[Congressional Record Volume 157, Number 167 (Thursday, November 3, 2011)]
[Extensions of Remarks]
[Pages E2002-E2003]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         INCREASING SHAREHOLDER THRESHOLD FOR SEC REGISTRATION

                                 ______
                                 

                               speech of

                        HON. SHEILA JACKSON LEE

                                of texas

                    in the house of representatives

                      Wednesday, November 2, 2011

  Ms. JACKSON LEE of Texas. Mr. Speaker, I rise in support of H.R. 
1965, which seeks, ``To amend the securities laws to establish certain 
thresholds for shareholder registration, and for other purposes.'' This 
legislation amends the Securities Exchange Act of 1934 regarding 
registration of securities to modify the registration threshold for an 
issuer that is either a bank or a bank holding company as well as for 
an issuer that is neither a bank nor a bank holding company. It raises 
the Exchange Act's shareholder cap from 499 to 1,999 shareholders for 
banks and permits banks with less than 1,200 shareholders to cease its 
reporting requirements under the Exchange Act. As well as, raises from 
$1 million to $10 million the threshold for total assets of an issuer 
that requires registration of a certain class of equity security.
  This legislation would increase ability of banks to raise capital 
from a larger shareholder base, which would create a level playing 
field for smaller community banks. It also raises the Exchange Act's 
shareholder cap from 499 to 1,999 shareholders for banks and permits 
banks with less than 1,200 shareholders to cease reporting requirements 
under the Exchange Act.
  Under current law, banks and private companies have a 500 investor 
threshold. Since 99.5 percent of banks reach the asset threshold for 
registration as a public company, the only meaningful test of whether a 
bank should be registered as a public company is the number of 
shareholders. But while the asset threshold has been increased tenfold 
since 1964, the shareholder threshold has stayed the same. Banks that 
are nearing the 500 shareholder threshold may have nowhere to turn to 
raise capital they need to meet the credit needs of their communities.
  This provision limits the amount of capital banks and private 
companies can raise before they have to adhere to the Security Exchange 
Commission's (SEC) reporting requirements. The SEC reporting process is 
extensive and expensive. Small businesses, especially, can ill afford 
to comply with this stipulation at the cost of their ability to 
innovate and procure capital. As it stands community banks are part of 
a highly regulated industry governed by numerous statutes and 
regulations affecting almost every aspect of banking activity. Each 
banking institution is regulated by two agencies: a primary federal 
regulator and, in the case of state chartered banks, by the state 
regulator, as well.
  Significant financial and other information regarding every bank and 
savings association can be publicly viewed on the website maintained by 
the FDIC. All banks are required to make annual reports available to 
both their customers and investors. Most provide financial and other 
information to investors through their company websites. The advantage 
to the small community banks from increases in the registration and 
deregistration thresholds would not be a lack of transparency, since 
keeping shareholders and the public fully informed about the bank's 
performance is essential to its presence as a community bank. Rather, 
it is a reduction of regulatory burdens and reporting requirements that 
pose a disproportionate burden on small community banks.
  Banks should focus on lending money to small business rather than 
fulfilling a regulation that should be modified. If we alleviate this 
burden from banks, I expect these same banks will give loans and 
provide other financial resources to our nation's businesses--
especially for our nation's small businesses.
  Our nation's businesses need our help. Because of the 2008-2009 
financial crises, the business environment has been suffering from 
decreased access to credit. Appropriate access to credit allows for 
innovation and encourages startups which may one day become major 
employers. Currently, there is a distinct lack of capital procurement.
  Small businesses need access to loans and other lines of credit in 
order to build their businesses and create jobs. Before us is a measure 
that would allow small businesses to get the support they need. This 
bill will provide small businesses with increased access to capital.
  According to the U.S. Small Business Administration, small businesses 
account for 52 percent of all U.S. workers. They are the life blood of 
our economy. Small businesses in the U.S. produced three-fourths of the 
economy's new jobs between 1990 and 1995, and represent an entry point 
into the economy for new groups. Women, for instance, participate 
heavily in small businesses.
  The number of female-owned businesses climbed by 89 percent, to an 
estimated 8.1 million, between 1987 and 1997, and women-owned sole 
proprietorships were expected to reach 35 percent of all such ventures 
by the year 2000. They were hindered in large part because of lack of 
access to traditional forms of credit. Before us today, is a measure 
that would help businesses grow. Small firms also tend to hire a 
greater number of older workers and people who prefer to work part-
time.
  There are hundreds of stories of start-up companies catching national 
attention and growing into large corporations. Just a few examples of 
these types of start-up businesses making it big include the computer 
software company Microsoft; the package delivery service Federal 
Express; sports clothing manufacturer Nike; the computer networking 
firm America On-Line; and ice cream maker Ben & Jerry's.
  Without access to capital, Houston native Michael Dell would not have 
been able to start one of the most successful computer retail 
businesses in the world. His $1,000 dollar initial investment in the 
1980s allowed Dell Computers to become a household name. Without this 
capital, America would not have had one of its premier innovators.
  The economic impact of this legislation is encouraging. Businesses 
require capital in order to expand and flourish. When businesses are 
presented with this opportunity, jobs are created that in turn, will 
stimulate economic growth. Dell's headquarters alone employs roughly 
16,000 people.
  We must always remember that American small businesses are the heart 
beat of our nation. I believe that small businesses represent

[[Page E2003]]

more than the American dream--they represent the American economy. 
Small businesses account for 95 percent of all employers, create half 
of our gross domestic product, and provide three out of four new jobs 
in this country.
  I urge my colleagues to join me in supporting H.R. 1965, ``To amend 
the securities laws to establish certain thresholds for shareholder 
registration, and for other purposes.''

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