[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3606 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 3606
To increase American job creation and economic growth by improving
access to the public capital markets for emerging growth companies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 8, 2011
Mr. Fincher (for himself, Mr. Carney, Mr. Bachus, Mr. Crowley, Mr.
Garrett, Mr. McHenry, Mr. Schweikert, Mr. Westmoreland, Mr. Garamendi,
Mr. Renacci, Mr. Huizenga of Michigan, Mr. Kind, Mrs. Blackburn, Mr.
DesJarlais, Mr. Tipton, Mr. Polis, Mr. Crawford, Mr. Griffin of
Arkansas, Mr. Austin Scott of Georgia, Mr. Perlmutter, Mr. Himes, Mrs.
McCarthy of New York, Mr. Connolly of Virginia, Mr. Peters, Mr. Grimm,
Mrs. Capito, Mr. Hensarling, and Ms. Eshoo) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To increase American job creation and economic growth by improving
access to the public capital markets for emerging growth companies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reopening American Capital Markets
to Emerging Growth Companies Act of 2011''.
SEC. 2. DEFINITIONS.
(a) Securities Act of 1933.--Section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)) is amended by adding at the end the following:
``(19) The term `emerging growth company' means an issuer
that had total annual gross revenues of less than
$1,000,000,000 during its most recently completed fiscal year.
An issuer that is an emerging growth company as of the first
day of that fiscal year shall continue to be deemed an emerging
growth company until the earliest of--
``(A) the last day of the fiscal year of the issuer
during which it had total annual gross revenues of
$1,000,000,000 or more;
``(B) the last day of the fiscal year of the issuer
following the fifth anniversary of the date of the
first sale of common equity securities of the issuer
pursuant to an effective registration statement under
this title; and
``(C) the date on which such issuer is deemed to be
a `large accelerated filer', as defined in section
240.12b-2 of title 17 of the Code of Federal
Regulations, or any successor thereto.''.
(b) Securities Exchange Act of 1934.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
(1) by redesignating paragraph (77), as added by section
941(a) of the Investor Protection and Securities Reform Act of
2010 (Public Law 111-203, 124 Stat. 1890), as paragraph (79);
and
(2) by adding at the end the following:
``(80) The term `emerging growth company' means an issuer
that had total annual gross revenues of less than
$1,000,000,000 during its most recently completed fiscal year.
An issuer that is an emerging growth company as of the first
day of that fiscal year shall continue to be deemed an emerging
growth company until the earliest of--
``(A) the last day of the fiscal year of the issuer
during which it had total annual gross revenues of
$1,000,000,000 or more;
``(B) the last day of the fiscal year of the issuer
following the fifth anniversary of the date of the
first sale of common equity securities of the issuer
pursuant to an effective registration statement under
the Securities Act of 1933; and
``(C) the date on which such issuer is deemed to be
a `large accelerated filer', as defined in section
240.12b-2 of title 17 of the Code of Federal
Regulations, or any successor thereto.''.
(c) Other Definitions.--As used in this title, the following
definitions shall apply:
(1) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(2) Initial public offering date.--The term ``initial
public offering date'' means the date of the first sale of
common equity securities of an issuer pursuant to an effective
registration statement under the Securities Act of 1933.
SEC. 3. DISCLOSURE OBLIGATIONS.
(a) Executive Compensation.--
(1) Exemption.--Section 14A(e) of the Securities Exchange
Act of 1934 (15 U.S.C. 78n-1(e)) is amended--
(A) by inserting ``An emerging growth company shall
be exempt from the requirements of subsections (a) and
(b).'' before ``The Commission may''; and
(B) by striking ``an issuer'' and inserting ``any
other issuer''.
(2) Proxies.--Section 14(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78n(i)) is amended by inserting ``, for any
issuer other than an emerging growth company,'' after
``including''.
(3) Compensation disclosures.--Section 953(b)(1) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (Public Law 111-203; 124 Stat. 1904) is amended by
inserting ``, other than an emerging growth company, as that
term is defined in section 3(a) of the Securities Exchange Act
of 1934,'' after ``require each issuer''.
(b) Financial Disclosures.--
(1) Securities act of 1933.--Section 7(a) of the Securities
Act of 1933 (15 U.S.C. 77g(a)) is amended by adding at the end
the following: ``An emerging growth company need not present
more than 2 years of audited financial statements in order for
the registration statement of such emerging growth company with
respect to an initial public offering of its common equity
securities to be effective, and in any other registration
statement to be filed with the Commission, an emerging growth
company need not present financial data for any period prior to
the earliest audited period presented in connection with its
initial public offering.''.
(2) Securities exchange act of 1934.--Section 13(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) is amended
by adding at the end the following: ``In any registration
statement, periodic report, or other reports to be filed with
the Commission, an emerging growth company need not present
financial data for any period prior to the earliest audited
period presented in connection with its initial public
offering.''.
(c) New Accounting Pronouncements.--Section 19(b)(1)(A) of the
Securities Act of 1933 (15 U.S.C. 77s(b)(1)(A)) is amended--
(1) in clause (iv), by striking ``and'' at the end; and
(2) by adding at the end the following:
``(vi) has not established any accounting
principles that would require an emerging
growth company to comply with any new or
revised financial accounting standard as of an
effective date that is earlier than the
effective date that applies to a company that
is not an issuer, as defined in section 2(a)(7)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201(a)(7)); and''.
