Today, Rep. Anna G. Eshoo (D-Palo Alto) voted in support of H.R. 3606, the Jumpstart Our Business Startups (JOBS) Act which passed the House by 380 to 41. H.R. 3606 contains the provisions of H.R. 1070, the Small Company Capital Formation Act, which increases the SEC Regulation A offering limit from $5 million to $50 million.
"In December 2010, I testified before the House Financial Services Committee about the need to raise the Regulation A offering limit to help small companies capture more capital in the early stages of business formation," said Rep. Eshoo. "Small businesses and startups, especially in the high-tech, sustainable energy, and life science fields are ready and able to create jobs, but the current Regulation A limit is no longer relevant in terms of its cap of $5 million."
The Regulation A threshold has been stuck at $5 million since 1992. At such a low level, the benefit of a Regulation A offering is extremely limited. In fact, only seven companies took advantage of it in 2010.
"I'm very proud we're finally sending a bill to the President for his signature that increases the Regulation A offering limit, expanding the opportunity for capital formation," said Rep. Eshoo. "What better time than now, when small businesses can use this important boost."
Regulation A was enacted during the Great Depression to facilitate the flow of capital to small business and provide regulatory relief for small firms that want to sell shares of company stock. These "mini offerings" have been used to help small companies raise capital and test the water for future initial public offerings.
In December 2010, Rep. Eshoo testified before the House Committee on Financial Services about the need to increase the offering limit under "Regulation A."
Rep. Eshoo also led the Bay Area Congressional delegation in a February 2011 letter to President Obama , and March 2011 letter to Chairwoman Mary Schapiro urging the Administration to exercise its authority under Section 28 of the Securities Act to raise the Regulation A offering limit.
President Barack Obama included this legislation in his bipartisan American Jobs Act and said in his joint session to Congress addressing jobs that, "We needed to cut away the red tape that prevents too many rapidly growing startup companies from raising capital and going public."
In November 2011, H.R 1070 passed the House as a stand-alone bill 421-1.