Sen. Carper Hails Final Passage of Bipartisan JOBS Act

WASHINGTON – Today, Sen. Tom Carper (D-Del.) hailed the final passage of the Jumpstart Our Business Startups Act (JOBS) Act, bipartisan legislation that modernizes regulations that impede capital formation, allowing businesses to grow and hire new workers. Two of the main provisions in the package – Private Company Flexibility and Growth and The Reopening American Capital Markets to Emerging Growth Companies Act – were championed by Sen. Carper. The bill, which passed the House of Representatives with a vote of 380 to 41, now goes to the President’s desk for his signature.

“One of the primary roles of government is to create and maintain a nurturing environment for job creation and job preservation,” said Sen. Carper. “This jobs package encourages companies to keep and grow jobs right here in America by providing better access to capital, and modernizing a portion of our nation’s regulatory framework. In particular, I thank my colleagues for working on bipartisan legislative solutions to update the ‘shareholder threshold’ and create an Initial Public Offering ‘on-ramp.’ These solutions reflect the reality that different companies face different challenges, and they often need regulatory flexibility to be able to expand and hire American workers. Both measures embrace America’s entrepreneurial spirit, and I am encouraged that my colleagues – in both the House and the Senate – could come together to find bipartisan solutions. If we can continue to work together like we did today, I believe that American companies will compete and win in the global market place, and we’ll put more Delawareans and more Americans back to work while we do it.”

Private Company Flexibility and Growth Act – The Shareholder Threshold bill
Introduced by Sen. Tom Carper (D-Del.) and Sen. Pat Toomey (R-Pa.)

PROBLEM: Currently, the shareholder threshold says when a company exceeds 500 shareholders, it must comply with costly regulations associated with going public. The shareholder limit was set in 1964 and the ensuing regulations can hinder the growth of companies that determine it is in their best interest to stay private. Some companies, particularly start-ups, need the flexibility that staying private offers so they can focus on such things as research and development instead of focusing their attention on how to meet or exceed the earnings expectations of analysts and others.

SOLUTION: Sens. Carper and Toomey’s bill would modernize the shareholder threshold by raising the limit to 2,000, while also exempting employees from being included in the shareholder threshold. This bill will allow start-ups to provide employees the opportunity to share in the growth of a company through ownership without triggering the shareholder threshold, providing companies with flexibility to grow in a way that’s best for the company and its employees.

The Reopening American Capital Markets to Emerging Growth Companies Act
Cosponsored by Sen. Tom Carper (D-Del.);Introduced by Sens. Chuck Schumer (D-N.Y.) and Pat Toomey (R-Pa.) and by U.S. Rep. John Carney (D-Del.)

PROBLEM: In 1996, Initial Public Offerings (IPO) were at an all-time high, with 791 companies going public that year. However in 2008, IPOs fell to a low of 45. Companies often cite increased regulation as the reason IPOs have become more costly. Some studies estimate that the initial cost to go public is over $2 million dollars, with an annual cost to stay public of over $1 million dollars.

SOLUTION: This legislation, which embraces the recommendations of the non-partisan IPO Taskforce that emerged out of a conference convened by Treasury in March 2011 on Access to Capital, will address these concerns by creating an on-ramp for emerging growth companies to comply with certain regulations and costs associated with going public. This on-ramp is temporary and simply provides for an easier transition. These companies aren’t permanently exempted from rules or regulations. This legislation includes a balanced definition of “Emerging Growth Company” designed to reach a meaningful group of potential issuers. It will help ensure that once again IPOs become a desirable option for companies. This measure provides smaller companies with a temporary, cost-effective avenue to take their company public, should they choose to do so.

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