The House Financial Services Committee has unanimously approved a bi-partisan piece of legislation that would build on and expand the 2012 Jumpstart Our Business Startup, or “JOBS,” Act, Wolters Kluwer Law & Business principal analyst James Hamilton reports.
Introduced by Rep. Stephen Fincher (R-Tenn.) and Rep. John Delaney (D-Md.), the “Improving Access to Capital for Emerging Growth Companies Act,” would make improvements to the initial public offering process for emerging growth companies.
According to the bill summary, the new legislation would amend the Securities Act of 1933 to reduce from 21 to 15 the number of days that emerging growth companies must have a draft registration statement on file with the U.S. Securities and Exchange Commission for a nonpublic review before they can conduct a “road show” ahead of the IPO date.
Hamilton explains that the bill would also grant a one-year grace period to issuers that begin the IPO process as an emerging growth company but no longer hold that status at the time of the offering. Such companies would continue to be treated as though they belong in the emerging growth category during that period should the bill become law.
The proposed legislation also authorizes an emerging growth company, within one year of its IPO, to confidentially submit a draft registration statement to the SEC for any securities that are to be issued subsequent to the offering for confidential review before publicly filing a registration statement. This is permissible if the initial confidential submission, including any amendments, is publicly filed with the SEC within two days before the emerging growth company issues those securities, according to the bill summary.
The legislation also amends the JOBS Act to direct the SEC to revise its general instructions on the Form S-1 registration statement to stipulate the conditions under which a registration filed or submitted for confidential review by an issuer before its IPO may omit financial disclosure information for historical periods that would otherwise be required by Regulation S-X, according to the bill summary. This is permitted as long as the omitted financial information relates to a historical period that the issuer has no reason to believe should be included in the Form S-1 at the time of the contemplated offering, Hamilton explains.
“This bill is all about job creation,” Fincher said in a statement. “Small companies are our nation’s best job creators, but have been the hardest hit by burdensome regulations. This bill improves Title I of the JOBS Act, which has had tremendous success, and afforded many companies the opportunity to go public and create jobs for hardworking Americans. I am pleased the Committee voted in favor of my bill, which will allow more companies to expand and create more, quality American jobs.”
On the same day the House Financial Services Committee approved four other regulatory relief bills aimed at boosting the economy and helping to create jobs.
“We all know that creating jobs, hope and opportunity for the American people – who have lost way too many jobs, way too much hope and way too much opportunity – is still the number one job we have as members of Congress,” committee chairman Jeb Hensarling (R-Tex.) said in a statement. “We also know in divided government it is always challenging to find common ground. I want to applaud the members who have worked together on a bipartisan basis to bring these common sense bills before this committee.”