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U.S. Securities and Exchange Commission

Securities and Exchange Commission
Advisory Committee on Smaller Public Companies

By-Laws and Operating Procedures

(As adopted on April 12, 2005)

The following By-Laws and Operating Procedures (“By-Laws”) will govern the operations of the Securities and Exchange Commission Advisory Committee on Smaller Public Companies (the “Committee”).

Section I: Purpose, Organization and Operation

The purpose of the Committee is to assist the U.S. Securities and Exchange Commission (the “Commission”) in assessing the current securities regulatory system in the United States relating to disclosure, financial reporting, internal controls and offering exemptions for smaller companies, and to make recommendations for changes. The Committee has been formed under the Federal Advisory Committee Act, 5 U.S.C.–App. 1 (“FACA”), which governs the creation and operation of advisory committees by federal government agencies, by the filing of its Charter on March 23, 2005 with the Committee on Banking, Housing, and Urban Affairs of the United States Senate and the Committee on Financial Services of the U.S. House of Representatives. Notwithstanding anything to the contrary in these By-Laws, the Committee will operate in accordance with FACA and its implementing regulations, and with its Charter, as the same may be amended from time to time.

Section II: Members and Official Observers

The Members of the Committee are appointed by and serve at the pleasure of the Chairman of the Commission as may be appropriate for the accomplishment of the Committee’s purposes and in order to balance the viewpoints required to effectively address those purposes. Official Observers are invited by the Chairman to serve as official observers of the Committee; they also serve at the pleasure of the Chairman. Official Observers have all rights of Members of the Committee except the right to vote or to make a motion for a vote.

Section III: Meetings

(A) In General. The Committee will meet at such intervals as are necessary to carry out its duties. Meetings may be called by the Co-Chairs of the Committee with the approval of the Designated Federal Officer of the Committee appointed in accordance with FACA (“DFO”), or by the DFO. One of the Co-Chairs of the Committee will preside at all meetings of the Committee, unless the Chairman of the Commission directs the DFO to preside in accordance with FACA. The presiding officer may specify the use of rules of parliamentary procedure consistent with these By-Laws. Subject to such reasonable guidelines and procedures as the presiding officer or the Committee may adopt, Members and Official Observers may participate in a meeting by means of conference telephone or similar communications equipment if all Members and Official Observers can hear one another at the same time and members of the public entitled to hear them can do so.

(B) Notice. The Committee will publish a notice of each meeting in the Federal Register at least 15 calendar days before the meeting. The notice will include (1) the name of the Committee; (2) the time, date, place and purpose of the meeting; (3) a copy or summary of the agenda; (4) a statement as to whether all or part of the meeting will be open to the public and, if any part is closed, a statement as to why, citing the specific statutory provisions that serve as the basis for closure; (5) any notice required by Section III(F) if oral public comment is to be excluded; and (6) the name and telephone number of the DFO or other Commission official who may be contacted for additional information concerning the meeting.

(C) Agenda. The Co-Chairs will adopt an agenda for each meeting of the Committee sufficiently in advance of the meeting to permit a copy or summary of the agenda to be published with the notice of the meeting. The DFO must approve the agenda before such publication. The Commission staff will distribute the agenda to the Members and Official Observers before each meeting. Items for the agenda may be submitted to the Co-Chairs through the DFO by any Member or Official Observer of the Committee or by any member of the public.

(D) Voting. A Member must be participating in a meeting personally to cast a vote. When a decision or recommendation of the Committee is required, the presiding officer will request a motion for a vote. Any Member may make a motion for a vote and vote. No second after a proper motion will be required to bring any issue or recommendation to vote. Committee action based on a vote requires a simple majority of the votes cast at a meeting at which there is a quorum.

(E) Quorum. A quorum will consist of a simple majority of the Members, not including Official Observers.

(F) Open Meetings. Unless otherwise determined in advance, all meetings of the Committee will be open to the public. Once an open meeting has begun, it may not be closed for any reason. If, during the course of an open meeting, matter inappropriate for public disclosure arises during discussion, the presiding officer will order such discussion to cease and will schedule it for closed session. All materials brought before, or presented to, the Committee during an open meeting will be available to the public for review or copying at the time scheduled for the meeting. All such materials also will be available on the Committee’s web site before the meeting or added to the web site as soon as practicable afterwards. The Co-Chairs may decide in advance to exclude oral public comment during a meeting, in which case the meeting announcement published in the Federal Register will note that oral comment from the public will not be permitted and will invite written comment as an alternative. Members of the public may submit written statements to the Committee at any time.

