SEC adopts Hollingsworth and McAdams proposal to cut red tape on promising start ups
March 13, 2020
WASHINGTON, D.C. – Representative Trey Hollingsworth (R-IN) release the following statement after the Securities and Exchange Commission (SEC) voted to adopt amendments to provide relief to small public companies with less than $100 million in annual revenue from Sarbanes-Oxley 404(b) requirements.
“Last Congress we passed a bipartisan bill to ensure smaller companies can invest in cures, not excessive compliance; I’m happy to see the SEC is carrying this forward and enabling American firms to continue leading the world in groundbreaking research,” said Rep. Hollingsworth.
Rep. Hollingsworth and Rep. Ben McAdams (D-UT) introduced the Fostering Innovation Act in 2019 to allow small emerging growth companies to keep capital working to fund business needs, rather than on costly and unnecessary regulatory filings. The bill would extend the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of emerging growth companies with an annual average revenue less than $50 million and less than $700 million in public float. The House previously passed the Fostering Innovation Act in the 115th Congress in both the CHOICE Act and the JOBS Act.
“This timely action by the SEC comes at a critical time for many growing companies, including those in the bioscience sector, to keep vital capital working in research and development, rather than costly regulatory requirements. America has long been a leader in scientific and medical innovation, and this move by the SEC helps ensure that will continue,” said McAdams.
The SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions. This action tailors regulatory issues for these start-ups that had no revenues or low annual revenues in the most recent fiscal year. The amendments adopted by the SEC do not change key protections from the Sarbanes-Oxley Act of 2002.