CHICAGO--(BUSINESS WIRE)-- Grant Thornton LLP applauds President Obama for recognizing the importance of access to capital to start-ups and small business during his State of the Union Address last night. The Small Company Capital Formation Act, introduced by Rep. David Schweikert (R-AZ), was overwhelmingly passed by the House on November 2, 2011, by a vote of 421 to 1. Grant Thornton now encourages the Senate to act on the companion bipartisan legislation introduced by Sen. Jon Tester (D-MT) and Sen. Pat Toomey (R-PA). Combined, this legislation will help to resurrect our IPO markets, which once made the U.S. stock markets the envy of markets throughout the world.
The Small Company Capital Formation Act of 2011 would amend the Securities Act of 1933 to authorize the SEC to raise the Regulation A offering limit from $5 million to $50 million, providing a less costly and more effective alternative for small companies to access the capital markets. The bills also will improve investor protections and confidence by requiring the issuer to file audited financial statements with the SEC on an annual basis.
The United States has mustered an average of only 128 IPOs per year since 2000. In that same time frame there has been a net decrease in listings on domestic stock exchanges of 2,863 companies — an average of 260 per year, or more than twice the number of new IPOs. The result is a net decline in listed companies that further inhibits economic growth and confidence in capital markets.
Grant Thornton encourages investors, as well as owners of small and medium-sized businesses, to call their congressional representative and express strong support for this legislation. These bills are a first step, among other solutions, to encourage small businesses to access U.S. capital markets, spur business innovation, generate new jobs and revitalize the U.S. economy.
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