Expanding Access to Capital Act of 2023

Expanding Access to Capital Act of 2023

This bill reduces various securities regulations applicable to certain companies, brokers, and advisors. The bill also allows more investors to invest in specified types of ventures.

The bill reduces regulations, for example, by establishing an exemption to certain securities regulations for small offerings of securities. Specifically, under the bill, securities registration is not required for a sale of securities if the total amount of securities sold by the issuer during the preceding 12-month period does not exceed $250,000. The bill also allows certain issuers of securities regulated as emerging growth companies to continue operating under these regulations, including those related to reduced disclosures, for an additional period of time. It also raises the limit of total annual gross revenues under which issuers qualify as emerging growth companies to $1.5 billion.

The bill allows more investment, for example, by raising the caps on the allowed capital and number of investors under which a fund may qualify as a venture capital fund. Venture capital funds are exempt from certain regulations applicable to other investment firms, including those related to filings, audits, and restricted communications with investors. The bill increases the caps from (1) $10 million to $150 million in capital contributions and commitments, and (2) 250 to 600 allowed investors.

In addition, the bill expands who may be considered an accredited investor for purposes of participating in private offerings of securities. Certain unregistered securities may only be offered to accredited investors.

Bill 118 hr 2799, also known as the Expanding Access to Capital Act of 2023, aims to make it easier for small businesses to access capital by expanding the definition of accredited investors. Currently, accredited investors are individuals or entities that meet certain income or net worth requirements and are allowed to invest in private offerings. This bill seeks to broaden this definition to include individuals with certain professional certifications, designations, or credentials that demonstrate their financial sophistication.

The bill also includes provisions to streamline the registration process for small businesses seeking to raise capital through Regulation A offerings. Regulation A offerings allow companies to raise up to $50 million from the general public without having to go through the full registration process required for public offerings. The Expanding Access to Capital Act of 2023 would simplify the filing requirements for these offerings, making it easier and less costly for small businesses to access capital from a wider pool of investors.

Additionally, the bill includes measures to increase transparency and accountability in the private securities market. It requires the Securities and Exchange Commission (SEC) to conduct a study on the impact of the accredited investor definition on capital formation and investor protection. The SEC would also be required to report to Congress on any recommendations for changes to the definition of accredited investors. Overall, the Expanding Access to Capital Act of 2023 aims to promote economic growth and job creation by making it easier for small businesses to raise capital and access the resources they need to succeed. By expanding the definition of accredited investors and streamlining the registration process for Regulation A offerings, this bill seeks to level the playing field for small businesses and encourage investment in the private securities market.