Rep. Anna G. Eshoo (D-Palo Alto) released the following statement after President Obama signed H.R. 3606 into law. The Jumpstart Our Business Startups (JOBS) Act contains the provisions of H.R. 1070, the Small Company Capital Formation Act, which Rep. Eshoo was instrumental in creating. H.R. 1070 increases the SEC Regulation A offering limit from $5 million to $50 million to assist startup companies establish a better financial footing in their respective markets.
"Regulation A has had a price cap of $5 million since 1992, with only seven companies taking advantage of it in 2010," Rep. Eshoo said. "Raising the cap is essential to the needed capital formation for startup businesses to create jobs, strengthen our economy, and promote the high-tech, sustainable energy, and life science sectors. This law will help small businesses and startups do just that."
The Securities Act of 1933 was enacted during the Great Depression and included Regulation A to facilitate capital formation for small businesses and to provide regulatory relief for small firms 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." To read her testimony, please click here.
Rep. Eshoo also led the Bay Area Congressional delegation in a February 2011 letter to President Obama and in a 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.
In November 2011, H.R 1070 passed the House as a stand-alone bill 421-1.