Small Company Capital Formation Act of 2011
Floor Speech
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Mr. SCHWEIKERT. Mr. Speaker, first, I would like to start this with a heartfelt thank you to both Spencer Bachus of Alabama, the chairman of the Financial Services Committee, for both his kindness to me as a freshman and also for the guidance he has provided me, and to the gentlewoman from California, who I hope will speak next, who partially helped spearhead this idea and helped us move it forward.
One of the reasons I stand here right now with these boards is just to sort of help get through the concept of this piece of legislation, H.R. 1070. So often around here, we refer to it as the reg A bill. But what does that mean to people? Well, to try to make it as simple as possible, it is when a company has an opportunity to do a filing with the Securities and Exchange Commission for a simplified process to go public. The problem is, in today's world, that's limited to $5 million. Well, no one is going public at $5 million.
And we can actually see some of our history of this. This was actually first done in 1933 when at that time, in the Securities Exchange Act, it was understood that there needed to be a path to go public. Well, at that time, it was $100,000, and I think 1992 is when it was moved up to $5 million.
Well, in 19 years, the world has changed a lot. But one of the changes that I consider almost a crisis is the number of our companies that aren't going public anymore. And you're going to see on a couple of these boards here that the fact of the matter is we actually have fewer, substantially fewer companies that are publicly traded today than we did even a decade ago.
Now, the first slide here is somewhat simple. It is just sort of trying to demonstrate how many years we have been sitting here at this $5 million level, and it's been 19 years. But as we go on to the next board--and I know this is a little busy to try to read. The staff got a little colorful on this one. But what we were trying to point out is that the number of IPOs that are less than $50 million today are almost nothing.
My understanding is last year we had only three companies--only three companies in the entire country take a look at filing in that $5 million and under space. And if you actually look from 1995 to 2004, some of the latest data I was able to find from that entire time frame, I think there were only 78 companies that actually pursued this process. Well, in a country our size, this is a crisis, particularly if we're looking for that path of equity, that path of financing, that path of raising capital for these growing companies. This is one of the reasons we stand here with this reg A bill, H.R. 1070.
Let's go on to this next board. And I know this is a little busy. But this is also to try to make the point of what's going on from a competitive standpoint when you look around the world. All those lines, those are other companies that are listing on exchanges, that are becoming publicly traded, that are reaching out to the world and raising capital. Well, you will happen to notice a small problem: the line with the dots, that's us. That's our country. We actually are going in the other direction.
If I remember my numbers here, we actually today have 5,091 publicly traded companies on the big exchanges. So we've got 5,000-some today. In 1997, we had 8,823. Does anyone see the real problem there? Literally in a little over a decade, we've gone down dramatically in the number of publicly listed companies. And my great hope here is, by raising this limit from the $5 million up to $50 million--which $50 million is chosen for quite a reason. That is the minimum threshold for a couple of the large exchanges to be publicly traded. And that's why we're doing this, because we're trying to create jobs, we're trying to move equity, and we're trying to be competitive around the world.
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