Pat Toomey (R-PA) speaks during a press conference introducing the Republican Party’s infrastructure plan, at the U.S. Capitol in Washington, April 22, 2021.
Erin Scott | Reuters
Republicans in the Senate on Monday announced plans to accelerate new entrepreneurial businesses by encouraging young companies to trade on the public market, protecting retail investors and regulate regulations for smaller companies.
Draft discussion by Senator Pat Toomey, R-Pa. Launched, is an early effort to solicit feedback from Republicans and Democrats on nearly 30 bills that could help businesses tap capital in both public and private markets.
Toomey, a ranking member on the Senate Banking Committee, named the proposal after the landmark JOBS Act of 2012, which celebrated its 10th anniversary on Tuesday. The acronym for that law stands for Jump-start Our Business Start-up.
The draft of the new JOBS 4.0 Act comes more than a year after Toomey requested plans to boost gross domestic product growth and job creation by increasing access to capital, his office said.
“The JOBS Act has helped revive interest in the public markets and spur economic growth, but it’s clear that much work remains to be done to provide retail investors with access to with higher returns and ensuring the US market remains the deepest and most liquid market in the world.” Toomey said in a statement.
The new plan includes ideas from entrepreneurs, retail investors and others, the senator added, and includes many provisions that have strong bipartisan support. 24 of the 29 bills included in the discussion draft were introduced on Capitol Hill.
Some of those ideas have received bipartisan support – something they will need to become law as Democrats control the White House and both houses of Congress. It’s not clear how many of the bills could win the 60 votes needed to pass the legislation in a 50-50 partisan Senate election.
For example, a provision backed by Republican Senator John Kennedy of Louisiana and Democratic Senator Tina Smith of Minnesota, would require the Securities and Exchange Commission to study access to private capital. in rural areas of the country.
Another section, supported by the Mark Warner Foundation for Democracy in Virginia and Kyrsten Sinema of Arizona, will advance a study of mid-market initial public offering costs. It will aim to encourage more medium-sized businesses to list publicly.
GOP staff said they are optimistic about a part of the plan called Equal Opportunity for All Investors, which will edit the rules around the SEC’s Regulation D.
If enacted, the law will expand SEC definition of “accredited investor” and allows investors with more modest means to buy equity in promising – but private – companies.
Under current law, any company that wants to sell securities to the public must either register with the SEC and file regular financial statements, or qualify for an exemption under the law. The most common, known as Regulation D, allows companies to sell shares to so-called “accredited investors” with an annual income of more than $200,000 or a net worth of at least 1 million dollars.
However, some parts of Toomey’s plan could prove a tougher sell-off in the Democratic Congress.
A proposal from Senator Thom Tillis, RN.C., would give public companies the option to file quarterly or semi-annual financial statements “to ease the short-term thinking of public companies them and reduce unnecessary legal filings.”
Former President Donald Trump supports such a move in 2018 after talking to “business leaders” about obstacles to business growth. While some executives applauded the effort to shift investors’ focus to longer-term trends and away from short-term earnings results, many stakeholders see quarterly reports as a key pillar of the business. corporate transparency.
Another proposal, put forward by Bill Hagerty of Tennessee, Cynthia Lummis of Wyoming, Steve Daines of Montana and Tillis, would make it more difficult for stakeholders to submit proposals at company shareholder meetings. .
Under the so-called Restoration Shareholder Transparency Act, a shareholder wanting to include in the proposal would have to control at least 1% of the company’s stock, an effort to cut back on what supporters of the plan say. scheme called “frivolous” submissions.
Democrats are likely to be skeptical of those plans. The White House and radical organizations aim to crack down on what they see as a long list of corporate abuses including excessive executive compensation and record-setting share buybacks.
While Republican aides who spoke to CNBC acknowledged that some components of the bill could face lasting difficulty in the current Congress, they added that they expect bipartisan support. for portions of the law that have not yet been funded by the Democratic Party.
The main purpose of the draft discussion is to solicit feedback to see what proposals might be feasible, an aide added.
“We think there’s value in identifying these bipartisan bills that can pass this Congress,” an aide said Friday afternoon.
“But I think the second thing is to come up with something that could be a road map for what Republicans represent in shaping the capital,” the aide added.
