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By Kun Zhao, Esq. On February 16, 2012, the House Financial Services Committee approved the Schumer-Toomey bill, which makes it easier for growing small and mid-sized companies to go public. The measure is aimed to help growing companies raise capital through public markets to spur job creation. The bill would establish an exemption for “emerging growth companies” that have less than $1 billion in annual revenue at the time they register with the SEC for an Initial Public Offering (IPO) and less than $700 million in public float to meet certain SEC compliance requirements for up to five years until they reach the thresholds. These so-called emerging growth companies would be exempted from paying an outside auditor to attest to a company’s internal controls and procedures under Sarbanes-Oxley Act. The bill would allow investors to have access to research reports about emerging growth companies prior to the IPO. It would also permit emerging growth companies to evaluate the possibility of success in a potential offering by allowing some pre-filing communications to institutional investors which are previously prohibited during the so called “quiet period.” The bill also allows filing a registration statement with the SEC on a confidential basis. Under the bill, CEOs and chief financial officers would still be required to be personally liable for the adequacy of the internal controls and procedures that they have certified. A similar bill is pending in the Senate and President Barack Obama has called for Congress to pass it. If passed and signed into law, the bill will ease the compliance obligations for growing companies and substantially reduce the high compliance costs, thereby encouraging small and mid-sized companies to raise capital through public markets.