Idaho is part of new private placement database

Idaho has joined the Electronic Filing Depository, a new online database for companies to electronically submit forms for one kind of private equity to raise revenue. The EFD was developed by the North American Securities Administrators Association and is intended to streamline filing requirements, according to the Idaho Department of Finance. The new site could be useful for companies looking to raise money in several states.

The EFD can be used by companies looking to raise money from accredited investors, who tend to be people with high incomes or wealth. The database can be used by issuers who file a Form D for a Regulation D, Rule 506, which is a safe harbor for private offerings. Those forms must be submitted to the Securities and Exchange Commission as well as state regulators like the Idaho Department of Finance.

Before the EFD, filers had to complete paper copies of the forms and mail them in, said Jim Burns, acting bureau chief of securities with the Idaho Department of Finance.

Switching to the electronic model will help companies seeking funding, and will also help the lawyers who handle the filings, said Paul Boyd, a partner in the corporate group at Stoel Rives in Boise. He said regulatory filings are a large part of his work and that mailing them in to every state where companies sought funding was time-consuming, expensive and slow.

“It’s good for investors, the public and issuers, because it’s less expensive, quicker and cuts down on a lot of needless paperwork,” Boyd said.

Thirty-nine states have signed up to participate in the EFD. It’s available for all of Idaho’s neighboring states except Oregon and also isn’t available for some large states nationally, including California and New York. Burns said the database came online in December after testing in November, so it may take some states a while to decide they want to take part.

Burns said that if the system works well, regulators will  add other regulatory filings to the EFD.

“This becomes a viable option, perhaps, for different types of offerings,” he said.

While the EFD may provide added convenience to companies, it does have an added cost. Beyond states’ filing fees, there is a $150 fee for each unique filing, which covers initial filings, amendments and renewal filings. Boyd said that added cost is still less than the added time it takes for attorneys to send filings to several states.