The House Financial Services Committee passed several bills designed to promote capital formation, including:
HR 4200, the Small Business Investment Companies (SBICs) Advisers Relief Act, introduced by Rep. Blaine Luetkemeyer (R-MO). The bill was approved 56-0.
H.R. 4200 amends the Investment Advisers Act of 1940 to reduce unnecessary regulatory costs and eliminate duplicative regulation of advisers to SBICs. Eliminating duplicative regulation will allow the private equity fund money that currently goes to pay for regulatory compliance and fees to flow directly to job-creating small businesses.
H.R. 4554, the Restricted Securities Relief Act, introduced by Rep. Mick Mulvaney (R-SC). The bill was approved 29-28. H.R. 4554 would streamline the process for reselling restricted securities to the public under a Securities and Exchange Commission (SEC) rule in order to increase liquidity in the private securities markets and the availability of capital for small companies and to reduce its cost. By reducing the regulatory burdens surrounding the offering and resale of private securities offerings by small issuers, this bill will help enhance the liquidity in this space, making it easier for issuers to access capital.
H.R. 4568 would simplify the SEC registration form for new securities offerings. Simplifying this disclosure regime will lower compliance costs associated with filing redundant paperwork, allowing eligible companies to direct more resources to growing their business.
H.R. 4571, the Encouraging Employee Ownership Act of 2014, introduced by Rep. Randy Hultgren (R-IL). The bill was approved 36-23. H.R. 4571 modernizes SEC Rule 701, which was last updated in 1996. Updating this rule gives private companies more flexibility to reward employees with a company’s securities and thereby retain valuable employees without having to use other methods to compensate them, such as borrowing money or selling securities.
H.R. 4569, the Disclosure Modernization and Simplification Act, introduced by Rep. Scott Garrett (R-NJ). The bill was approved 59-0. H.R. 4569 would direct the SEC to simplify its disclosure regime for issuers and help investors more easily navigate very lengthy and cumbersome public company disclosures. Permitting issuers to submit a summary page would enable companies to concisely disclose pertinent information to investors without exposing them to liability. This summary page would also enable investors to more easily access the most relevant information about a company.
H.R. 4570, the Private Placement Improvement Act, introduced by Rep. Garrett. The bill was approved 31-28.
H.R. 4570 would amend the Federal securities laws to ensure that small businesses do not face complicated and unnecessary regulatory burdens when attempting to raise capital through private securities offerings issued under SEC Regulation D.
H.R. 4565, the Startup Capital Modernization Act of 2014, introduced by Rep. Patrick McHenry (R-NC). The bill was approved 31-28. H.R. 4565 would make it easier for issuers to take advantage of registration exemptions under SEC Regulation A to increase capital formation to grow the economy and create jobs.