State securities regulators streamline program for entrepreneurs wanting to go public

WASHINGTON (October 6, 1999) – State securities regulators have streamlined and improved a program designed to help local entrepreneurs raise seed capital to expand their businesses through small stock offerings.

The program, known as SCOR, for “Small Company Offering Registration,” has allowed more than 1,100 companies across the country to sell shares to the public. They range from microbreweries to small banks and technology startups.

The North American Securities Administrators Association (NASAA)¹ recently approved changes to the SCOR form and accompanying manual to make it more user-friendly for both issuers and investors. States will adopt the changes by policy or rule. The SCOR form is basically a fill-in-the-blank offering circular, or prospectus for investors.

The questions on the SCOR form were simplified by reducing the amount of legalistic language. The manual was updated with more “real life” examples to help prospective issuers complete the SCOR form. For investors, regulators approved the inclusion of an executive summary at the beginning of the SCOR document.

NASAA adopted the SCOR program a decade ago. It is designed to help small businesses raise capital with a minimum of red tape while adequately disclosing the risks of the offering to investors.

SCOR offerings are limited to less than $1 million and are not listed on stock markets such as the American Stock Exchange and the Nasdaq Stock Market. Instead, the issuer acts as its own transfer agent. That means shares are not as liquid as those listed on the national stock markets.

The SCOR form, which runs 38 pages, takes time and effort to fill out but is worth it for serious entrepreneurs, notes NASAA President-elect Deborah Bortner, Washington State’s Director of Securities. “The SCOR form can serve as a road map for a business plan. It includes the information, numbers and risks that investors and bankers need to make informed decisions,” Bortner notes.

“SCOR is for committed entrepreneurs, provided they follow the rules, do the hard work and completely fill out the form,” says Brad Smith, president of Austin, Texas-based WBS&A, Ltd., a management consultant to small issuers. “Management that wants to provide credible information to investors is more likely to use the [SCOR] program.” Smith has helped several firms attempt SCOR offerings, ranging from a distributor of home decorating products to a Texas technology company that created a new way to test printed circuit boards. The size and quality of SCOR offerings is trending upward, Smith believes. “Entrepreneurs are more accepting of SCOR,” he says.

Once the SCOR form is completed, it must be reviewed and approved by state securities regulators. If it is a multi-state offering, one state regulator may take the lead in working with the issuer, consolidating comments by other state regulators.

The SCOR form can be used to raise up to $1 million every 12 months, Smith notes. The same offering document can be relatively easily updated to do a larger Reg. A or SB1 offering, he says.

Helping entrepreneurs and small business is part of the job of state securities regulators, NASAA’s Bortner believes. “Small business is so critically important to our economy, we should do anything we can to help,” she says. Bortner served three years as chair of NASAA’s Corporate Finance Section. She plans to make small business issues a priority of her presidency, beginning in the fall of 2000.

“We’re pleased to be working with NASAA on improving the climate for small business capital formation,” said Jere W Glover, Chief Counsel, Office of Advocacy of the U.S. Small Business Administration. “With the revision of the SCOR form and Issuer Manual into “plain English,” NASAA and its members have continued to show their commitment to helping small businesses gain access to the public securities market.”

The SCOR program is currently available to entrepreneurs in all the states but Hawaii, which plans to adopt the program soon. To get a copy of the SCOR form and manual, contact your state securities regulator. Check the white pages of the telephone directory under “Government” or call NASAA at 202-737-0900 or visit the group’s website at

¹ The oldest international organization devoted to investor protection, the North American Securities Administrators Association, Inc., was organized in 1919. It is a voluntary association with a membership consisting of the 65 state, provincial and territorial securities administrators in the 50 states, the District of Columbia, Canada, Mexico and Puerto Rico. In the United States, NASAA is the voice of the 50 state securities agencies responsible for grass-roots investor protection and efficient capital formation.

Additional contacts:

Gregory Dean
Assistant Chief Counsel
US Small Business Administration

Deborah Bortner
Director of Securities
Washington State Dept. of Financial Institutions

Brad Smith
WBS&A, Ltd.
Austin, Texas

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