What is SCOR?
Description
This article is from the Investing Articles: Public Offerings: IPO and DPO series.
What is SCOR?
SCOR (Small Corporate Offering Registration) is a do-much-of-it-yourself securities registration document ("prospectus") in the form of a 50-question form designed so that knowledgeable business people, their attorneys and accountants can create the documents needed to sell state-registered securities to the general public--a direct public offering.
SCOR gives small businesses access to public capital by making the
process affordable. It is up to them to seize that
opportunity,
and to make something of it. Selling debt or equity securities (common
or preferred stock, bonds, promissory
notes, etc.) directly to the
public, (that is, without having to pass muster with the Securities
and Exchange Commission and
stock exchanges such as the New York,
American, or NASDAQ the national market, or even regional exchanges
such as the Boston, Philadelphia, Chicago, or Pacific) is an option
every small business--start-up, developing, or going concern--should
consider.
More than 700 companies have attempted to register almost $1
billion in equity and more than $100 million in debt using this
process. While not all have succeeded, many have. Several companies
have used direct public offerings (DPO) to move their
businesses
from their garages onto national or regional exchanges.
SCOR is an Important Part of the DPO Process
Small companies have been able to sell securities directly to the
public without having to go through the expense of a full SEC
registration since 1982. However, it was not until 1989 when the North
American Securities Administrators Association
adopted the Small
Corporate Offering Registration form, that the process of state
registration became truly practical.
SCOR refers to both a public offering of $1 million or less and the
form used as the offering document (prospectus). Companies seeking to
raise up to $1 million in a 12-month period must register the
securities only in the states in which they
intend to sell
them.
Who can use the SCOR form?
While the federal
exemption is very broad, there are additional limitations on who can
use the SCOR Form. Generally, the form may be used by all small
corporations except: Blank check and blind pool companies (companies
that have no specific purpose for the funds they are trying to raise);
Companies involved in extractive industries, such as oil and gas, and
mining companies; Reporting companies (companies required to make
regular reports such as 10-K and 10-Q to the Securities and Exchange
Commission); and Investment companies. Other than those, the form has
been used by high tech, low tech, real estate, lifestyle,
manufacturing, merchandising and financial companies at stages of
development.
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