WASHINGTON, D.C. – Congressman Robert Hurt (R-Virginia) today introduced the Small Company Disclosure Simplification Act, along with Congresswoman Terri Sewell (D-Alabama). This legislation would streamline regulations for small public companies and remove a disincentive for companies to access capital in the public markets. Hurt released the following statement following introduction of the bill:
“The costs associated with our current regulatory climate are having a negative effect on small companies, particularly innovative startups that need additional capital to expand their operations and grow. The JOBS Act, a bipartisan law implemented to remove burdensome regulations for emerging growth companies accessing capital in the public markets, was an important step for job creation; however, more still needs to be done to relieve unnecessary regulatory burdens and increase access to capital for small companies.
“One glaring example of a regulation where costs currently outweigh potential benefits is related to the use of eXtensible Business Reporting Language (XBRL). This bill offers a commonsense solution to this problem, ensuring our regulatory structures are not hampering the success of smaller companies. I look forward to working with Rep. Sewell and my colleagues on the Financial Services Committee to pass this important bill so that small companies across the Fifth District and beyond can focus their efforts on innovating, expanding, and creating jobs.”
Jeffrey M. Gallagher, CEO of Virginia Bio, said, “I want to thank Rep. Hurt for introducing this important legislation. There are hundreds of biotech companies in Virginia, and these emerging innovators are uniquely impacted by costly roadblocks like XBRL. Unnecessary bureaucratic red tape can divert capital from the lab and delay or derail promising research. Small companies across our state need commonsense regulations that do not impede their growth. Rep. Hurt's Small Company Disclosure Simplification Act is an important step that will support economic growth and accelerate research and the development of life-saving products and treatments in the Commonwealth.”
About this legislation:
- In order to comply with this XBRL regulation, small companies must expend tens of thousands of dollars on average; however, evidence suggests that less than ten percent of investors actually use XBRL.
- In line with the JOBS Act, the Small Company Disclosure Simplification Act removes duplicative regulations for small companies from submitting interactive data filings with XBRL. Public companies are still required to file mandatory information with the Securities and Exchange Commission (SEC).
- The bill requires the SEC to revise its cost-benefit analysis to ensure a better understanding of the disproportionate costs this regulation is having on small companies.
- It allows companies to focus on innovating, expanding, and creating jobs, rather than complying with duplicative and unnecessary federal regulations.