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March 15, 2011

REP. SCHWEIKERT INTRODUCES “THE SMALL COMPANY FORMATION ACT”

Washington, D.C. – Congressman David Schweikert (R-AZ), Vice Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, introduced H.R. 1070, the Small Company Capital Formation Act Tuesday. This bill will be featured Wednesday as part of a Financial Services Committee hearing on job creation and capital formation:

Today, Congressman Schweikert introduced the Small Company Capital Formation Act, a bill that reduces regulation and makes it easier for small businesses to be traded on public exchanges like the NYSE or NASDAQ.

H.R. 1070 reduces burdensome regulation on small business by increasing the Regulation A exemption from $5 million to $50 million.

Regulation A, on the books since 1933, exempts small companies from the SEC’s filing requirements for less than $5 million.  Though Regulation A has periodically increased from its initial ceiling of $100,000 in 1933 to the current $5 million ceiling in 1992, it has not been increased to reflect the rising costs associated with bringing a small company public over the last two decades.

The Small Company Capital Formation Act will ensure that this ceiling is raised when necessary and as economic conditions warrant by requiring that the SEC revisit this ceiling every two years. Should the SEC find that the ceiling needs to be higher, this bill will provide them with the authority to increase the limit.

“Taking a small business public is an important, but expensive process that requires millions in underwriting costs. My legislation is intended to relieve companies from these costs and excessive paperwork.

“Many companies, especially those in the high-tech sector, require more capital upfront to make their ventures successful. At a time when so many small businesses are in need of capital, this is a commonsense proposal that will make our capital markets more vibrant and competitive.”

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