U.S. Sen. Thom Tillis (R-NC) has introduced the bipartisan Fostering Innovation Act to support innovative firms by enabling them to focus on business development rather than regulatory compliance.
The bill, S. 2126, would amend the Sarbanes-Oxley Act of 2002 to provide a temporary exemption for low-revenue issuers from certain auditor attestation requirements. Currently, such emerging growth companies (EGCs) are exempt from a section of that law requiring public companies to get external audits of their financial reporting internal controls, according to Tillis’s office. S. 2126 would extend the EGC exemption for five years for EGCs having less than $50 million in average annual revenue and less than $700 million held by public investors.
The proposal is needed, said Tillis, who serves on the Senate Banking, Housing, and Urban Affairs Committee, because certain expiring Jumpstart Our Business Startups (JOBS) Act exemptions could harm the ability of some companies to access capital and continue to grow by diverting critical investments away from science toward compliance.
And that could undermine a key industry in his home state.
“North Carolina has a rich and diverse biotech landscape and is the home of many companies that are on the cutting edge of scientific and medical research,” Tillis said.
In fact, the state counts roughly 650 life sciences companies being located there, including 350 research and development companies, 125 contractors working in research and testing, and 110 related production and manufacturing companies, according to the North Carolina Biotechnology Center.
Together, these firms employ 63,000 North Carolinians and from 2012 to 2014 posted an almost 7 percent employment growth rate, which is three times the national average, according to the biotech center’s data.
The bill would allow such companies to remain focused on delivering cures and treatments for patients rather than worrying about their investment capital for a few more years.
Sam Taylor, president of the North Carolina Biosciences Organization (NCBIO), noted that the biotech industry in North Carolina had benefitted from the JOBS Act, which he said incentivizes the capital formation needed to fund research and clinical trials.
“The Fostering Innovation Act would build on the JOBS Act’s success and further support small businesses in North Carolina by allowing them to focus valuable innovation capital on their groundbreaking R&D rather than government red tape,” Taylor said.
Sen. Gary Peters (D-MI), who joined Tillis in introducing S. 2126, also cited the economic importance of emerging-technology.
“This bipartisan, common sense legislation would cut red tape for emerging bio-technology companies so they can focus their resources on the critical research and development that will provide innovative treatments and save lives,” Peters said.
S. 2126 has been referred to the Senate Banking, Housing, and Urban Affairs Committee.