A two-year federal effort to modernize regulations and policies governing small and emerging growth companies (EGCs ) will result in new a Securities and Exchange Commission (SEC ) Office of Advocate for Small Business Capital Formation and an accompanying advisory committee, according to Laura Anthony, a securities and investment specialist, blogger and founder of Legal and Compliance, LLC, in West Palm Beach.

Based on a September 13, 2017, final report from the SECs Advisory Committee on Small and Emerging companies , the federal agency that oversees securities and investments is proposing new guidance and definitions for emerging privately held businesses and small publicly traded companies, Ms. Anthony writes in the Securities Law Blog .

The newly formed advocacy office will oversee the updated policies and regulations; members are currently being sought for its advocacy advisory committee, according to Ms. Anthony.

Her coverage of the committees two-year effort and final report covers five main topics:

Updated definitions that would identify smaller reporting companies as those with public floats up to $250 million (up from less than $75 million), and would identify accelerated filers as those with public floats of $250-$700 million. According to Ms. Anthony, This will increase the class of companies benefiting from a broad range of benefits, including exemption from several pay, auditor and compensation requirements.

Updated definitions of accredited investors with an emphasis on simplicity, acceptable levels of non-financial sophistication, a do-no-harm philosophy and other factors.

A recommendation to amend Rule 701s requirement that financial consultants be natural persons, a nod to the increasing use of employees or employee rental services by fund-raising entities and a recognition of the realities of todays business operations.

Greater clarity at state and federal levels around broker-dealer regulations , including broker registration, compensation, exemptions and solicitation. The committee reiterated its support for a joint, coordinated and transparent FINRA-North American Securities Administrators Association effort focused on small business capital regulations at the state level.

Board diversity disclosure and definitions, which the advisory committee believes should be left to qualifying companies but should include information covering race, gender and ethnicity.

A new U.S. equity market for smaller company securities trading by accredited investors, as well as other measures to increase investment opportunities for small and mid-cap investors.

Left unaddressed are auditor attestation requirements that arise from the Sarbanes-Oxley Act . Proponents favor the inclusion of auditor-originated reports on companies effectiveness regarding financial reporting, while critics call the requirements burdensome and costly. The Advisory Committee indicated that its updated definition of accelerated filers would include a higher threshold for compliance and reporting.