House Approves Bill to Ease Employee Stock Rules
WASHINGTON—Startups and other privately held companies would have greater flexibility in awarding stock to employees without triggering what critics say are overly intrusive reporting requirements, under legislation passed by the U.S. House on Tuesday.
The legislation, approved on 331-87 vote, is among a series of pending bills aimed at easing regulatory burdens on smaller companies. The bill comes five years after lawmakers passed the 2012 law, the Jumpstart Our Business Startups Act, designed to make it easier for such companies to grow and create jobs.
Tuesday’s measure, dubbed the Encouraging Employee Ownership Act of 2017, would boost a $5 million cap in the amount of stock closely held companies can award employees before triggering certain disclosures the companies find meddlesome, such as cash flows and lists of shareholders’ ownership interests. The bill would increase the threshold to $10 million and peg it to inflation.
“Too many companies right now shy away from offering employees greater ownership opportunities because a bureaucratic, burdensome, top-down regulation hasn’t been updated in nearly 20 years,” House Financial Services Committee Chairman Jeb Hensarling (R. Tex.) said, speaking ahead of Tuesday’s vote.
The House legislation was introduced by Rep. Randy Hultgren (R., Ill.).
Though the measure has been introduced in prior years, Tuesday’s vote marks the first time it cleared the House as a stand-alone bill. It also appears to have growing support in the Senate, where a companion measure cleared the Senate Banking Committee last month.
The Senate version was introduced by Sens. Pat Toomey (R., Pa.) and Mark Warner (D., Va.).