U.S. Sen. Thom Tillis (R-NC) on Jan. 25 introduced the Encouraging Public Offerings Act of 2018, legislation that would boost U.S. business development and capital markets by making it easier for private companies to go public.
The bill, S. 2347, would expand initial public offering (IPO) issuers’ ability to “test the waters” before full IPO rollout and submit the IPO to the U.S. Securities and Exchange Commission (SEC) for a confidential review prior to publicly filing draft IPO registration statements, or for follow-on items, according to Tillis’ office. All firms also could assess potential investor interest by meeting with qualified buyers and investors before an IPO.
“IPOs give companies crucial access to our capital markets, and yield the potential to create thousands of jobs,” Sen. Tillis said. “When private companies consider going public, we should be doing everything possible to make this process easy and to encourage it, without jeopardizing investor protections.”
S. 2347 essentially would expand test-the-waters capabilities that currently apply only to so-called emerging growth companies, which have annual gross revenues of less than $1 billion under the 2012 Jumpstart Our Business Startups (JOBS) Act, according to the senator’s office. With the streamlined IPO filing procedure proposed under S. 2347, more companies would be encouraged to issue IPOs and in turn support capital formation, Tillis said.
“It’s imperative that Americans have the opportunity to invest their savings and retirement funds wisely, and having more IPOs is important in helping folks save for retirement,” Tillis said. “This bipartisan legislation will reduce unnecessary red tape and encourage these companies to continue to grow.”
U.S. Sen. Chris Van Hollen (D-MD), who joined Tillis in introducing S. 2347, also stressed the bill’s pro-growth importance, noting that it would help pioneering startups gain a foundational foothold.
“Many emerging businesses find that the process of going public is too complex and expensive,” Sen. Van Hollen said. “This legislation creates a streamlined process for startups that provides the flexibility they need to grow and prosper.”
The bill also “will help spur innovation and improve efficiency in the market, bringing more opportunity for businesses to grow across the country and throughout Maryland,” Van Hollen added.
S. 2347 has been referred to the Senate Banking, Housing, and Urban Affairs Committee, which is also considering a companion bill, the Encouraging Public Offerings Act of 2017, H.R. 3903, introduced on Oct. 2, 2017 by U.S. Rep. Ted Budd (R-NC) and unanimously passed on Nov. 1, 2017 by the U.S. House of Representatives.