Small Company Simple Registration Act of 2015

Floor Speech

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Mrs. WAGNER. Mr. Speaker, I thank my colleague, Mr. Hurt, for yielding.

I am glad that the House is taking up H.R. 1723, the Small Company Simple Registration Act, which will take a much-needed step in helping remove financial barriers and make it more efficient for small businesses to go public.

This bipartisan legislation, which I have sponsored with Ms. Terri Sewell from Alabama and which was approved by the House Financial Services Committee on a completely unanimous vote of 60-0, would make a simple change in the basic registration form for new securities offerings, the form S-1.

Specifically, it would allow smaller reporting companies to incorporate by reference any documents filed with the SEC after the effective date, which means that those companies will not have to go through the trouble of refiling the form S-1 again and again.

This will have a profound impact on these small companies by cutting compliance costs, as they will not have to file redundant paperwork and wait on the SEC to approve their filing in order to raise capital and grow their small business.

Small companies are increasingly leading the way in terms of technological innovation and job creation but consistently struggle with finding adequate access to capital in order to grow their business. It is a fact that small businesses are the main driver of economic growth in our country, as they create more jobs than any other business sector in America.

In fact, the Kauffman Foundation, which is a nonprofit economic resource organization based in Kansas City, Missouri, estimated in 2010 that startups create an average of 3 million jobs annually and stated: ``Without startups, there would be no net job growth in the U.S. economy.'' It is clear that we must empower small businesses with every avenue to grow and, therefore, create jobs.

For many small businesses looking to take the next step in expanding, going public is an attractive option that grants them access to the capital markets and allows them to issue stock to a wider range of investors. However, the ``price of admission'' for this avenue to raising capital is continually increasing through the amount of compliance and red tape required. For many, it simply is not worth it.

Indeed, our securities laws are structured today in a way that favors large companies over small startups, which are struggling to gain market share, by increasingly requiring more legal compliance and providing exemptions for companies over certain revenue thresholds.

The JOBS Act from 2012 made many improvements to this system and provided small companies additional access to the equity markets. My bill, the Small Company Simple Registration Act, expands upon the progress of the JOBS Act by making securities registration forms more efficient for the main driver of our economy, small business.

During a hearing before the House Financial Services Committee earlier this year, a representative of BIO, Mr. Kovacs from PTC Therapeutics, testified about their experiences with doing a follow-on offering inside of a year of their IPO using form S-1. Ultimately, they had to go and update the entire S-1, which is a process that took weeks of work and required help from outside legal counsel.

If the ``forward incorporation by reference'' provision from H.R. 1723 had been in place, they could simply include a reference to any additional documentation filed alongside their original S-1 form, which would have taken much less time and required significantly less legal help.

Additionally, investors would still be protected by having access to all needed information from the S-1 form, as well as any additional documentation.

I would like to close by urging support for this commonsense and strong bipartisan piece of legislation that would streamline the paperwork that small businesses are required to file. This is something that the SEC's own working group on small business capital formation has recommended for several years now, but which the SEC itself has failed to act upon.

Furthermore, this piece of legislation passed the committee earlier this year on a unanimous vote 60-0.

I urge passage of this legislation.

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