House of Representatives Passes JOBS Act 3.0 To Help Small Businesses & Entrepreneurs
The bill is made up of 32 individual acts. Some of the acts that are particularly relevant to small and microcap issuers include;
Fair Investment Opportunities for Professional Experts Act,
Encouraging Public Offerings Act of 2017,
Family Office Technical Correction Act,
Main Street Growth Act,
Modernizing Disclosures for Investors Act,
Improving Investment Research for Small and Emerging Issuers Act,
Expanding Investment in Small Businesses Act, and
Enhancing Multi-Class Share Disclosures Act.
According to Crowdfund Insider, the 32 acts of the “JOBS and Investor Confidence Act of 2018,” are:
Helping Angels Lead Our Startups (HALOS) Act – This bill defines an “angel investor group” and clarifies a regulation issued by the Securities and Exchange Commission (SEC) to ensure that startups have the opportunity to make a presentation to interested parties without running afoul of the securities laws.
The Credit Access and Inclusion Act of 2017 – The bill amends the Fair Credit Reporting Act (FCRA) to authorize an entity, including the Department of Housing and Urban Development (HUD) to furnish data to consumer reporting agencies regarding an individual’s history of on-time payments with respect to a lease, or contracts for utilities and telecommunications services.
Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act of 2017 – The bill alleviates costs to small business owners by simplifying the securities registration system for mergers and acquisition brokers who help transfer the ownership of small, privately held companies. It also disqualifies “bad actors” from utilizing the simplified process and does not allow transactions involving shell companies.
Fair Investment Opportunities for Professional Experts Act – The act modernizes the definition of accredited investor so those who do not have a high income or high net worth but do have the education and job experience to evaluate investment risks and merits can participate in the growth of promising companies. This change will provide more Americans with greater investment opportunities and enable the businesses they invest in to create more jobs.
Fostering Innovation Act – The “Fostering Innovation Act of 2017” amends Section 404(b) of the Sarbanes-Oxley Act (SOX) to extend the exemption to comply with the law for certain low-revenue emerging growth companies (EGCs) that would otherwise lose their exempt status at the end of the five-year period that applies under current law.
End Banking for Human Traffickers Act of 2018 – This act amends the Victims of Trafficking and Violence Protection Act of 2000 to add the Treasury Secretary to the President’s Interagency Task Force to Monitor and Combat Trafficking, requires the task force to submit to Congress an analysis of anti-money laundering (AML) efforts of the U.S. government and financial institutions relating to severe forms of trafficking in persons, and requires the Treasury Secretary to designate an office within the Office of Terrorism and Financial Intelligence to coordinate efforts to combat the illicit financing of human trafficking.
Investing in Main Street Act – The bill amends the Small Business Investment Act by increasing the percentage a financial institution or federal savings association can invest in a small business investment company (SBIC) to 15 percent and require the financial institution or the federal savings association to be approved by their federal regulator prior to investing more than five percent.
Exchange Regulatory Improvement Act – The “Exchange Regulatory Improvement Act,” as amended, requires the SEC to set forth the facts and circumstances it considers in determining what is a “facility” of an exchange.
Encouraging Public Offerings Act of 2017 – The “Encouraging Public Offerings Act of 2017” amends the Securities Act of 1933 to expand to all public companies certain provisions of Title I of the Jumpstart Our Business Startups (JOBS) Act, which previously applied only to an EGC. Specifically, the legislation allows issuers to submit to the SEC for confidential review, before publicly filing, draft registration statements for Initial Public Offerings (IPOs) and for follow-on offerings within one year of an IPO. Additionally, this bill allows all companies to “test-the-waters” before filing an IPO, which means they may meet with qualified institutional buyers and other institutional accredited investors to gauge those investors’ interest in the offering.
Family Office Technical Correction Act – This act clarifies that family offices and family clients, as defined in section 275.202(a)(11)(G)-1 of title 17, Code of Federal Regulations, are accredited investors under Regulation D of the SEC.
Expanding Access to Capital for Job Creators Act – The “Expanding Access to Capital for Rural Job Creators Act” amends the Securities Exchange Act of 1934 to have the SEC’s Advocate for Small Business Capital Formation identify any unique challenges to rural area small businesses when identifying problems that small businesses have with securing access to capital. H.R. 4281 also requires that the annual report made by the SEC’s Small Business Advocate include a summary of any unique issues encountered by rural area small businesses.
Financial Institution Living Will Improvement Act of 2017 – The bill amends the “Dodd-Frank Wall Street Reform and Consumer Protection Act” to reform the resolution plan submission “living will” process by requiring bank holding companies to submit to the Federal Reserve Board (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) resolution plans every two years. This bill requires the Federal Reserve and FDIC to provide feedback regarding a resolution plan within six months after a bank holding company submission. This bill also requires the Federal Reserve and FDIC to publicly disclose the assessment framework used to review the adequacy of resolution plans.
Prevention of Private Information Dissemination Act of 2017 – The “Prevention of Private Information Dissemination Act of 2017” establishes criminal penalties for the unauthorized disclosure of living will and stress test determinations and other individually identifiable information by federal officials, consistent with existing penalties for other unauthorized disclosure of confidential records by federal officials.
International Insurance Standards Act – The bill ensures that international insurance standards and agreements are consistent with our domestic insurance system and provides greater Congressional oversight and transparency on international insurance standard negotiations.
