Today, Congressman Ben Quayle (R-AZ-03) introduced the Startup Expansion and Investment Act, a bill that makes it easier for emerging companies to access the capital necessary to expand and create jobs. Specifically, the bill allows new companies with a market capitalization under $1 billion to opt-out of regulations within section 404 of the Sarbanes-Oxley Act for the first ten years after going public. To inform investors, a company must clearly disclose in its annual reports that it chose to opt out of section 404. The costs associated with section 404 compliance (over $1 million annually in some cases) discourage many companies from going public. Currently, companies with a market capitalization under $75 million do not have to comply with section 404. The Startup Expansion and Investment Act substantially expands the number of companies that can take advantage of this job-creating benefit.
From Congressman Quayle:
"The Startup Expansion and Investment Act removes one of the many regulatory hurdles that inhibit many companies from going public. Access to the public capital markets is vital for a company to expand and hire new workers. Removing regulatory burdens results in economic freedom which leads to more economic growth."