[Congressional Record Volume 169, Number 97 (Monday, June 5, 2023)]
[House]
[Pages H2725-H2726]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
REGISTRATION STATEMENT CONTENTS FOR EMERGING GROWTH COMPANIES
Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2610) to amend the Securities Exchange Act of 1934 to
specify certain registration statement contents for emerging growth
companies, to permit issuers to file draft registration statements with
the Securities and Exchange Commission for confidential review, and for
other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2610
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. REGISTRATION STATEMENTS.
Section 12(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78l(b)) is amended--
(1) in paragraph (1)(K), by striking ``years,'' and
inserting ``years (or, in the case of an emerging growth
company, not more than the two preceding years),''; and
(2) by adding at the end the following:
``Any issuer 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 10 days before listing on a
national securities exchange. 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, 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.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Missouri (Mrs. Wagner) and the gentleman from California (Mr. Sherman)
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. 2610, a bill to harmonize the
emerging growth company, EGC, financial statement requirements
originally enacted in the JOBS Act of 2012.
I thank my colleague, and our esteemed chair of the Financial
Services Committee, Chairman McHenry, for his leadership on this
important piece of bipartisan legislation that will attract companies
to go public here in the United States.
Title I of the bipartisan JOBS Act of 2012 established a new class of
public companies, or issuers, called emerging growth companies, to
attract small companies to go public and reverse the steady decline of
small initial public offerings, IPOs, in American capital markets.
Under the JOBS Act, EGCs are granted scaled reporting and disclosure
requirements for a limited time after they go public. This attractive
accommodation allows the company to grow before absorbing the costly
regulatory burdens faced by large public companies.
One accommodation EGCs may take advantage of under the JOBS Act is
providing 2 years of audited financial statements rather than 3 years
when conducting an IPO.
Sometimes an EGC in its entirety does not undertake an IPO and
instead spins off a segment of its business as a new company and takes
that spin-off public. However, spin-offs of an EGC may not take
advantage of the 2-year financial statement accommodation.
{time} 1700
The EGC financial statement accommodations should apply equally,
whether an EGC is conducting an IPO or spinning off a segment of its
business and taking that company public.
Mr. Speaker, H.R. 2610 ensures consistency and equal application by
clarifying that an EGC may present 2 years rather than 3 years of
audited financial statements in both IPOs and spinoff transactions.
Mr. Speaker, for this reason, I urge my colleagues to support H.R.
2610, and I reserve the balance of my time.
Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.
[[Page H2726]]
Mr. Speaker, I rise in support of H.R. 2610, sponsored by the
gentleman from North Carolina, the chairman of the Financial Services
Committee.
Mr. Speaker, both this bill and the last bill we considered are
seeking to reduce the obligations of emerging growth companies, or
EGCs.
H.R. 2608 would allow an EGC to provide only 2 years of audited
financial statements in the case of an acquisition or a follow-on
offering. We just passed that bill on this floor by a voice vote. We
are now considering H.R. 2610, which takes that concept one step
further and allows an EGC to provide only 2 years of audited financial
statements in the case of a spinoff.
Logically, if we are going to adopt that bill, we should adopt this
bill.
A spinoff transaction is one where one company creates a new
independent company by selling new shares of its existing business.
Both H.R. 2608, which we just passed, and this bill, H.R. 2610,
reduce the obligations for EGCs by saying that they need to provide not
3 years of audited financial statements but 2 years of audited
statements.
We should keep in line what is required for EGCs, whether they are
going public, whether they are acquiring, whether they are doing an
initial public offering, or, as this bill does, whether they are doing
a spinoff.
Mr. Speaker, I urge my colleagues to support this bill, and I reserve
the balance of my time.
Mrs. WAGNER. Mr. Speaker, I yield such time as he may consume to the
gentleman from North Carolina (Mr. McHenry), the chairman of the full
Financial Services Committee.
Mr. McHENRY. Mr. Speaker, I thank Chairwoman Wagner for her great
leadership on the committee.
Mr. Speaker, I think it has been well-explained about emerging growth
companies. We have had a nice discussion here on the House floor of
what we had done in Congress 11 years ago to ensure that fast-growing,
smaller companies can access our capital markets and do so with less
regulatory burden, enticing them into our public markets, which enable
average, everyday investors to have more investment opportunities and
ownership of American society, as well.
Speaking to that, this bill clarifies the periods for which financial
statements are required to be provided by an emerging growth company
when conducting a spinoff transaction. This legislation will strengthen
public markets by addressing an irregularity that was not addressed
under the JOBS Act of 2012 and ensure consistent treatment for emerging
growth companies, whether they are going public or spinning off a
portion of their business.
Mr. Speaker, I have talked about the positive impact of emerging
growth companies and of the JOBS Act, generally, since it was enacted
into law. At that period of time, in 2012, you had a Republican House
of Representatives, a Democrat Senate, a Democrat in the White House,
and very few things got done.
President Obama at the time wanted to address the jobs challenge in
American society and wanted us to change law and regulations so that we
can actually lift people out of poverty and back into the workforce.
Those were some very important things that we discussed that
Congress, but the foremost of that was the legislating we did out of
the Financial Services Committee, which culminated in the passage of
what was called the JOBS Act.
One of the best provisions in the JOBS Act was the emerging growth
companies' section of that, or title of that bill, and that is what we
are talking about and speaking of on this day.
What we are trying to do is tweak that law to make sure it functions
appropriately. Like all things, whether it is your home, legislation,
or your car, you want to adjust it from time to time to make sure it is
running the way you intended it to run. That is what we are doing here
today with these small changes to the emerging growth companies'
statute and the JOBS Act.
Mr. Speaker, I urge my colleagues to vote ``yes'' on this important
provision.
Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the House, just a few minutes ago, adopted on a voice
vote, H.R. 2608. That bill had passed the committee by a vote of 41-0.
This bill is extremely similar, except it passed the committee with a
vote of 42-0.
H.R. 2610 will ensure that there is uniformity regarding EGCs'
financial disclosure obligations, in this case, in the event that an
EGC conducts a spinoff.
Mr. Speaker, I 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.
2610, and I yield back the balance of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise today in support of H.R. 2610,
which amends the Securities Exchange Act of 1934.
This amendment specifies certain registration statement contents for
emerging growth companies.
Additionally, the amendment permits issuers to file draft
registration statements with the Securities and Exchange Commission for
confidential review prior to a public filing.
Further, emerging growth companies will only be required to submit
profit and loss statements from the previous two years in registration
statements submitted to the SEC, rather than the previous three years
currently required by law.
This bill facilitates greater efficiency and capital formation
without sacrificing investor protection.
In my home state of Texas, the Houston area leads the Nation in small
business development and is one of the top emerging ecosystems for
startups globally.
More broadly, Texas remains the top destination in the Nation for new
companies.
Under this bill, emerging companies across Texas, the City of
Houston, and the Nation will better be able to explore their options
for future growth, evaluate required disclosures, and thoughtfully
consider whether they will proceed with their public offering.
This bill will boost these businesses and enhance their ability to
catalyze economic growth and job creation nationwide.
I urge my colleagues to join me in supporting H.R. 2610 and the
economic growth of our Nation, which is fueled by these emerging growth
companies.
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. 2610, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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