Capital Markets Improvement Act (HR 1675) Aims to Help Small Business

Capital Markets Improvement Act (HR 1675) Aims to Help Small Business

shutterstock_171944912 Insurance Bad FaithSmall businesses are important to building a healthy economy. They provide access to goods and services that consumers want, which helps to stimulate the economy. But most importantly, they help fuel job growth. Times have changed, and being a small business owner has become increasingly difficult.

Having to deal with all the federal and state red tape that comes with owning a small business can be costly and time-consuming, which can be overwhelming for small business owners. A business transaction lawyer can often help them navigate through the red tape, but nonetheless, the way small businesses are treated by the government can be very frustrating. However, if the Capital Markets Improvement Act (H.R. 1675) of 2016 is signed into law, business owners may finally see some much-needed relief.

How the Act Helps Small Businesses

H.R. 1675 is supported by the U.S. Chamber of Commerce because it helps businesses grow by making public markets more attractive to them. The chamber represents over three million businesses of all sizes throughout the United States. Studies have shown that opportunities for creating new jobs increases when a company goes public. After a long period of decline, the number of IPOs and public companies is on the rise again thanks to the previously passed JOBS Act that streamlined the process of obtaining financing for startups.

Builds Upon the JOBS Act

The Capital Markets Improvement Act continues with what the JOBS Act began. The Act currently includes several provisions that have passed through the House Financial Services Committee, including:

  • Title 1 – Encouraging Employ Ownership – Raises the limit to $10 million for securities sold to employees.
  • Title II – Fair Access to Investment Research – Makes it easier for investors to access information regarding Exchange Traded Funds (ETFs).
  • Title III – Small Business Mergers, Acquisitions, Sales and Brokerage Simplification – Reduces regulatory burdens to improve market efficiency.
  • Title IV – Small Company Disclosure Simplification – Eases restrictions and allows for exemptions for electronically filing financial disclosures
  • Title V – Streamlining Excessive and Costly Regulations Review – Ongoing review of SEC regulations to determine if still relevant or in need of updating.

Controversy Surrounding H.R. 1675

While the U.S. House of Representatives recently passed H.R. 1675, the Act is not without controversy as it heads to the Senate. There are concerns from the Obama Administration over whether the Act’s provisions generate more risks to investors because of its reduced oversight. It is expected that even the Senate passes the Act; the president may veto it in its current form out of concerns that it poses risks to investors.

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