FAIRFIELD COUNTY, Conn. – A bill that would make it easier for growing firms to go public and access capital to expand and create jobs has been introduced by U.S. Rep. Jim Himes and 25 of his colleagues.
“Companies everywhere are creating new products and ideas that could change the world. But we might not see the next Zipcar or Google if we don’t make it easier for growing companies to make the jump from upstart to established,” Himes, D-4th District, said in a statement.
The “Reopening American Capital Markets to Emerging Growth Companies Act of 2011” would allow companies to launch an Initial Public Offering when they are ready, “then scale up to the new regulatory responsibility associated with going public,” according to Himes. The bill would phase in costly administrative and compliance obligations while maintaining key investor protections.
In a recent survey conducted by Nasdaq and the National Venture Capital Association, 86 percent of chief executive officers cited “accounting and compliance costs” and 80 percent cited “regulatory risks” as key concerns of going public. With companies taking longer to go public – an average 9.4 years, compared to fewer than five years in the 1980s – rapid expansion and the resulting job growth are delayed. This legislation aims to accelerate the expansion and job growth made possible by accessing public markets.
Himes’ bill establishes a new category of issuers called “emerging growth companies” that have less than $1 billion in annual revenue at the time they register with the U.S. Securities and Exchange Commission and less than $700 million in publicly traded shares after the IPO.
The legislation creates a transitional regulatory “on-ramp” status for these companies to make it easier for them to go public. The “on-ramp” period would last as long as five years or until a company reaches $1 billion in annual revenue or $700 million in publicly traded shares. Full compliance with certain obligations would be phased in during that period.
Click here for a summary of the “Reopening American Capital Markets to Emerging Growth Companies Act of 2011.”