The House put aside its differences over how to promote economic growth Thursday to pass two bills making it easier for small, privately owned businesses to raise the capital needed to expand with fewer federal restraints.
The bills remove Security and Exchange Commission restrictions that now make it difficult for small businesses both to solicit funds from wealthy investors and to turn to the Internet to attract small-scale contributors.
The measures enjoyed wide bipartisan support and follow the near-unanimous passage Wednesday of two similar bills aimed at relaxing SEC rules for small entrepreneurs and community banks seeking to gather capital.
The lack of controversy on the SEC bills stands in contrast to the usual sharp divisions between the two parties over how to promote job growth. Republicans have been united in rejecting Democratic proposals for a greater federal financial role in stimulating the economy, while Democrats have generally opposed GOP proposals to expand domestic energy production or cut back on environmental regulations.
Democrats veered from the debate to criticize the GOP leadership for not bringing up President Barack Obama's jobs bill and legislation to punish China for keeping its currency undervalued.
One SEC bill on Thursday, H.R. 2940, removes the regulatory ban on small, privately held companies using advertisements to solicit wealthy investors.
The bill's sponsor, House Republican Whip Kevin McCarthy of California, said current law requires a business owner to have a pre-existing relationship with a potential investor, and that if he wants to advertise for outside investors he must register with the SEC, a process that can take months and cost millions of dollars.
His legislation states that the company can only seek "accredited investors" who have at least $1 million in assets outside their home. Banks, insurance companies and registered investment companies would also qualify.
The bill, said House Financial Services Committee Chairman Spencer Bachus, R-Ala., "gives entrepreneurs the ability to raise capital and that capital translates into jobs."
The measure passed 413-11 after the House rejected an amendment by Rep. Brad Miller, D-N.C., that would have required disclosure of bonus compensation structures and "golden parachute" arrangements in materials advertising for investments.
The House also passed legislation offered by Rep. Patrick McHenry, R-N.C., that creates an SEC exemption for small businesses and startups trying to use the Internet to raise relatively small contributions from a large number of people.
McHenry said this Internet-based "crowdfunding" is widely used by charitable organizations and political groups to raise dollars, but that the SEC general solicitation ban prevents companies from using the Internet to connect to investors.
The measure, he says, gives "the average everyday investor the opportunity to have an equity stake in their favorite company, not just accredited investors, not just the so-called high net worth individuals."
The bill, H.R. 2930, creates an exemption for firms raising up to $1 million a year, indexed for inflation, or $2 million if the company provides certain financial information. It contains investor protections and limits individual investments to $10,000 or 10 percent of the investor's annual income. It was approved 407-17.
The White House, in a statement, said President Barack Obama has proposed a similar exemption, "which would enable greater flexibility in soliciting relatively small equity investments."
On Wednesday the House passed a bill that raised from $5 million to $50 million the threshold for shares a private company can sell as part of a securities offering before having to register with the SEC and a second measure that raised from 500 to 2,000 the number of shareholder investors a community bank can have before having to register or go public.
All these bills must now be considered by the Senate.
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