Breaking Down the Expanding Access to Capital Act of 2023
On March 6th, 2024, the House of Representatives passed the Expanding Access to Capital Act of 2023 (H.R. 2799). Introduced by House Financial Services Committee Chairman Patrick McHenry, R-North Carolina, the act is intended to facilitate capital formation by strengthening public markets, helping small businesses and entrepreneurs, and creating new opportunities for all investors.
This package of bills has implications for the investment space ranging from retirement plan management to expanding the definition of an accredited investor for nonpublic offerings.
Many of the passive real estate investment strategies offered at Legacy are only available to accredited investors. One key aspect of the act is the broadening of the definition and requirements of this investor classification. Under the new rules, certain clients of registered investment advisors who don’t meet the traditional income or net-worth thresholds would still be eligible to participate in private offerings. These investors could invest up to 10% of their annual income or net assets, whichever is greater.
According to the Congressional summary, the bill’s provisions are designed to reduce “various securities regulations applicable to certain companies, brokers, and advisors” and allow “more investors to invest in specified types of ventures.”
Other provisions of the act include:
Issuers selling less than $250,000 worth of securities in a year would be exempt from registering those sales with the SEC.
Certain emerging growth companies would be allowed to continue operating under less stringent regulations for a longer period.
The revenue threshold for a company to qualify as an emerging growth company would be raised to $1.5 billion.
403(b) plans managed under the Employee Retirement Income Security Act would be allowed to include collective investment trusts (CITs).
Also passed as part of the package was the Improving Disclosures for Investors Act. This amendment directs the SEC to adopt electronic disclosure rules that would allow financial firms to send investors their documents in digital format.
With passage by the House, the act will now advance to the Senate. To learn more about what this could mean for you as a real estate investor, give our team a call.
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This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.