for filers without sacrificing important investor protections.” NASAA looks “forward to implementing this program so that Regulation A will be an attractive and efficient option both for small businesses that need capital and the investors asked to provide it.”
NASAA spokesman Bob Webster says that now that the membership approved the coordinated review program, the next step calls for members to sign a memorandum of understanding (MOU) demonstrating their agreement to participate in the program. “We are in the process of fielding signed MOUs,” he said.
The new program was initiated in response to Title IV of the JOBS Act, which raised to $50 million from $5 million the amount of money that can be raised through offerings exempt from registration under Regulation A.
Congress directed the Securities and Exchange Commission to adopt a rule implementing this JOBS Act provision. But NASAA believes the SEC’s proposed rule runs contrary to congressional intent by seeking to transform Regulation A offerings into covered securities, which by law are not subject to state review.