WASHINGTON, D.C. —Congressman Jim Himes (CT-4) and 25 of his colleagues have introduced bipartisan legislation to make it easier for growing firms to go public to access capital so they can expand and create jobs. Senators Charles Schumer (NY) and Pat Toomey (PA) have introduced companion legislation.

Studies show that more than 90 percent of job growth occurs after companies go public, but fewer small and medium-sized companies have taken this step in recent years, often citing the administrative and compliance burdens as the main obstacles to going public. The Reopening American Capital Markets to Emerging Growth Companies Act of 2011 would reduce these hurdles to an initial public offering by phasing in many of the costliest obligations over time while maintaining key investor protections.

“Companies everywhere are creating new products and ideas that could change the world, but we might not see the next Zipcar or Google if we don’t make it easier for growing companies to make the jump from upstart to established,” Himes said. “This legislation allows fast growing companies to launch an IPO when they are ready and then scale up to the new regulatory responsibilities associated with going public.”

In a recent survey conducted by Nasdaq and the National Venture Capital Association, 86 percent of chief executive officers cited “accounting and compliance costs” and 80 percent cited “regulatory risks” as key concerns of going public. With companies taking longer than ever to go public – on average 9.4 years, compared to fewer than five years in the 1980s – rapid expansion and the resulting job growth are delayed. This legislation aims to accelerate the expansion and job growth made possible by accessing public markets.

Himes’ bill establishes a new category of issuers called “emerging growth companies” that have less than $1 billion in annual revenues at the time they register with the U.S. Securities and Exchange Commission and less than $700 million in publicly-traded shares after the IPO. The legislation creates a transitional regulatory “on-ramp” status for these companies to make it easier for them to go public. The “on-ramp” period would last as long as five years, or until a company reaches $1 billion in annual revenue or $700 million in publicly-traded shares. Full compliance with certain obligations would be phased in during that period.

In a similar effort to help increase access to capital and improve the IPO process, earlier this year, Congress passed Himes’ bill that increases the number of shareholders permitted to invest in a community bank before it goes public. This gives community banks the flexibility to remain private until they have the capital and capability to launch a successful IPO.

Click here for a summary of the Reopening American Capital Markets to Emerging Growth Companies Act of 2011.