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Panel Advances Humes Bills to Help Companies Grow and Create Jobs

Press Release

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Location: Washington, DC

A congressional panel today approved two bills sponsored by Congressman Jim Himes (CT-4) that will help expanding businesses access the resources they need to grow their companies and create jobs. The two bills increase the number of investors permitted to hold shares in either a company or a community bank before the organization is required to register with the Securities and Exchange Commission (SEC).

"These bills make common sense changes that will help growing businesses access the capital they need to expand and create jobs while maintaining important protections for investors," Himes said. "As we seek creative solutions to our nation's dangerous jobs crisis, we should look to changes like these that improve the business climate without harming our environment, eliminating health protections, or reducing our ability to invest in the education and infrastructure we know are critical to long-term prosperity."

Himes' bills both raise the number of shareholders permitted to invest in an institution before that entity must register with the SEC or "go public." Currently, both banks and private companies are subject to a 500 investor threshold, which limits the amount of capital they can raise before they must comply with the expensive reporting requirements associated with SEC registration. Additionally, in the current economic climate, successful initial public offerings (IPOs) require substantial capital and management time, initially and on an ongoing basis, especially compared to when these regulations were first put in place. These bills give small companies and community banks the flexibility to remain private until they have the capital and capability to launch a successful IPO.

Both bills modify Section 12 (g) of the Securities Exchange Act of 1934. The Private Company Flexibility and Growth Act (H.R. 2167) increases the number of shareholders that can invest in a private company from 500 to 1,000. It also exempts employees and accredited investors from that count. H.R. 1965 increases the number of shareholders permitted to invest in a community bank from 500 to 2,000.


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