Congresswoman Kyrsten Sinema (AZ-09) and Congressman Trey Hollingsworth (IN-09) introduced the Fostering Innovation Act, bipartisan legislation to provide commonsense regulatory relief for companies on the cutting edge of scientific and medical research.
"We've heard from companies throughout Arizona that burdensome regulations continue to stifle their ability to grow and succeed," said Congresswoman Sinema. "The Fostering Innovation Act allows innovative companies to spend valuable resources on product research and development instead of costly and unnecessary external audits. This commonsense solution cuts red tape and allows companies to move life-saving innovations forward."
"Indiana is leading the way in medical device and bio-tech innovation," said Congressman Hollingsworth. "This bipartisan, commonsense reduction of burdensome regulations will empower many industries throughout the Hoosier state to devote more resources to product innovation, research, and development."
"Emerging growth companies often drive the development and delivery of life-changing and life-saving innovations to people in the U.S. and around the world," said Joan Koerber-Walker, president and CEO of the Arizona Bioindustry Association (AZBio). "ECGs make significant investments along the path from discovery to development to delivery and often do not see a financial return in the early stages of a journey that can span decades. By easing the regulatory burdens of Sarbanes-Oxley in these early years, the Fostering Innovation Act will allow EGCs to focus more time and resources on getting new innovations to market and most importantly, helping people to live longer and better lives. We greatly appreciate Congresswoman Sinema's leadership in addressing this key issue and for all of her efforts to remove obstacles from the path of our innovators so they can move American innovations forward faster. "
Currently, emerging growth companies (EGCs) are exempt from certain regulatory requirements for five years after their initial public offering (IPO). One of the requirements EGCs are exempt from is Sarbanes-Oxley Section 404 (b) - which requires public companies to obtain an external audit on the effectiveness of their internal controls for financial reporting.
The Fostering Innovation Act is a very narrow fix that temporarily extends the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of EGCs with annual average revenue of less than $50 million and less than $700 million in public float.
The Fostering Innovations Act is part of Sinema's Opportunity for Arizona, her commonsense, Arizona-focused plan to create good-paying jobs, strengthen Arizona's economy, and ensure businesses have every chance to succeed. Read the full plan here.