Congressman David Schweikert (R-AZ) applauded the passage of the "JOBS' Act today by the U.S. Senate. This package included two of his bills, co-authored by Senators Toomey, Tester, and Carper, the most of any Member:
"I am ecstatic that the Senate has passed the "JOBS' Act and is sending it along to President Obama.
"I am grateful that my work product and the work product of my colleagues was included in this package. This is a big win for the American people, as we have further removed burdens on small business and create more certainty," said Rep. David Schweikert.
BACKGROUND ON H.R. 1070:
The Small Company Capital Formation Act reduces regulation and makes it easier for small businesses to raise capital and test the waters for a future initial public offering.
H.R. 1070 reduces burdensome regulation on small business by increasing the SEC Regulation A exemption from $5 million to $50 million.
Regulation A, on the books since 1933, exempts small companies from the SEC's filing requirements for less than $5 million. Though Regulation A has periodically increased from its initial ceiling of $100,000 in 1933 to the current $5 million ceiling in 1992, it has not been increased to reflect the rising costs associated with bringing a small company public over the last two decades. Increasing the Regulation A threshold will lower the cost of raising capital for small businesses.
The Small Company Capital Formation Act ensures that this ceiling is raised when necessary and as economic conditions warrant by requiring that the SEC revisit this ceiling every two years. Should the SEC find that the ceiling needs to be higher, this bill provides them with the authority to increase the limit.
This bill first passed the House on November 2, 2011, by a margin of 421-1.
The Senate version of this bill was introduced in September by Sens. Toomey (R-PA) and Tester (D-MT).
BACKGROUND ON H.R. 2167:
Many small businesses are forced to file as a public company because of an obscure regulation that requires companies with 499 shareholders and $10 million in assets to file with the SEC.
This current shareholder threshold rule was originally adopted in 1964, and has not been modernized since.
This regulation causes undue pressure on our markets because it restricts the number of shareholders and assets these companies can have. In turn, this severely limits the growth stages for companies, which need time and flexibility to develop. Without regulatory relief, these small businesses will not grow or they will be acquired by larger firms. Both of these outcomes lead to fewer jobs and less innovation.
H.R. 2167, Private Company Flexibility and Growth Act, removes these barriers to capital formation for small companies by raising the shareholder threshold from 500 to 1,000 shareholders.