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Bill -- 500 Shareholder Rule

Bill -- 500 Shareholder Rule

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Published by venturewire
Rep. David Schweikert (R-Ariz.) today introduced a bill that would amend the Securities Exchange Act of 1934, allowing allow private companies to have 1,000 shareholders instead of the current 500 before they’re required to publicly disclose their finances, often compelling them to go public.
Rep. David Schweikert (R-Ariz.) today introduced a bill that would amend the Securities Exchange Act of 1934, allowing allow private companies to have 1,000 shareholders instead of the current 500 before they’re required to publicly disclose their finances, often compelling them to go public.

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Published by: venturewire on Jun 14, 2011
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07/13/2014

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..................................................................... (Original Signature of Member)

112TH CONGRESS 1ST SESSION

H. R. ll

To amend the Securities Exchange Act of 1934 to change the threshold number of shareholders for required registration under that Act.

IN THE HOUSE OF REPRESENTATIVES
Mr. SCHWEIKERT introduced the following bill; which was referred to the Committee on llllllllllllll

A BILL
To amend the Securities Exchange Act of 1934 to change the threshold number of shareholders for required registration under that Act. 1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled, 3 4
SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Private Company

5 Flexibility and Growth Act’’. 6 7
SEC. 2. THRESHOLD FOR REGISTRATION.

Section 12(g)(1)(B) of the Securities Exchange Act

8 of 1934 (15 U.S.C. 78l(g)(1)(B)) is amended by striking
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2 1 ‘‘shall—’’ and all that follows through ‘‘register’’ and in2 sert ‘‘shall, within 120 days after the last day of its first 3 fiscal year ended on which the issuer has total assets ex4 ceeding $10,000,000 and a class of equity security (other 5 than an exempted security) held of record by 1,000 per6 sons, register’’. 7 8
SEC. 3. ACCREDITED INVESTORS AND EMPLOYEES.

Section 12(g)(5) of the Securities Exchange Act of

9 1934 (15 U.S.C. 78l(g)(5)) is amended by adding at the 10 end the following: ‘‘For purposes of determining whether 11 an issuer is required to register a security with the Com12 mission pursuant to paragraph (1), the definition of ‘held 13 of record’ shall not include securities held by persons who 14 qualify as accredited investors (as that term is defined by 15 the Commission) or securities that are held by persons 16 who received the securities pursuant to an employee com17 pensation plan in transactions exempted from the registra18 tion requirements of section 5 of the Securities Act of 19 1933.’’. 20 21
SEC. 4. COMMISSION RULEMAKING.

The Securities and Exchange Commission shall revise

22 the definition of ‘‘held of record’’ pursuant to section 23 12(g)(5) of the Securities Exchange Act of 1934 (15 24 U.S.C. 78l(g)(5)) to implement the amendment made by 25 section 2. The Commission shall also adopt safe harbor

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3 1 provisions that issuers can follow when determining 2 whether holders of their securities are accredited investors 3 or that holders of their securities received the securities 4 pursuant to an employee compensation plan in trans5 actions that were exempt from the registration require6 ments of section 5 of the Securities Act of 1933.

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