[Congressional Record Volume 169, Number 92 (Tuesday, May 30, 2023)]
[House]
[Pages H2653-H2654]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              ENHANCING MULTI-CLASS SHARE DISCLOSURES ACT

  Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2795) to amend the Securities Exchange Act of 1934 to 
require issuers with a multi-class stock structure to make certain 
disclosures in any proxy or consent solicitation material, and for 
other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2795

       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 ``Enhancing Multi-Class Share 
     Disclosures Act''.

     SEC. 2. DISCLOSURE RELATING TO MULTI-CLASS SHARE STRUCTURES.

       Section 14 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78n) is amended by adding at the end the following:
       ``(l) Disclosure Relating to Multi-class Share 
     Structures.--
       ``(1) Disclosure.--The Commission shall, by rule, require 
     each issuer with a multi-class share structure to disclose 
     the information described in paragraph (2) in any proxy or 
     consent solicitation material for an annual meeting of the 
     shareholders of the issuer, or any other filing as the 
     Commission determines appropriate.
       ``(2) Content.--A disclosure made under paragraph (1) shall 
     include, with respect to each person who is a director, 
     director nominee, or named executive officer of the issuer, 
     or who is the beneficial owner of securities with 5 percent 
     or more of the total combined voting power of all classes of 
     securities entitled to vote in the election of directors--
       ``(A) the number of shares of all classes of securities 
     entitled to vote in the election of directors beneficially 
     owned by such person, expressed as a percentage of the total 
     number of the outstanding securities of the issuer entitled 
     to vote in the election of directors; and
       ``(B) the amount of voting power held by such person, 
     expressed as a percentage of the total combined voting power 
     of all classes of the securities of the issuer entitled to 
     vote in the election of directors.
       ``(3) Multi-class share structure.--In this subsection, the 
     term `multi-class share structure' means a capitalization 
     structure that contains 2 or more classes of securities that 
     have differing amounts of voting rights in the election of 
     directors.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
Missouri (Mrs. Wagner) and the gentlewoman from California (Ms. Waters) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from Missouri.


                             General Leave

  Mrs. WAGNER. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Missouri?
  There was no objection.
  Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2795, the Enhancing Multi-
Class Share Disclosures Act.
  Mr. Speaker, I thank my colleague from the other side of the aisle, 
Congressman Meeks, for his work on this thoughtful piece of bipartisan 
legislation that improves the information shareholders receive about 
voting powers in the companies in which they invest.
  Since the late 1800s, U.S. companies have utilized multi-class share 
structures. The original intent behind these structures was to allow 
companies, particularly family-run enterprises, to maintain voting 
control without having to own the majority of equity in their company.
  There have been several efforts to limit the availability of multi-
class share structures in the past. For example, starting in 1926 and 
ending in 1985, some national securities exchanges restricted the 
number of multi-class shares that were allowed to list on those 
exchanges.
  In response to the increasing competitiveness of national securities 
exchanges in the 1980s, the exchanges eased those restrictions on 
multi-class share structures. While the SEC Investor Advisory Committee 
has called for more mandatory disclosures from companies with multi-
class shares, the SEC does not currently require companies to disclose 
the gap between the equity an individual holds in the company and the 
number of voting shares they control, although many companies already 
disclose those for their shareholders voluntarily.
  By requiring disclosures regarding voting power, particularly 
regarding officers and directors and those who have more than 5 percent 
voting power, H.R. 2795 will ensure that shareholders receive more 
uniform information in proxy materials.
  Mr. Speaker, rather than prohibiting multi-class share structures 
altogether, H.R. 2795 represents a thoughtful and balanced approach to 
enhance

[[Page H2654]]

transparency without eliminating class structures that encourage 
founders that may not otherwise go public to do so.
  Mr. Speaker, for these reasons, I support H.R. 2795, and I urge my 
colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2795, the Enhancing Multi-
Class Share Disclosures Act, sponsored by the gentleman from New York.
  This bill closes documented gaps around multi-class governance 
structures. Multi-class governance structures are those where corporate 
insiders or beneficial owners retain an outsized amount of voting power 
relative to their shares.
  These structures, while they may add value, can pose significant 
risks to other investors, making sunlight ever more important for 
investors. Specifically, these structures limit investors' ability to 
influence management, direct strategy, and hold misaligned boards 
accountable.
  Under current rules, the difference between a corporate insider's 
voting power and their ownership interest, regardless of how large that 
gap may be, is often disclosed in ways that are difficult for a retail 
investor to fully comprehend.
  Accordingly, the SEC Investor Advisory Committee recommended that the 
SEC amend its rules to ensure that this gap is better identified and 
quantified for investors via a disclosed ratio. This commonsense bill 
adopts this recommendation to ensure investors have the clearest 
information available to make the best decision for themselves.
  This bill is supported by the Council of Institutional Investors, 
whose members manage trillions of dollars of assets for people all 
across America.
  Mr. Speaker, I urge my colleagues to support this bill, and I reserve 
the balance of my time.

