At the end of September 2022, Patrick McHenry, the top Republican on the House Financial Services Committee, released the Committee Republicans’ capital formation agenda. The capital formation agenda aims to build on the successes of the JOBS Act in a number of important areas, which are summarized below.
Strengthening Public Markets. The Committee Republicans would focus on policies that would make the public markets more attractive, including the Encouraging Public Offerings Act, which, if adopted, would allow issuers to test the waters with potential investors and allow issuers to submit a confidential draft registration statement for review by the SEC prior to public filing or within one year following an IPO. Another bill under consideration is The Helping Startups Continue to Grow Act, which, if adopted, would extend certain exemptions and reduce disclosure requirements for emerging growth companies. Among other things, this would allow an EGC spin-off to benefit from the two-year financial statement accommodation for IPO registration and reduce the minimum time between a company’s first public filing and IPO pricing.
Helping Small Businesses and Entrepreneurs. The Committee Republicans also would focus on small business and entrepreneurial activity. For example, the Small Entrepreneurs Empowerment and Development (Seed) Act would create an exemption from the registration requirements of the Securities Act for equity offerings of up to $250,000. Other proposed policies include exempting “finders” from SEC broker registration and raising threshold for capital contributions and increasing the number of allowable investors for venture capital funds.
Increasing Opportunities for Investors. The Committee Republicans intend to focus on expanding investment opportunities for Americans who have “historically been relegated to the investing sidelines” in order to facilitate diversity. The Increasing Investor Opportunities Act would allow a publicly offered closed-end fund to invest all of its assets in private securities. The Gig Worker Equity Compensation Act, would, among other things, expand the definition of accredited investor to include any person “who invests not more than 10 percent of the greater of his or her annual income or net assets, among others.”
See the Committee Republicans’ Capital Formation Agenda here and the full Staff Report here.