[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.

                          ____________________