Obama signs small business legislation
"When their ideas take root, we get inventions that can change the way we live," Obama said in the Rose Garden, flanked by lawmakers of both parties who backed the bill. "And when their businesses take off, more people become employed."
He said the initiatives in the bill paralleled many of the provisions that he sought last fall in his jobs agenda to encourage small-business growth.
Republicans, who promoted the pro-small business ideas in the House, joined Obama at the signing ceremony, including House Majority Leader Eric Cantor, R-Va. Sen. Scott Brown, R-Mass., whose seat has been targeted by Democrats, also looked on as Obama signed the bill into law.
"This bill represents exactly the kind of bipartisan action we should be taking in Washington to help our economy," Obama said.
Cantor, speaking to reporters after the ceremony, said the bill was aimed at "the problem that we face in America today which is that our economy is lagging and our small businesses are having too hard of a time getting up off the ground."
Some Democrats, however, raised concerns that the bill softened investment protections enacted after the dot.com excesses and Wall Street meltdowns and the changes could lead to fraud and abuse.
Speaking to an audience that included small business owners, Obama indicated he's aware of those concerns and has directed top officials to "keep a close eye" on how it goes into effect
The main part of the bill would phase in Securities and Exchange Commission regulations over a five-year period to let smaller companies go public sooner. Firms that have annual gross revenues of less than $1 billion would enjoy this "emerging growth company" status.
The legislation may be one of the few accomplishments for a Congress stymied by partisan divisions heading into the fall elections.
The bill combines a number of bipartisan bills that exempt newer companies from SEC reporting rules in order to reduce costs and red tape.
Another provision facilitates the practice of "crowd-funding" in which the Internet is used to solicit a large number of smaller investors.
Senate Democrats were unsuccessful in their efforts to add more investor protections but succeeded in attaching one provision that requires websites involved in crowd-funding to register with the SEC. It also demands that companies seeking to raise money this way provide information on its financial status, business plans and shareholder risks.
Sara Hanks, a securities attorney and co-founder of CrowdCheck, a company aimed at helping startups, said the crowd-funding element will help make it easier for small companies to access capital but warned it will be up to investors and entrepreneurs "to protect themselves from deals that are too good to be true."
In addition to the emerging growth company and crowd-funding provisions, the legislation removes SEC regulations preventing small businesses from using advertisements to attract investors and raises from 500 to 2,000 the number of shareholders a company or community bank can have before it must register with the SEC.