Today, Capital Markets Subcommittee Chairman Bill Huizenga (R-MI) spoke in support of H.R. 3903, The Encouraging Public Offerings Act of 2017. This bipartisan jobs legislation will encourage and enhance Initial Public Offerings (IPOs), which are the primary way businesses raise equity capital to expand and create jobs. H.R. 3903 passed the House by a vote of 419 to 0.
Congressman Bill Huizenga:
Mr. Speaker, over the past two decades, our nation has experienced a 37% decline in the number of U.S. listed public companies. Equally troubling, we have seen the number of public companies fall to around 5,700. These statistics are concerning because they are similar to data we saw in the 1980's when our economy was less than half its current size. Since 2000, the average number of IPOs has fallen to approximately 135, which pales in comparison to the more than 450 IPOs filed per year in the early 1990's. Notably, there has not been a corresponding downward trend in the creation of new companies over that same period.This demonstrates that the regulatory cost associated with going public is deterring new and emerging companies from making the decision to go public. Why is this important? It is preventing our capital markets from reaching their full potential. What that means is that it is not allowing Mr. and Mrs. 401k from participating in the economic successes we have seen.
Federal securities regulations are typically written for large public companies and this one-size-fits-all framework imposes a disproportionate burden on small and emerging companies looking to go public. On June 29, 2017, the SEC extended to all companies the option of submitting in advance draft registration statements for IPOs and follow-on offerings within one year of an IPO. H.R. 3903, the Encouraging Public Offerings Act, would ensure that all issues making an IPO would be allowed to communicate with potential investors before the offering and file confidential draft registration statements with the Securities and Exchange Commission. H.R. 3903 simply codifies the SEC’s practice into law and it will allow companies to finalize their registration documents without undue expectations from outside influences and allow companies to time their offering with the market before making their Form S-1’s public and beginning an investor roadshow. I commend the bipartisan work of Reps. Budd and Meeks on this important bill to ensure that H.R. 3903 applies to all companies, without losing valuable investor protections.