Alleviating Stress Test Burdens to Help Investors Act (Secs. 2 and 3) – The section of this legislation to be included in JOBS Act 3.0 amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to exempt nonbank financial institutions not primarily regulated by either a federal banking agency or the Federal Housing Finance Agency from the Dodd-Frank Act’s mandatory company-run stress-testing requirements. Additionally, the bill clarifies that the SEC and the Commodity Futures Trading Commission retain their authority to issue regulations to require nonbank financial companies to conduct periodic analysis of the financial condition of such companies under adverse economic conditions.
National Strategy for Combating the Financing of Transnational Criminal Organizations Act – This act requires the President, through the Secretary of the Treasury, to develop a national strategy to combat the financial networks of transnational criminal organizations (TCOs) not later than one year after the enactment of this Act and every two years thereafter. In particular, the strategy will assess the most significant TCO threats and the individuals, entities, and networks that provide financial support or facilitation to those TCOs. It also reviews current goals, priorities, and actions against TCOs’ financial support networks and will recommend new ways to deter and prosecute those who financially enable TCOs.
Common Sense Credit Union Capital Relief Act – The bill delays the effective date of the rule used by the National Credit Union Administration titled “Risk-Based Capital” from 2019 to 2021.
Options Markets Stability Act – The legislation requires the prudential regulators to implement a risk-adjusted approach to value centrally-cleared exchange-listed derivatives as it relates to capital rules to better and more accurately reflect exposure and to promote market-making activity.
Cooperate with Law Enforcement Agencies and Watch Act of 2018 – Sponsored by Rep. French Hill (R-AR) and cosponsored by Rep. Bill Foster (D-IL), the “Cooperate with Law Enforcement Agencies and Watch Act of 2018” provides a safe harbor for financial institutions that maintain a customer account at the request of a Federal, State, tribal or local law enforcement agency.
Main Street Growth Act – The “Main Street Growth Act” amends the Securities Exchange Act of 1934 to allow for the registration of venture exchanges with the SEC to provide a venue that is tailored to the needs of small and emerging companies and offers qualifying companies one venue in which their securities can trade.
Building Up Independent Lives and Dreams (BUILD) Act – This act allows certain non-profits that are conducting charitable mortgage loan transactions to use either the truth in lending (TIL), good faith estimate (GFE), and HUD-1 forms, or those required under the TILA-RESPA Integrated Disclosure (TRID) rule.
Modernizing Disclosures for Investors Act – The “Modernizing Disclosures for Investors Act” requires the SEC to provide a report to Congress with a cost-benefit analysis of EGCs’ use of SEC Form 10-Q, including the costs and benefits to investors and other market participants of the current requirements for reporting on Form 10-Q, as well as the expected impact of the use of alternative formats of quarterly reporting for EGCs. The bill also directs the SEC to report to Congress with recommendations for decreasing costs, increasing transparency, and increasing efficiency of quarterly financial reporting by EGCs.
Fight Illicit Networks and Detect (FIND) Trafficking Act – The “FIND Trafficking Act” requires the Comptroller General of the United States to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.
Improving Investment Research for Small and Emerging Issuers Act – The bill requires the SEC to carry out a study to evaluate the issues affecting the provision of and reliance upon investment research into small issuers and pre-IPO companies, including EGCs and other small issuers.
Developing and Empowering our Aspiring Leaders (DEAL) Act – SThe “DEAL Act” requires the SEC to revise the definition of a qualifying investment to include equity securities acquired in a secondary transaction.
Expanding Investment in Small Businesses Act – SThe “Expanding Investment in Small Businesses Act” requires the SEC to study whether the current diversified fund limit threshold for mutual funds constrains their ability to take meaningful positions in small-cap companies.
Promoting Transparent Standards for Corporate Insiders Act – The “Promoting Transparent Standards for Corporate Insiders Act” requires the SEC to consider certain types of amendments to Rule 10b5-1 to ensure that corporate insiders are not able to indirectly engage in illegal insider trading through changes to their trading plans.
Investment Adviser Regulatory Flexibility Improvement Act – The “Investment Adviser Regulatory Flexibility Improvement Act” directs the SEC to consider alternative methods for businesses or organizations to qualify as a “small business” or “small organization” for the purposes of assessing the regulatory impact on investment advisers.
Enhancing Multi-Class Share Disclosures Act — The “Enhancing Multi-Class Share Disclosures Act” requires issuers with a multi-class share structure to make certain disclosures in any proxy or consent solicitation material that provide enhanced transparency regarding certain shareholders’ voting power.
National Senior Investor Initiative Act of 2018 – The “National Senior Investor Initiative Act of 2018” or the “Senior Security Act of 2018” creates an interdivisional task force at the SEC, to examine and identify challenges facing senior investors and requires the Government Accountability Office to study the economic costs of the exploitation of senior citizens.
Middle Market IPO Underwriting Cost Act – Sponsored by Rep. Jim Himes (D-CT), the “Middle Market IPO Underwriting Cost Act” requires the SEC, in consultation with the Financial Industry Regulatory Authority, to study the direct and indirect costs associated with small and medium-sized companies to undertake initial public offerings.
Crowdfunding Amendments Act – Sponsored by Reps. Patrick McHenry (R-NC) and Maxine Waters (D-CA), the “Crowdfunding Amendments Act” allows crowdfunding investors to pool their money together into a fund that is advised by a registered investment advisor.
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