In a rare sign of bipartisanship, Congressional Republicans and Democrats are moving forward with a group of widely supported jobs bills, aimed at improving capital formation for small businesses and spurring the growth of startups.
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House Majority Leader Eric Cantor, D-Va., introduced the JOBS (Jumpstart Our Business Startups) Act on Tuesday, a legislative package of several bills that have already been approved by different committees and in some cases the full House.
Cantor announced the package with a group of lawmakers and small business owners. “It is a compilation of bills, some of which have been voted on the floor of the House with heavy bipartisan support,” he said. “These are bills which also reflect the work of the President’s Jobs Council. Today, the White House has said we need to get started jumpstarting our business startups, and that is exactly what the bill does. Many of the members who are here have bills in the package. The bills range from increasing the ability for small businesses to access capital, to bills which reduce the regulatory burden on startup businesses and allow them to flourish and grow. That’s what we believe is the secret to the success of growing this economy, it is to get the small business engine started again.”
Among the components of the package is a bill already approved by the Financial Services Committee by a 54-1 vote that reduces the costs of going public by giving companies a temporary reprieve from certain Securities and Exchange Commission regulations, phasing in the regulations over five years. This would allow smaller companies to go public sooner. The bill would also create a new category of issuers called Emerging Growth Companies, which would retain that status for five years or until they exceed $1 billion in annual gross revenue or become large accelerated filers. Investors would be protected by requiring the companies to provide audited financial statements and establish and maintain internal controls over financial reporting.
Another component of the JOBS Act is a bill that removes an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. The bill was approved by the Financial Services Committee and passed the House by a bipartisan vote of 413-11 last November.
Yet another part of the package is a bill that was approved last November by the House by a bipartisan vote of 407-17 to remove SEC restrictions on “crowdfunding” so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered “accredited” by the SEC. Companies would be able to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides the SEC with audited financial statements.
Still another part of the package is a bill that was also approved by the House last November by a margin of 421-1, making it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million.
Another component would remove barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders. This bill was approved by the Financial Services Committee in a voice vote.
Another component is a bill that would increase the number of shareholders allowed to invest in a community bank from 500 to 2,000, enabling banks to better deploy their capital to make more loans. This bill, which is the House version of a Senate bill, so far has only been referred to the Financial Services Committee.
Senate Majority Leader Harry Reid, D-Nev., supports similar bipartisan legislation and is expected to help steer it through the Senate. “Senate Democrats have been working on these measures for months,” he said. “I am glad to see House Republicans joining Democrats to move this legislation. Common-sense issues like these should not have to turn into knock-down, drag-out fights. I look forward to moving these measures and our economy forward with the help of my Republican colleagues.”