(G) Closed Meetings. All or parts of meetings of the Committee may be closed in limited circumstances in accordance with applicable law. Requests for closed meetings must be submitted by the DFO to the Chairman of the Commission under FACA, generally at least 30 days in advance of the meeting. The appropriate Commission official must determine that closing the meeting is consistent with the provisions of the Government in the Sunshine Act. Consistent with Section III(B)(4), the notice of the closed meeting published in Federal Register must include information on the closure.

(H) Hearings. The Committee may hold hearings to receive testimony or oral comments, recommendations and expressions of concern from the public. The Committee may hold hearings at open meetings or in closed session in accordance with the standards in these By-Laws for closing meetings to the public. The Co-Chairs or the Committee may specify reasonable guidelines and procedures for conducting orderly and efficient hearings, such as requirements for submitting requests to testify and written testimony in advance and placing limitations on the number of persons who may testify and the duration of their testimony.

(I) Minutes. The DFO will prepare minutes of each meeting of the Committee and submit them to the Co-Chairs for certification of their accuracy. At least one Co-Chair must certify as to the accuracy of the minutes. The DFO will distribute copies of the certified minutes to each Member and Official Observer. Minutes of open meetings will be available to the public on the Committee’s web site. Minutes of closed meetings will also be available to the public upon request, subject to the withholding of matters about which public disclosure would be harmful to the interests of the Government, industry, or others, and which are exempt from disclosure under the Freedom of Information Act. The minutes will include a record of persons present (including the names of Committee Members and Official Observers, names of Commission staff providing support services to the Committee, and names of members of the public who made written or oral presentations); a complete and accurate description of the matters discussed and conclusions reached; and copies of all reports received, issued or approved by the Committee.

Section IV: Officials

(A) Co-Chairs. The Co-Chairs of the Committee are appointed by and serve at the pleasure of the Chairman of the Commission to perform the duties specified in these By-Laws. The Co-Chairs will work with the DFO to establish priorities, identify issues that should be addressed, determine the level and types of staff and financial support required and serve as the focal point for the Committee’s membership.

(B) Designated Federal Officer. The DFO is designated by the Chairman of the Commission and serves as the Federal Government’s agent for matters related to the Committee’s activities. By law, the DFO must, among other things, approve or call all meetings of the Committee, approve agendas, attend all meetings, and adjourn meetings when such adjournment is in the public interest. In addition, the DFO is responsible for providing adequate staff support to the Committee, including staff to assist the DFO in the performance of the following functions: (1) notifying Members and Official Observers of the time and place for each meeting; (2) maintaining records of all meetings, including subcommittee meetings, as required by law; (3) maintaining the roll; (4) preparing the minutes of all meetings of the Committee and its subcommittees; (5) attending to official correspondence; (6) maintaining official Committee records, including subcommittee records; (7) maintaining a web site for the Committee; (8) acting as the Committee’s agent to collect, validate and pay all vouchers for pre-approved expenditures; and (9) preparing and handling all reports, including the annual report of the Committee required by FACA.

(C) Support Staff. The Chairman of the Commission has agreed that staff from the Commission’s Division of Corporation Finance, and in particular the Division’s Office of Small Business Policy, will be available to the DFO to provide adequate staff support for the Committee.

Section V: Subcommittees

The Co-Chairs of the Committee, with the approval of the DFO, may convene subcommittees to support the Committee’s functions and may appoint Members and Official Observers to, and Chairs of, any subcommittees so convened. The Co-Chairs will be ex officio members of all subcommittees. Only Members of the Committee will have the right to vote and make a motion for a vote in a subcommittee. No subcommittee will have any authority to provide advice or recommendations (1) directly to the Commission or (2) to be adopted by the Committee without discussion or consideration at an open meeting of the Committee. All activities of the subcommittees will be in compliance with FACA.

Section VI: Records

All documents, reports and other materials prepared by or submitted to the Committee constitute official governmental records and must be maintained in accordance with FACA’s policies and procedures.

Section VII: Expenses

Expenses related to the operation of the Committee will be borne by the Commission. Expenditures of any kind must be approved in advance by the DFO.

Section VIII: Amendments

These By-Laws may be amended from time to time by vote of the Members.



Modified: 04/18/2005