Lawyers hope new regs will help smaller firms tap equity markets.

Small California companies may find it easier to sell stock offerings under new and less cumbersome regulations recently drafted by the state Department of Corporations, attorneys say.

The regulations, if approved, will clarify the Small Corporate Offering Registration law passed last September which allows small companies to make public offerings of up to $1 million and streamline legal costs by filing a standard disclosure statement with the state.

Although the new regulations are still in a public comment period, which ends March 18, it is expected they will go to the state Office of Administrative Law for adoption.

The regulations would "allow smaller companies to sell offerings and comply with securities law in a less cumbersome and more cost effective manner," said Tim LeBas, a senior counsel with the Department of Corporations.

Although the SCOR law became effective Jan. 1, no California company has yet to complete a SCOR offering or even file plans for one.

Critics charged that lengthy SCOR program regulations imposed by the state in November restrict the program's effectiveness. Those regulations require each California company to file a special "C-7" disclosure form rather than a standard "U-7" disclosure form required by every other state with SCOR offerings.

The current regulations also require that companies hire an attorney -- which some complained was too costly -- to sign the stock offering disclosure statement, certifying they made a diligent effort to determine there were no inaccuracies and that the form was complete.

At least one California company executive said he found the state's SCOR regulations too troublesome, but was encouraged by the new revamped regulations.

"We were advised by our financial adviser and attorneys that it would be an easier process for us to consider registration for a SCOR offering in other states that accept the standard U-7 form," said Michael C. Skinner, CEO of Santa Barbara-based Pacific Heritage Mint, which plans to do a SCOR offering this year. "I was so discouraged we would not be able to offer stocks to people in the Santa Barbara area who have supported our company."

With the proposed new regulations, which would allow use of the standard U-7 form and only advise the hiring of an attorney, Skinner said he will "absolutely" file in the next 90 days to sell his SCOR offering in California.

"Based on what I've heard in the past week about the U-7, we will file in California," he said.

The company expects to retain San Diego-based SCOR Consulting to help prepare its stock offering.

Several attorneys objected to the C-7 form regulation because it made the stock offering process less uniform. They also objected to the attorney's signature because it placed too much weight on the lawyer.

The new regulations, if passed, would negate the C-7 requirement and instead require companies to file a U-7. They also soften, but not entirely eliminate, the responsibility of attorneys who help companies prepare the forms.

Filing a U-7 form instead of a C-7 allows companies that want to raise money through a SCOR offering in more than one state to fill out only one disclosure form instead of two, said Twila Foster, a member of the State Bar's business law section's corporations committee.

She added that two different disclosure forms could make the companies ultimately liable for information included on one and not the other.

As far as the attorney's responsibility is concerned, the first set of regulations required an attorney's signature, while the second set only encourages company officials to seek the advice of an attorney.

In the event that an attorney does give company officials advice, the attorney is required to submit an opinion along with the U-7 form citing a limited amount of liability for what is in the documents.

This regulation "lessens the liability a little bit with some hedge clauses," said Lee Petillon, an attorney with the Century City-based law firm Gipson, Hoffman & Pancione.