When some of the more extreme members of the Democratic and Republican parties vote for legislation that would help spur economic growth, you would think it would be big news.
In general, though, media are ignoring The JOBS Act 3.0, which recently passed in the U.S. House of Representatives by a vote of 406-4. The legislation was sponsored by Congressman Jeb Hensarling (R-TX), chair of the House Finance Committee, with support from ranking committee member Congresswoman Maxine Waters (D-CA).
You read that right. Members of Congress as far apart as you can get supported legislation that could help small businesses and the economy grow.
It’s as if someone was listening when we recently wrote that Congress should concentrate on deregulation that would make it easier for businesses to go public.
The JOBS Act 3.0, which still must pass in the U.S. Senate and be signed into law by President Trump, combines 32 bills, some of which ease regulation included in the complex Dodd-Frank Wall Street and Consumer Protection Act.
“The JOBS Act 3.0 is principally designed to spur entrepreneurship by reinvigorating business startups and initial public offerings,” Congressman Hensarling wrote in The Wall Street Journal. “U.S. startups approached a 40-year low in 2016, and the number of domestic IPOs, though making a comeback, is half what it was 20 years ago, according to Scott Kupor of Andreessen Horowitz. Last year China produced more than one-third of the world’s IPOs vs. America’s 11%. This gap has probably cost the U.S. millions of jobs.”
The Senate has committed to take up the legislation in return for a commitment by the House to consider The Economic Growth, Regulatory Relief and Consumer Protection Act, which Hensarling wrote is “a critical part of Congress’s and the administration’s efforts to recalibrate financial regulation after the regulatory onslaught of the past 10 years.”
Among other things, JOBS 3.0 would, according to Inc.:
Establish legal certainty by clarifying how entrepreneurs and angel investors can discuss potential investments without “running afoul of securities laws.” It proposes a review of the Securities and Exchange Commission’s Regulation D rules that govern how startups raise capital, adding exemptions to its prohibitions against general solicitation.
Expand the definition of “accredited investor” so that people could invest in startups based on their “experience and expertise,” rather than just their financial means.
Change the rules for confidential IPOs so that more companies can consider this option. Current rules allow “an issuer” to file a confidential IPO for an emerging growth company. The JOBS Act 3.0 proposes to enable any person authorized to act on behalf of the company to file.
Lower the cost of going public by creating exceptions to certain rules and allowing companies to delay various financial reporting requirements. Initial regulatory compliance costs for companies going public averaged $2.5 million, according to a 2011 report by the IPO Task Force.
Create venture exchanges where companies with a relatively small number of outstanding shares of stock could be listed. The creation of venture exchanges would attract research and sales support for small issuers, according to Congressman Hensarling.
We’ll take up additional features of JOBS 3.0 in tomorrow’s post.