On September 6, 2017, the U.S. House of Representatives overwhelmingly passed the Improving Access to Capital Act (HR 2864) in a 403-3 vote. The bill would vastly expand the usage and capabilities of Reg A+ crowdfunding to include even reporting companies, not just private startups.
Equity crowdfunding, such as Reg A+, was initially created by the JOBS Act of 2012. The law allows small companies to utilize crowdfunding-style fundraising to obtain up to $50 million in a “mini-IPO” type offering.
In particular, this legislation would be a major victory for public companies trading on the OTC Markets Group, Inc. (OTCQX: OTCM) platform. While some micro-caps standouts are able to obtain equity financing, most OTC companies are left with one main option: terrible debt financing deals. These convertible debt deals may provide the desperately needed capital to stay alive, but it comes at a deep cost to the shareholders.
However, the rise of equity crowdfunding and Reg A+ is positioned to provide small companies with next-level financing solutions that will not dilute and destroy your current share value. OTC Markets Group, Inc. has been very supportive of the JOBS Act and the expansion of Reg A+. Upon the passing of the Improving Access to Capital Act, OTC Markets Group, Inc. President and Chief Executive Officer, Cromwell Coulson, released a statement saying “We are excited to see the House of Representatives pass HR 2864, Improving Access to Capital Act. We commend Representatives Sinema and Hollingsworth for sponsoring this bipartisan legislation that will give all SEC reporting companies the ability to raise capital online under Regulation A+. This effort is vital to lowering the cost of capital formation and fostering economic growth for US companies.”
As of September 6th, the legislation has been sent to the Senate, “read twice and referred to the Committee on banking, Housing, and Urban Affairs,” according to Congress.gov. With all likelihood, the legislation will be passed in the Senate as the House vote seemed to have strong bipartisan support. For now, this first step is a major win for publicly-traded small-cap stocks.