(d) Other Disclosures.--An emerging growth company may comply with
section 229.303(a) of title 17 of the Code of Federal Regulations, or
any successor thereto, by providing information required by such
section with respect to the financial statements of the emerging growth
company for each period presented pursuant to subsection (b). An
emerging growth company may comply with section 229.402 of title 17 of
the Code of Federal Regulations, or any successor thereto, by
disclosing the same information as any issuer with a market value of
outstanding voting and nonvoting common equity held by non-affiliates
of less than $75,000,000.
SEC. 4. INTERNAL CONTROLS AUDIT.
Section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7262(b)) is amended by inserting ``, other than an issuer that is an
emerging growth company (as defined in section 3 of the Securities
Exchange Act of 1934),'' before ``shall attest to''.
SEC. 5. AUDITING STANDARDS.
Section 103(a)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7213(a)(3)) is amended by adding at the end the following:
``(C) Transition period for emerging growth
companies.--Any rules of the Board requiring mandatory
audit firm rotation or a supplement to the auditor's
report in which the auditor would be required to
provide additional information about the audit and the
financial statements of the issuer (auditor discussion
and analysis) shall not apply to an emerging growth
company, as defined in section 3 of the Securities
Exchange Act of 1934. Any additional rules adopted by
the Board after the date of enactment of this
subparagraph shall not apply to any emerging growth
company, unless the Commission determines that the
application of such additional requirements to emerging
growth companies is necessary or appropriate in the
public interest, after considering the protection of
investors and whether the action will promote
efficiency, competition, and capital formation.''.
SEC. 6. AVAILABILITY OF INFORMATION ABOUT EMERGING GROWTH COMPANIES.
(a) Provision of Research.--Section 2(a)(3) of the Securities Act
of 1933 (15 U.S.C. 77b(a)(3)) is amended by adding at the end the
following: ``The publication or distribution by a broker or dealer of a
research report about an emerging growth company that is the subject of
a proposed public offering of the common equity securities of such
emerging growth company pursuant to a registration statement that the
issuer proposes to file, or has filed, or that is effective shall be
deemed for purposes of paragraph (10) of this subsection and section
5(c) not to constitute an offer for sale or offer to sell a security,
even if the broker or dealer is participating or will participate in
the registered offering of the securities of the issuer. As used in
this paragraph, the term ``research report'' means a written,
electronic, or oral communication that includes information, opinions,
or recommendations with respect to securities of an issuer or an
analysis of a security or an issuer, whether or not it provides
information reasonably sufficient upon which to base an investment
decision.''.
(b) Securities Analyst Communications.--Section 15D of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-6) is amended--
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following:
``(c) Limitation.--Notwithstanding subsection (a) or any other
provision of law, neither the Commission nor any national securities
association registered under section 15A may adopt or maintain any rule
or regulation in connection with an initial public offering of the
common equity of an emerging growth company--
``(1) restricting, based on functional role, which
associated persons of a broker, dealer, or member of a national
securities association, may arrange for communications between
a securities analyst and a potential investor; or
``(2) restricting a securities analyst from participating
in any communications with the management of an emerging growth
company that is also attended by any other associated person of
a broker, dealer, or member of a national securities
association whose functional role is other than as a securities
analyst.''.
(c) Expanding Permissible Communications.--Section 5 of the
Securities Exchange Act of 1933 (15 U.S.C. 77e) is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following:
``(d) Limitation.--Notwithstanding any other provision of this
section, an emerging growth company or any person authorized to act on
behalf of an emerging growth company may engage in oral or written
communications with potential investors that are qualified
institutional buyers or institutions that are accredited investors, as
such terms are respectively defined in section 230.144A and section
230.501(a) of title 17 of the Code of Federal Regulations, or any
successor thereto, to determine whether such investors might have an
interest in a contemplated securities offering, either prior to or
following the date of filing of a registration statement with respect
to such securities with the Commission, subject to the requirement of
subsection (b)(2).''.
(d) Post Offering Communications.--Neither the Commission nor any
national securities association registered under section 15A of the
Securities Exchange Act of 1934 may adopt or maintain any rule or
regulation prohibiting any broker, dealer, or member of a national
securities association from publishing or distributing any research
report or making a public appearance, with respect to the securities of
an emerging growth company, either--
(1) within any prescribed period of time following the
initial public offering date of the emerging growth company; or
(2) within any prescribed period of time prior to the
expiration date of any agreement between the broker, dealer, or
member of a national securities association and the emerging
growth company or its shareholders that restricts or prohibits
the sale of securities held by the emerging growth company or
its shareholders after the initial public offering date.
SEC. 7. OTHER MATTERS.
Section 6 of the Securities Act of 1933 (15 U.S.C. 77f) is amended
by adding at the end the following:
``(e) Emerging Growth Companies.--
``(1) In general.--Any emerging growth company, prior to
its initial public offering date, may confidentially submit to
the Commission a draft registration statement, for confidential
nonpublic review by the staff of the Commission prior to public
filing, provided that the initial confidential submission and
all amendments thereto shall be publicly filed with the
Commission not later than 21 days before the date on which the
issuer conducts a road show, as such term is defined in section
230.433(h)(4) of title 17 of the Code of Federal Regulations,
or any successor thereto.
``(2) Confidentiality.--Notwithstanding any other provision
of this title, the Commission shall not be compelled to
disclose any information provided to or obtained by the
Commission pursuant to this subsection. For purposes of section
552 of title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such
section 552. Information described in or obtained pursuant to
this subsection shall be deemed to constitute confidential
information for purposes of section 24(b)(2) of the Securities
Exchange Act of 1934.''.
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