Securities Act of 1993 Purpose of Registration
A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company's securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.
Securities Act of 1993 The Registration Process
In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for:
• a description of the company's properties and business;
• a description of the security to be offered for sale;
• information about the management of the company; and
• financial statements certified by independent accountants.
Not all offerings of securities must be registered with the Commission. Some exemptions from the registration
• private offerings to a limited number of persons or institutions;
• offerings of limited size;
• intrastate offerings; and
• securities of municipal, state, and federal governments.
By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public.
Sarbanes-Oxley Act of 2002
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt." The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010 by President Barack Obama. The legislation set out to reshape the U.S. regulatory system in a number of areas including but not limited to consumer protection, trading restrictions, credit ratings, regulation of financial products, corporate governance and disclosure, and transparency.
Jumpstart Our Start-ups (JOBS) Act
The Jumpstart Our Business Startups Act (the "JOBS Act") was enacted on April 5, 2012. The JOBS Act aims to help businesses raise funds in public capital markets by minimizing regulatory requirements. An Act To increase American job creation and economic growth by improving access to
the public capital markets for emerging growth companies.
Regulation A allows companies to offer and sell securities to the public (accredited/non-accredited investors), but with more limited disclosure requirements than what you would currently expect from publicly reporting companies. In comparison to registered offerings, smaller companies in earlier stages of development may be able to use this rule to more cost-effectively raise money.
Investments in startups and early-stage ventures are speculative and the businesses may fail. Unlike an investment in a mature business where there is a track record of revenue and income, a startup often relies on the development of a new business, product or service that may or may not find a market. The SEC does not pass upon the merits or give its approval to any securities offered.
Even though there is no resale restriction, you may need to hold your investment for an indefinite period of time. If the securities are not to be listed on an exchange where you can quickly and easily trade the securities, you will have to locate an interested buyer when you do seek to resell your investment. In addition to basic requirement Regulation A allows companies to sell securities to non-accredited investors as well.
Regulation (Reg) A+
On March 25, 2015 , The Securities and Exchange Commission today adopted final rules to facilitate smaller companies’ access to capital. The new rules provide investors with more investment choices.