Sinema, Fitzpatrick Jobs Bill Passes House
Bipartisan legislation introduced by Congresswoman Kyrsten Sinema (D-AZ) and Congressman Mike Fitzpatrick (R-PA) to reduce burdensome regulations for certain emerging growth companies passed the House on Monday May 23, 2016 . The Fostering Innovation Act provides commonsense regulatory relief for companies on the cutting-edge of scientific and medical research.
Pictured: Congresswoman Kyrsten Sinema (at right) and Joan Koerber-Walker , President & CEO of the Arizona Bioindustry Association (AZBio). Headquartered in AZ-CD 9, AZBio meets regularly with Congresswoman Sinema to provide updates on the life-saving and life-changing innovations created by emerging growth companies in CD-9 and across the state of Arizona.
“I’ve heard from companies throughout my district that burdensome and unnecessary regulations continue to stifle their ability to grow and succeed,” said Sinema. “The Fostering Innovation Act allows innovative companies to spend valuable resources on product research and development instead of costly and unnecessary external audits. This is a commonsense solution that ensures costly regulations don’t stand in the way of success for Arizona businesses.”
“Startups and emerging companies need to focus on creating jobs, not navigating red tape. This bipartisan, common sense reform to one size fits all regulations allows growing businesses to better compete in critical research and development,” said Fitzpatrick. “The Fostering Innovation Act is a solution that allows Congress the opportunity to remove unnecessary road blocks that prevent growth and economic certainty for small businesses in Bucks and Montgomery counties, and around the country.”
Currently, emerging growth companies (EGCs) are exempt from certain regulatory requirements for five years after their initial public offering (IPO). One of the requirements EGCs are exempt from is Sarbanes-Oxley Section 404 (b) – which requires public companies to obtain an external audit on the effectiveness of their internal controls for financial reporting. This reporting requirement is costly and unnecessary because management is still required to assess internal controls and these EGCs, by definition, have limited public exposure.
The Fostering Innovation Act is a very narrow fix that temporarily extends the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of EGCs with annual average revenue of less than $50 million and less than $700 million in public float.
“By extending the JOBS Act’s SOX 404(b) exemption for an additional five years, the Fostering Innovation Act would ensure that small business innovators can remain laser-focused on the search for groundbreaking cures and treatments,” said Jim Greenwood, President and CEO of the Biotechnology Industry Organization (BIO). “BIO strongly supports this move away from one-size-fits-all regulations, and applauds Reps. Sinema and Fitzpatrick for their efforts to reduce compliance costs for emerging biotechs and support small business capital formation.”
“Emerging growth companies often drive the development and delivery of life-changing and life-saving innovations to people in the U.S. and around the world. ECGs make significant investments along the path from discovery to development to delivery and often do not see a financial return in the early stages of a journey that can span decades,” said Joan Koerber-Walker, president and CEO of the Arizona Bioindustry Association (AZBio). “By easing the regulatory burdens of Sarbanes-Oxley in these early years, The Fostering Innovation Act will allow EGCs to focus more time and resources on getting new innovations to market and most importantly, helping people to live longer and better lives. We greatly appreciate Congresswoman Sinema’s leadership in addressing this key issue and for all of her efforts to remove obstacles from the path of our innovators so they can move American innovations forward faster. ”