House Overwhelmingly Passes Bipartisan JOBS Act To Help Small Biz

Posted by Brian Patrick on

 FYI –

• One measure in the House bill would require the Securities and Exchange Commission to allow small, private companies to use direct mail or advertisements to solicit private offerings from wealthier investors. Another would let people invest as much as $10,000 in start-ups over the Internet without the companies having to register first with the SEC.

• A third provision would double to 1,000 the number of shareholders that smaller companies could have before they were required to register with the SEC and exclude the shareholder cap from applying to employees of the company. A fourth would increase the shareholder cap to 2,000 for small banks.

• Yet another provision aims to create an "on-ramp" for smaller companies to launch initial public offerings by scaling back a variety of existing rules. A final provision would increase the issuance cap on a little-used type of offering that allows smaller companies to issue debt without having to register with the SEC.


House Clears Bill To Help Small Businesses
The Wall Street Journal
Andrew Ackerman
March 8, 2012

WASHINGTON—The House on Thursday approved measures designed to help smaller businesses raise capital, a rare display of bipartisanship over a bill both parties hope will alleviate the difficulty such companies have in their efforts to create jobs.

The bill, which passed the House by a vote of 390-23, is meant to help small businesses use sources of capital other than banks and lift regulations that make it more challenging for business owners to solicit outside investment. Yet supporters offered no estimates for how many jobs the bill might create, and regulators have expressed concern its provisions will erode investor protections.

Still, its backers hope that the largely technical nature of the changes in the bill will go some way in helping smaller firms grow. The measure has bipartisan support in the Senate as well as the backing of President Barack Obama.

House Majority Leader Eric Cantor (R., Va.) said the bill will help remove "costly regulations" on small businesses. "Small businesses and start-ups simply do not have the bandwidth to comply with Washington's red tape—and yet they are the ones we are counting on to create jobs," he said before the vote.

The House bill combines six pieces of legislation introduced individually last year, four of which have already cleared the full House by wide margins. House Republicans bundled the measures into a single package after Mr. Obama called on Congress to pass a small-business bill in his State of the Union address in January.

Senate Majority Leader Harry Reid (D., Nev.) said Thursday that he hopes to soon advance a similar bill in the Senate. People familiar with the matter said a Senate floor vote could come by the end of the month, bypassing the committee process. The differences between the House and Senate bill would ideally be hammered out in a conference committee, Mr. Reid said.

One measure in the House bill would require the Securities and Exchange Commission to allow small, private companies to use direct mail or advertisements to solicit private offerings from wealthier investors. Another would let people invest as much as $10,000 in start-ups over the Internet without the companies having to register first with the SEC.

A third provision would double to 1,000 the number of shareholders that smaller companies could have before they were required to register with the SEC and exclude the shareholder cap from applying to employees of the company. A fourth would increase the shareholder cap to 2,000 for small banks.

Yet another provision aims to create an "on-ramp" for smaller companies to launch initial public offerings by scaling back a variety of existing rules. A final provision would increase the issuance cap on a little-used type of offering that allows smaller companies to issue debt without having to register with the SEC.

Sponsors of the IPO on-ramp measure argue that onerous securities regulations have blocked initial public offerings and kept companies from raising capital and adding jobs. Critics say the lukewarm IPO market in recent years is a function of poor economic health and investor appetite.

Regulators also have said that the measure's provisions will erode investor protections. Rather than spur IPOs, markets will demand significantly higher interest rates to invest in companies that take advantage of the bill's shortcuts, critics say.

Jay Ritter, a finance professor at the University of Florida, told the Senate Banking Committee this week that much-touted estimates of 22 million job losses tied to the downturn in IPOs are overblown. Increasing the number of IPOs "isn't going to automatically spur an enormous amount of job growth," he said.





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