Washington, D.C. – Congressman David Schweikert (R-AZ), a member of the House Financial Services Committee and Vice Chair of the Capital Markets and Government-Sponsored Enterprises Subcommittee, made the following statement after his bill, H.R. 2167 The Private Company Flexibility and Growth Act, passed the committee with bipartisan votes Wednesday:
“Burdensome regulation cannot grow the economy nor can it create jobs. My bill provides relief to small businesses by removing an impediment to capital formation.
“This legislation will help entrepreneurs grow their business, remain competitive, and most importantly create jobs.
“I am excited that this bipartisan bill, passed in a bipartisan vote, will soon be on the House floor. I encourage all of my colleagues to support this commonsense measure for market growth and job creation.”
Many small businesses are forced to file as a public company because of an obscure regulation that requires companies with 499 shareholders and $10 million in assets to file with the SEC.
This current shareholder threshold rule was originally adopted in 1964 and has not been modernized since.
This regulation causes undue pressure on our markets because it restricts the number of shareholders and assets these companies can have. In turn, this severely limits the growth stages for companies, which need time and flexibility to develop. Without regulatory relief, these small businesses will not grow or they will be acquired by larger firms. Both of these outcomes lead to fewer jobs and less innovation.
H.R. 2167, the Private Company Flexibility and Growth Act, removes these barriers to capital formation for small companies by raising the shareholder threshold from 500 to 1,000 shareholders.
The Private Company Flexibility and Growth Act is expected to come to the House floor next week for a vote.