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

April 16, 2004View for printing

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.

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Sarah J. Elliott

Communications Director

Montana State Auditor's Office

selliott@state.mt.us

406-444-2495
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