S. 5003: Access to Capital Creates Economic Strength and Supports Rural America Act

This bill would change federal securities rules for a narrow group of rural telephone companies that also provide broadband internet service.

What it would do

• It creates an exemption from certain Securities and Exchange Commission (SEC) registration requirements under Section 12(g) of the Securities Exchange Act of 1934.
• The exemption would apply to securities issued by a rural telephone company, or by one of its affiliates or subsidiaries, if the company also provides broadband internet access service.
• To qualify, the company would have to file a financial summary form with the SEC within 120 days after the end of its fiscal year and send that same form to shareholders of record.
• The summary form would need to include:
  • a summary of the company’s consolidated balance sheet and income statement,
  • subscriber data for its broadband internet access service, and
  • any other financially material information the SEC decides is needed to protect investors.
• As of the end of the prior fiscal year, the company and its affiliates/subsidiaries together would need to have:
  • no more than 100,000 broadband internet subscribers in the United States, and
  • its securities held by more than 500 non-accredited investors but fewer than 2,000 total record holders.

Plain-English effect

In simple terms, the bill would make it easier for certain smaller rural telecom and broadband companies to avoid having to fully register some securities with the SEC, as long as they provide limited financial reporting and stay below certain size and ownership thresholds.

Relevant Companies

• SHEN — Shenandoah Telecommunications Company could potentially be affected if it fits the bill’s rural telephone/broadband criteria and meets the subscriber and shareholder thresholds.
• CNSL — Consolidated Communications Holdings, Inc. could potentially be affected if it qualifies as a rural telephone company providing broadband service under the bill’s definitions.
• None found — placeholder not applicable; no other clearly identifiable publicly traded companies are likely to be directly and significantly affected based on the bill text alone.