House Passes Bi-partisan Small Business Bills
Update - the President signed most of these provisions into law on April 5, (Public Law No: 112-106). Several of the small business bills listed below were merged as part of the Jumpstart Our Business Startups (JOBS) Act (H.R. 3606).
November 4, 2011 - This week, the House passed several positive small business bills to allow more flexibility in raising capital and to reduce regulatory burdens. Even though Congress has been in gridlock over many issues this year, these measures all received strong bi-partisan support. In fact, several of these ideas were included as part of the President’s American Jobs Act. As a member of the House Committee on Financial Services, I was able to review and help to craft these bills before they were called up for a vote on the floor. All of the bills are now pending action in the Senate. I will continue to work to find bi-partisan agreement on pro-jobs bills.
Entrepreneur Access to Capital Act (H.R. 2930) provides exemptions from SEC requirements to allow small businesses to raise capital through crowdfunding. The issuer's offering cannot exceed $1 million. If the issuer provides investors with audited financial statements, then the offering amount may not exceed $2 million. The bill limits individual contributions to the lesser of $10,000 or 10% of the individual contributor's annual income. H.R. 2930 requires issuers and intermediaries to fulfill a number of requirements in order to avail themselves of this new exemption. H.R. 2930 passed the Financial Services Committee by a voice vote with my support and passed the House by a vote of 407 - 17.
Increase Shareholder Threshold for SEC Registration (H.R. 1965) would increase the threshold for total assets that businesses and banks that issue non-publicly traded securities must hold before being required to register with the SEC. It also increases the threshold for the number of shareholders ("holders of record") banks must have to trigger SEC registration requirements. Specifically, the measure increases the current $1 million the level of total assets an issuer of non-publicly traded securities must hold to $10 million before the issuer is required to register with the SEC. In addition, if the issuer of securities is a bank, the bill raises to 2,000 from 500 the number of "holders of record" who can possess bank securities before the bank would be required to register with the SEC. H.R. 1965 passed the Financial Services Committee by a voice vote with my support and passed the House by a vote of 420 – 2.
Small Company Capital Formation Act (HR 1070) would increase to $50 million from $5 million the annual public offering threshold for companies to be exempt from full SEC filing requirements; more companies would be allowed to use the SEC's simplified process (Reg A).
In order for a company to be exempt from full SEC filing requirements, the aggregate offering amount of all securities sold within the prior 12-month period shall not exceed $50 million.
H.R. 1070 passed the Financial Services Committee by a voice vote with my support and passed the House by a vote of 421 - 1.
Access to Capital for Job Creators Act (H.R. 2940) directs the Securities and Exchange Commission (SEC) to revise its regulations to remove the prohibition against general solicitation or advertising on sales of non-publicly traded securities, provided that all purchasers of the securities are "accredited investors." The revised regulations must require that the securities issuer verify that the purchasers are accredited investors. H.R. 2940 passed the Financial Services Committee by a voice vote with my support and passed the House by a vote of 413 - 11.
Last week, the House considered the 3% Withholding Repeal and Job Creation Act (H.R. 674), which would repeal an existing law requiring federal, state and local governments to withhold 3% of payments that are due to government contractors in order to improve tax compliance. This bill passed the House by a vote of 405 – 16 with my support. UPDATE: On 11/16, this measure officially passed both Houses and will be sent to the President for his signature into law.