News & Updates

Filing a SCOR

Raise up to $1 Million per Year

(Form U-7)
As adopted by NASAA on April 30, 1989

Wednesday, February 24, 2016    


In recent years there have been attempts by state legislatures to simplify securities laws for small businesses wanting to sell stock to the public. 

Small Company Offering Registration (SCOR) is now legal and available in over 40 states, and the rest are likely to be on board soon Once a company registers in one of the named states, stock sales can also be made in Delaware, The District of Columbia, and New York.  For a current list of eligible states, contact the 

North American Securities Administrators Association at 202-737-0900.                                                                           

Even if your business is not based in one of these states, you may still register and sell your securities in the states which have adopted SCOR.

SCOR permits the sale of securities to an unlimited number of investors, accredited or nonaccredited. For this reason SCOR is known as a


Because it is basically a hybrid between a public offering and a private placement.

SCOR was based on  Uniform Limited Offering Registration Exemption (ULORE) in which provisions were used in the state of Washington. ULORE was a way for small companies to avoid the costs and complexity of public offerings by selling their securities only in their own state. SCOR stock sold under a SCOR offering
can be freely traded in the secondary market, making the investments more liquid and thereby appealing to investors.

While companies filing a SCOR are subject to some requirements and an application process, SCOR securities can be resold into established secondary markets. Until recently, however, this was unlikely because most of the companies were too small to meet listing requirements on any of the exchanges. 

The Pacific Stock Exchange has created special rules and a review process for SCOR securities that will hopefully improve the secondary market for these offerings.  In addition, various bulletin boards have been established on the Internet for SCOR securities, adding to the potential liquidity of these investments.     

As the Internet grows, so should the secondary market for securities in smaller companies.

Under a SCOR offering, a company can advertise for investors, and sell securities to anybody who expresses an interest. Obviously, this gives businesses a much-needed tool for raising capital.

Small companies have successfully used SCOR to sell stock without a securities underwriting firm.

This works particularly well with an established customer base or other supportive source of investors.

Form U-7 has been developed pursuant to the Small Business Investment Incentive Act of 1989 (now contained in Section 19 of the Securities Act of 1933) which prescribes state and federal cooperation in furtherance of the policies expressed in that Act of a substantial reduction in costs and paperwork to diminish the burden of raising investment capital particularly by small business, and a minimum interference with the business of capital formation.

Form U-7 is the general registration form for corporations registering under state securities laws, securities that are exempt from registration with the Securities and Exchange Commission (the "SEC") under Rule 504 of Regulation D. It is designed to be used by companies and their attorneys and accountants which are not necessarily specialists in securities regulation.

Historically, state legislatures have generally followed two approaches to the regulation of public offerings of securities, such as those made under Form U-7.           Some states deal solely with the disclosure made to investors. In addition to disclosure, other states also apply substantive fairness standards to public offerings, in order to assure that the terms and structure of the offering are fair to investors.  In particular, those standards are designed to require the promoters of the enterprise to share its potential risks and rewards fairly with the public investors.  Those standards vary from state to state and as a general rule must be complied with by a company in order to register its securities in those states.

You may anticipate receiving comments from examiners in many of the states in which Form U-7 registration is sought.     Depending upon the regulatory approach taken by the state, those comments may be limited to request for disclosure of additional information or may also require that certain terms of the offering be modified to comply with the state's substantive fairness criteria.  Failure to resolve outstanding comments can lead to denial of an application for registration.

A company,   prior to using Form U-7, may wish to contact the staff of the securities administrator of each state in which the offering is to be filed to review applicable substantive fairness standards.    It may be possible to arrange a prefiling conference with the administrator's staff. The states that apply such standards may identify those standards in an appendix to these instructions or may use other means to make them available.

We provide you with every detail for you to make an informed decision.  



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