The Auditor’s office will again pursue the Montana Capital Formation Act

Montana Capital Formation Act

The Auditor’s office will again pursue the Montana Capital Formation
Act,
which had broad support in the last Legislature.

Today State Auditor John Morrison outlined his legislative
agenda
for the 2005 Legislative Session. Proposed legislation was due today to
the
office of Budget and Program Planning.
The top three priorities for the Auditor’s office in 2005 will be the
Health
Care Affordability Act, limiting the unfair use of credit scoring by
insurance companies and the Montana Capital Formation Act.

The Montana Capital
Formation Act would create a private, professionally run venture capital
fund in which institutional investors could invest. It was modeled after
proven, successful programs in other states.
"It is time to start thinking creatively about how to get Montana’s
economy
moving forward," Morrison said. "This is a step in the right direction."
The legislation is designed to create an incentive for local
entrepreneurs
to develop models to compete for the venture capital funds.
The bill allows Montana-based companies to sell securities to up to 35
people without having to register the securities with the Montana
Securities
Department. Montana-based companies could make 10 more offers than they
are
allowed under current law.

* Montana companies still would have to comply with anti-fraud
statutes and provide full disclosure to people when making offers.

* The bill facilitates capital formation in Montana because it reduces
regulation.

* The bill encourages economic development by promoting capital
formation.

* The bill reduces costs for Montana-based companies selling
securities, such as attorney fees, accountant fees, regulatory fees and
printing expenses.

* Montana-based companies would be allowed to raise an unlimited
amount of capital under this exemption, but they would be limited to
making 35 offers.

* Only Montana-based companies may take advantage of this exemption
from securities registration.

* Salespeople cannot receive a commission, otherwise the company would
not be eligible for this exemption.

###

Sarah J. Elliott

Communications Director

Montana State Auditor’s Office

[email protected]

406-444-2495