Pat Toomey (R-PA) speaks at a news conference to present the Republican Infrastructure Plan, at the U.S. Capitol in Washington, DC, April 22, 2021.
Erin Scott Reuters
Republicans in the Senate on Monday announced a plan to accelerate new business ventures, encouraging young firms to trade in state markets, protecting retail investors and adapting rules for small companies.
The draft debate, published by Sen. Pat Toomey, Pennsylvania, is an early attempt to get feedback from Republicans and Democrats on nearly 30 bills that could help businesses use capital in both public and private markets.
Tumi, a senior member of the Senate Banking Committee, named the proposal in honor of the landmark 2012 Jobs Act, which celebrates its 10th anniversary on Tuesday. The abbreviation of this law means Jump-start Our Business Start-ups.
The draft of the new Labor Act 4.0 came more than a year after Tumi requested plans to boost gross domestic product and create jobs by expanding access to capital, his office said.
“The JOBS Act has helped revive interest in public markets and stimulate economic growth, but it is clear that significant work still needs to be done to give retail investors access to higher returns and ensure that US markets remain the deepest and most liquid in the world.” Tumi said in a statement.
The new plan includes ideas from entrepreneurs, retail investors and others, and includes a number of provisions that have strong bipartisan support, the senator added. Twenty-four of the 29 bills included in the draft debate have already been introduced on Capitol Hill.
Some of these ideas already have bipartisan support – which they will need to become law, as Democrats control the White House and both houses of Congress. It is unclear how many bills could garner the 60 votes needed to pass legislation in the Senate, divided 50 by 50 by party.
For example, a provision backed by Republican Sen. John F. Kennedy of Louisiana and Democratic Sen. Tina Smith of Minnesota will require the Securities and Exchange Commission to examine access to private capital in rural areas.
Another section, backed by Democratic Sen. Mark Warner of Virginia and Kirsten Cinema of Arizona, will push for a study of the costs of the initial public offering of mid-market stocks. It will aim to encourage more medium-sized firms to go public.
GOP officials said they were optimistic about part of a plan known as the Equal Opportunity for All Investors Act, which would edit the rules in accordance with SEC Regulation D.
If enacted, the legislation would expand the SEC’s definition of an “accredited investor” and allow investors with more modest means to acquire capital from promising but private companies.
Under current law, any company wishing to sell securities to the public must either register with the SEC and file regular financial reports or apply for legal exemption. The most common, known as Regulation D, allows firms to sell shares to so-called “accredited investors” who have annual returns of more than $ 200,000 or a net worth of at least $ 1 million.
However, some sections of the Tumi plan may become tougher in the Democratic Congress.
The proposal by Senator Tom Tillis, RN.C., would allow state-owned companies to choose to file financial statements quarterly or semi-annually, “to reduce the short-term thoughts of state-owned companies and cut costly unnecessary regulatory paperwork.”
Former President Donald Trump called for such a step in 2018 after talking to “business leaders” about barriers to corporate growth. While some executives have praised efforts to shift investors ’attention to long-term trends and move away from short-term profit outcomes, many stakeholders see quarterly reports as a critical pillar of corporate transparency.
Another proposal, backed by Republican Sen. Bill Hagerty of Tennessee, Cynthia Lamis of Wyoming, Steve Danes of Montana and Tillis, will make it harder to submit proposals to stakeholders at company shareholders’ meetings.
Under what is known as the Shareholder Transparency Act, a shareholder wishing to include an offer will have to control at least 1% of the company’s securities, an attempt to cut back on what supporters of the plan call “frivolous” submissions.
Democrats are likely to be skeptical of these plans. The White House and progressives are seeking to crack down on what they see as a long list of corporate abuses, including overcompensation of executives and record share buybacks.
While Republican aides who spoke to CNBC acknowledged that some of the components of the bill could face big claims in the current Congress, they added that they expect bipartisan support for those pieces of legislation that do not yet have a democratic sponsor.
The main goal of the discussion project is to get feedback to see which proposals may be viable, one assistant added.
“We believe there is value in identifying bipartisan bills that could pass this Congress,” one aide said Friday afternoon.
“But I think the second thing is to set out something that could be a roadmap for what Republicans stand for when it comes to capital formation,” he added.