                              {time}  1645

  Mrs. WAGNER. Mr. Speaker, I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York (Mr. Meeks), the sponsor of this bill.
  Mr. MEEKS. Mr. Speaker, I rise today to urge support of H.R. 2795, 
the Enhancing Multi-Class Share Disclosures Act.
  I thank Ranking Member Waters for her leadership, her continued 
support of this legislation as she just articulated, as well as 
Chairwoman Wagner, for her support so that we really have a bipartisan 
bill coming together for something that is really important.
  This bill, as indicated by both Ms. Waters and Mrs. Wagner, closes 
documented gaps in transparency around multi-class governance and 
structures for the benefit of traditional investors, which is important 
because traditional investors often come from Main Street, and we want 
to make sure that Main Street has all of the information it needs to go 
further with Wall Street.
  These structures, while they may add value, can pose, as indicated, 
significant risks for investors. As also indicated, multi-class 
governance structures allow corporate insiders or beneficial owners to 
own an outsized amount of voting power relative to their shares. This 
could limit other investors' abilities to influence management, direct 
strategy, and hold misaligned boards accountable. Accountability, 
having a voice, that is what this bill does.
  Let me be clear: I want to make sure that multi-class governance 
structures, while they do have their value, we know reforms are 
necessary, and their outright ban would do little for Main Street 
investors looking to gain a return on their next startup. We have seen 
companies employ these structures to access the public markets and open 
their profits to everyday investors, while still retaining the vision 
and direction of their founders.
  Information is at the core of any well-working capital market system.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. WATERS. Mr. Speaker, I yield an additional 1 minute to the 
gentleman from New York.
  Mr. MEEKS. As I said, we have seen companies employ these structures 
to access the public markets and open their profits to everyday 
investors. That is what it is about, the everyday investors. Open those 
profits so that we can see what they are, while still retaining the 
vision and the direction of their founders so it doesn't stop it. It 
makes sure there is transparency and information.
  Information is at the core of any well-working capital market system 
and more robust information is always best for investors. This bill 
will ensure that Main Street can make an informed decision as they look 
to invest in tomorrow's next successful business.
  Mr. Speaker, I urge all of my colleagues to support this bill.
  Mrs. WAGNER. Mr. Speaker, are there further requests for time on the 
other side or does the gentlewoman from California yield back?
  Mr. Speaker, I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
  This bill is pro-transparency, pro-investor, pro-corporate 
accountability. It strengthens investors' and other stakeholders' 
ability to understand the risks associated with investing in companies 
that have dual-class share structures.
  Mr. Speaker, I again urge my colleagues to support this bill, and I 
yield back the balance of my time.
  Mrs. WAGNER. Mr. Speaker, I simply urge my colleagues to support H.R. 
2795, and I yield back the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I rise today in support of H.R. 2795, 
the Enhancing Multi-Class Share Disclosures Act.
  H.R. 2795 would amend the Securities Exchange Act of 1934 to require 
issuers with a multi-class stock structure to make certain disclosures 
in any proxy or consent solicitation material, and for other purposes.
  A multi-class share structure occurs when a company issues two or 
more classes of shares that have different voting rights.
  Under the bill, the issuer must disclose certain information about 
each director, director nominee, named executive officer, and each 
beneficial owner of securities with 5% or more of the total combined 
voting power of all classes of securities entitled to vote in the 
election of directors.
  Specifically, the issuer must disclose (1) the number of shares of 
all classes of securities entitled to vote in the election of directors 
beneficially owned by such person, and (2) the amount of voting power 
held by such person.
  The Enhancing Multi-Class Share Disclosures Act is both timely and 
necessary to close documented gaps in transparency around multi-class 
governance structures.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from Missouri (Mrs. Wagner) that the House suspend the 
rules and pass the bill, H.R. 2795, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mrs. WAGNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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