The Securities and Exchange Commission yesterday answered a longstanding call from small business and lifted complex reporting requirements for limited securities sales.

The unanimous SEC decision exempts from most registration requirements companies offering securities sales of up to $2 million during a six month period. Those unregistered sales can only be made to accedited sales can only be made to accredited institutions and to the seller's corporate executives and directors.

But in approving the regulation, which goes into effect Feb. 25, several SEC members warned that there are risks associated with a loosening of regulations involving securities transactions.

SEC Commissioner Roberta Karmel pointed out that there is "always a danger that some offerers will go forward and some investors will be defrauded."

In another move yesterday designed to ease the difficulties and high costs associated with meeting securities laws, the commission issued for comment a long-awaited proposal that would dramatically alter the nature of corporate reporting to the SEC and would revise the annual shareholder reporting system.

Calling the proposal "a radical departure" from previous commission policy, SEC staff members said the proposal, now open for comment, will allow for a merging of corporate annual reports with the yearly 10-K filings submitted to the commission.

"These changes are all designed to substantially reduce the volume of paperwork imposed upon registrants and to concurrently reduce the time and staff effort consumed in the review of filings," the SEC staff said.

Many corporate officals have often complained about the duplicative nature of the 10-K yearly form and the widely-distributed annual report. SEC officials say the new proposal could result in substantial savings to public companies.

Not only does the far-reaching proposal streamline corporate reporting requirements, it also revises the regulations which lay out the guidelines for a corporation's discussion of its status in the annual report.

Currently, management's discussion focuses on a summary of operations and primarily revolves around income.

"The new proposal would require discussion of the financial statements and changes in financial condition in their entirety and would specifically require registrants to focus upon liquidity and capital resources in addition to capital resources in addition to income," the SEC staff said.

In addition, current guidelines provide numerical restrictions on items discussed in a corporation's income statement.

Broadly, the SEC proposal calls on a corporation's management to assess uncertainties or events that affect the firm's liquidity, capital resources and income and to "identify known trends" which are likely to affect overall corporate performance, the SEC staff said.

However, SEC officials point out that some basic issues in the proposal remain unresolved. For example, the merging of the two reports raises questions about the liability of corporate officials and directors.

At the present time, there are legal differences between the responsibility a corporation and its officials must adhere to in its 10-K filing its prospectus, and its annual report.

The small issue exemption, considered by many commissioners and staff members to be a major experiment, comes on the eve of a major small business meeting here, a parlay bringing together business and government officials to discuss federal policies affecting smaller firms.

Among the continuing subjects of complaints by the small business community are the difficulties federal policies pose in raising capital.

Now, the complex paperwork involved in issuing limited securities sales has been cut by the SEC, a piece of SEC Chairman Harold Williams' regulatory reform program.