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Bipartisan Start-Up Bill Passes House

By | 03.15.12

Bipartisan Start-Up Bill Passes House

A rare bipartisan bill aimed at easing the process through which start-ups and small companies can grow and go public passed the House on Thursday in a 390–23 vote. A similar bill is being drawn up in the Senate and President Obama has indicated that he plans to support it.

This bill, known as the Jumpstart Our Business Startups Act, would essentially ease SEC rules and deadlines on small businesses grossing less than a billion dollars a year that intend to go public. Rather, compliance would need to occur within a 5 year period, and if at the end of that period the company’s gross revenue then exceeded one billion, then the company would be required to be in full SEC compliance. Other small business boosts include allowing small companies going public to advertise and solicit investors, and to also raise more money from larger groups of smaller investors.

However, small business advocacy groups—including unions, consumer advocates, and AARP—have raised concerns over certain aspects of the bill. The biggest issue is the possibility of the bill stripping critical protections for potential investors in initial public offerings (IPOs). In fact, some experts are concerned that by changing the level of information companies are required to provide to potential investors, these measures would ease the way for fraudulent activity. Senior Vice President for Government Affairs at AARP Joyce A. Rogers has expressed concern that this could end up detracting much needed investment funds away from legitimate businesses with a real potential for growth, thereby undermining rather than stimulating sustainable job growth.

There are also differing opinions regarding the degree of job growth this bill would actually create. While start-ups have shown to be very important to job growth, some experts questions whether these measures would in fact boost start-up successes in ways that create more employment opportunities.

If this bill passes into law, it will become one of the few legislative pieces over the past couple of years that directly addresses job creation and boosting economic growth.

References

Liberto, Jennifer. “House Passes Bipartisan Bill Aimed at Start-Ups.” CNN Money. 3/8/12. (3/15/12.) http://money.cnn.com/2012/03/08/smallbusiness/House-startup-bill/index.htm?iid=.

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