House Approves Bipartisan JOBS Act
March 8, 2012 -
A bipartisan bill designed to jumpstart the economy and job creation won overwhelming approval by the House of Representatives today.
The Jumpstart Our Business Startups Act, or JOBS Act, will make it easier for small companies and entrepreneurs to access capital and investors and go public, which will help grow their businesses, promote stronger economic growth and create jobs.
The JOBS Act is comprised of six bills that originated in the Financial Services Committee and were earlier approved by the Committee. Under the leadership of Chairman Spencer Bachus, the Financial Services Committee has made easing capital formation and job creation for small companies a priority. As part of this effort, the Committee has advanced solutions that encourage small business capital formation to ensure small companies, entrepreneurs and startup businesses can raise the capital needed to expand, hire and invest.
“We need to do everything we can to ensure that America remains a country of opportunity, where jobs are created and small businesses flourish without being stifled by costly and unnecessary red tape. The JOBS Act will help foster an environment that allows our small businesses, startups and entrepreneurs to raise the capital needed to get job creation going again,” said Chairman Bachus. “The House has passed more than two dozen bills that will help grow our economy and create jobs, yet the do-nothing Senate continues to stall. Senator Reid must allow a vote on these needed bills, including the JOBS Act we’re sending him today.”
The JOBS Act, approved by the House today 390 to 23, is sponsored by Rep. Stephen Fincher, a member of the Financial Services Committee.
Research indicates that 90 percent of job creation for public firms occurs after they go public. A recent report by the President’s Council on Jobs and Competitiveness found that had the United States maintained the level of start-up activity that it saw in 2007, two million more Americans would be working today.
The JOBS Act removes regulatory barriers to capital formation by:
Modernizing the threshold for SEC registration and deregistration for bank holding companies. This provision is from H.R. 4088, the “Capital Expansion Act,” which was introduced by Representative Ben Quayle. The bill raises the threshold for mandatory registration under the Securities Exchange Act of 1934 from 500 shareholders to 2,000 shareholders for all banks and bank holding companies and raises the shareholder deregistration threshold from 300 shareholders to 1,200 shareholders.
- Reducing the cost of going public. This provision is from H.R. 3606, the Reopening American Capital Markets to Emerging Growth Companies Act of 2011, introduced by Reps. Stephen Fincher and John Carney. The bill creates a new class of public companies called emerging growth companies that will make it easier for more companies to access the capital markets by reducing the cost of going public for small and medium size companies.
- Removing a regulatory ban that prevents small companies from using advertisements. This provision is from H.R. 2940, introduced by Rep. Kevin McCarthy. The bill removes the regulatory ban that prevents small, privately held companies from using advertisements to solicit investors.
- Removing SEC restrictions that prevent companies from raising equity capital from a large pool of small investors. This provision is from H.R. 2930, introduced by Rep. Patrick McHenry. The bill removes SEC restrictions that prevent “crowdfunding” so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered “accredited” by the SEC.
- Increasing the offering threshold for companies exempted from SEC registration. This provision is from H.R. 1070, the “Small Company Capital Formation Act,” which was introduced by Representative Schweikert. The bill makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million.
- Raising the threshold for SEC registration. This provision is from H.R. 2167, the “Private Company Flexibility and Growth Act,” which was introduced by Representative Schweikert. The bill removes an impediment to capital formation for small companies by raising the shareholder threshold for mandatory registration with the SEC from 500 to 1,000 shareholders.