U.S. Representative John Carney (D-DE) today attended the White House ceremony where President Obama signed the JOBS Act into law. The centerpiece of the Jumpstart our Business Start-Ups Act (JOBS Act) is legislation introduced by Rep. Carney to make it easier for small- and medium-sized companies to undertake an initial public offering to grow and create jobs.
President Obama signed the legislation into law during a ceremony in the Rose Garden attended by Democrats and Republicans. The legislation passed the House of Representatives and the Senate in broad, bipartisan votes of 380-41 and 73-26, respectively. Representative Carney is the first freshman House Democrat to pass a major piece of legislation in the 112th Congress.
"I was proud to take part in today's signing ceremony for the JOBS Act. Making it easier for small- and medium-sized companies to grow is a proven way to create jobs and improve the economy," said Congressman Carney. "This legislation will encourage more entrepreneurs to start businesses and take their companies public. There is more work to do on the jobs front, but this bipartisan legislation is an important step forward.
Rep. Carney's legislation, the Reopening American Capital Markets to Emerging Growth Companies Act of 2011, reduces the costs of going public for these companies by phasing in certain regulatory requirements. Over the last ten years, the number of companies going public has fallen dramatically, hurting the ability of small companies to grow, innovate, and hire new workers.
The Treasury Department studied the issue and recommended phasing-in certain regulations for small and medium-sized companies. Rep. Carney's legislation creates a new category of issuers, called "emerging growth companies," that have annual revenues of less than a $1 billion and following the initial public offering (IPO), less than $700 million in publicly traded shares. Exemptions for these "on ramp" status companies would end either after five years, when the company reached $1 billion in revenue, $700 million in public float, or issued $1 billion in debt.
The legislation will also make it easier for potential investors to get access to research and company information in advance of an IPO. This is critical for small and medium-sized companies trying to raise capital that have less visibility in the marketplace.
In addition, the JOBS Act includes five pieces of legislation that have previously passed the House. Provisions in those pieces of legislation would remove the regulatory ban that prevents small, privately held companies from using advertisements to solicit investors for private offerings; permit "crowdfunding" to finance new businesses by allowing companies to accept and pool donations up to $1 million without registering with the SEC; raise the offering threshold for companies exempted from registration with SEC; raise the threshold for mandatory SEC registration for companies from 500 shareholders to 2,000 shareholders; and raise the threshold of shareholders allowed to invest in community banks.