BY DARA ALBRIGHT
It has been reported this week that new legislation is being introduced that would revise The 1964 Securities Acts Amendments which held companies with at least $1 million of assets and 500 shareholders to the same mandatory disclosure requirements as the 1934 Act imposes on securities traded on the major stock exchanges.
The proposed revisions, which include raising the shareholder threshold to 1,000 as well as exempting employees and accredited investors from the shareholder count, would undoubtedly tempt companies into staying private longer. This rule change, coupled with the new liquidity options made possible by cutting-edge private company platforms such as Gate Technologies, SecondMarket, Sharespost and Xpert Financial will allow private companies to properly cultivate their business and become better prepared for an eventual public exit. As a result, stronger companies will emerge.
“Clearly this indicates congressional support for updating the rules and regulations to be consistent with the developing market and current technologies,” says Vince Molinari, CEO of Gate Technologies. “The positions of regulators and Capitol Hill will foster additional expansion of capital while maintaining oversight and investor protection.”
The passage of the Private Company Flexibility and Growth Act will certainly provide the regulatory impetus to further bolster the rapidly expanding private company marketplace (PCM), the nation’s sole “long-only” marketplace. But what has yet to be discussed is how this act will transform a company’s shareholder base. The PCM attracts an entirely different echelon of investor – the longer term common stock purchaser – to the small cap company at its most pivotal growth stage. As opposed to prematurely going public and risk placing stock in the hands of manipulators, traders and shorters, issuers will be able to more effectively control its liquidity and manage its shareholder base. Imagine a company’s growth potential if its stock is placed with investors whose interests are actually aligned with the company’s. Now, envision the economic impact of an entire marketplace comprised of these companies.
Outstandingly, the bill has garnered bipartisan support and it’s so nice to see everyone finally getting along. I guess with a big election on the horizon, both democrats as well as republicans want to claim credit for a introducing a bill that could potentially resuscitate the U.S. economy.
Please let your local Congressman and Senator know that you support this bill – click here to find your local representative.
NowStreet Media, voice for the rapidly emerging private company marketplace, prides itself on being on the cutting-edge of capital formation enhancement and introducing new and innovative ways for companies to tap into the capital markets and cultivate their businesses. To learn more about NowStreet Media, please visit us at http://nowstreetjournal.com/about-2/.
- Congressman: Private stock bill could become law by year-end (finance.fortune.cnn.com)
- The Big Regulation Forcing Facebook To IPO Could Be Torn Up (businessinsider.com)
- Exclusive: New stock rules proposed (finance.fortune.cnn.com)