March 30, 2012

Community Banks – Senate Passes Legislation To Raise
the 500 Shareholder Threshold for SEC Registration

The United States Senate has approved the Jumpstart our Business Startups (JOBS) Act. H.R. 3606 that would raise the SEC registration threshold for financial institutions.  Senators voted 73-26 in favor of the JOBS Act, which includes the provision to raise the registration threshold from 500 shareholders to 2,000.

This provision would allow C-corp community banks to add shareholders and raise more capital without triggering expensive and burdensome SEC oversight.  Further, the legislation also raises the de-registration threshold from 300 to 1,200, which would allow registered community banks to de-register following a stock buyback or consolidation of
shareholders, thus avoiding unproductive expenses.

Because the Senate made minor changes to H.R. 3606 since its passage in the House, the bill will be sent back to the House of Representatives for concurrence before heading to President Obama’s desk for signature.  President Obama supports the measure, which stands to be one of few bipartisan bills to pass Congress during this politically contentious election year.  The SEC will have up to one year to promulgate the rule to implement the changes.