[Congressional Record Volume 171, Number 124 (Monday, July 21, 2025)]
[House]
[Pages H3508-H3509]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENHANCING MULTI-CLASS SHARE DISCLOSURES ACT
Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 3357) 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. 3357
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 of disclosure.--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 types of securities that
have differing amounts of voting rights in the election of
directors.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Arkansas (Mr. Hill) and the gentlewoman from California (Ms. Waters)
each will control 20 minutes.
The Chair recognizes the gentleman from Arkansas.
General Leave
Mr. HILL of Arkansas. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days 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
gentleman from Arkansas?
There was no objection.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in strong support of H.R. 3357, the Enhancing
Multi-Class Share Disclosures Act.
Mr. Speaker, multiclass structures have existed in American capital
markets for many decades, helping founders retain control of their
companies without holding a majority of the economic interest. These
structures are important for certain business models, like family
businesses, but they also raise questions about transparency and
shareholder rights.
Since this information is not required to be disclosed, shareholders
might not always understand how control is concentrated within a public
company.
Mr. Meeks' bill rightsizes this issue by requiring companies to
provide clear information about voting power, especially where insiders
or significant shareholders hold outsized influence.
Mr. Speaker, I urge my colleagues to join me in supporting this bill,
and I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, Mr. Meeks' bill closes documented gaps around multiclass
governance structures. Multiclass 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, pose significant risk,
making transparency ever more important for investors. Specifically,
these structures pose significant risks for investors, including
limiting 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 an
ordinary investor to comprehend.
Accordingly, the SEC Investor Advisory Committee recommended that the
Commission amend its rules to ensure that this gap is better identified
and quantified for investors via disclosed ratio.
This commonsense bill adopts this recommendation to ensure that
investors have the clearest information available to make the best
decisions for themselves. This bill is supported by the Council of
Institutional Investors, whose members manage trillions in working
families' assets.
Mr. Speaker, I urge my colleagues to vote ``yes'' on this bill, and I
reserve the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO
estimate for this bill.
H.R. 3357, ENHANCING MULTI-CLASS SHARE DISCLOSURES ACT, AS REPORTED BY
THE HOUSE COMMITTEE ON HOUSE FINANCIAL SERVICES ON JUNE 3, 2025
------------------------------------------------------------------------
By fiscal year, millions of
dollars--
-------------------------------
2025 2025-2030 2025-2035
------------------------------------------------------------------------
Direct Spending (Outlays)............... 0 0 0
Revenues................................ 0 0 0
Increase or Decrease (-) in the Deficit. 0 0 0
Spending Subject to Appropriation * * **
(Outlays)..............................
------------------------------------------------------------------------
* = between -$500,000 and $500,000.
** not estimated.
Increases net direct spending in any of the four
consecutive 10-year periods beginning in 2036? No.
Increases on-budget deficits in any of the four consecutive
10-year periods beginning in 2036? No.
Statutory pay-as-you-go procedures apply? No.
Mandate Effects:
Contains intergovernmental mandate? No.
Contains private-sector mandate? Yes, Under Threshold.
H.R. 3357 would direct the Securities and Exchange
Commission (SEC) to issue rules requiring securities issuers
with multi-class stock structures to disclose to all
shareholders information about the shares of all classes of
securities owned by and the voting power of particular
shareholders specified in the bill. A multi-class stock
structure is one in which a company offers two or more
classes of securities with different voting rights in an
election of directors.
Using information about the cost of similar rulemakings,
CBO estimates that implementing H.R. 3357 would cost $1
million over the 2025-2030 period. CBO expects the commission
would need three employees, at an average annual cost of
$330,000 for each employee, to issue rules over one year.
Because the SEC is authorized to collect fees each year to
offset its annual appropriation, CBO expects that the net
effect on discretionary spending over the 2025-2030 period
would be negligible, assuming appropriation actions
consistent with that authority.
If the SEC increased fees to offset the costs for
rulemaking as required by the bill, H.R. 3357 would increase
the cost of an existing mandate as defined in the Unfunded
Mandates Reform Act (UMRA) on private entities required to
pay those fees. CBO estimates that the incremental cost of
the mandate would be small and would fall well below the
annual threshold for private-sector mandates established in
UMRA ($206 million in 2025, adjusted annually for inflation).
The bill would not impose any intergovernmental mandates.
The CBO staff contacts for this estimate are Aurora Swanson
(for federal costs) and Rachel Austin (for mandates). The
estimate was reviewed by H. Samuel Papenfuss, Deputy Director
of Budget Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
Mr. HILL of Arkansas. Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from New
York (Mr. Meeks), ranking member of the House Committee on Foreign
Affairs and the sponsor of this legislation.
[[Page H3509]]
Mr. MEEKS. Mr. Speaker, I rise today in support of my bill, H.R.
3357, the Enhancing Multi-Class Share Disclosures Act.
Mr. Speaker, I thank Chairman Hill and Ranking Member Waters for
their leadership and efforts to bring my bill to the floor today.
Publicly traded companies are critical to this country's economic
dynamism and wealth creation. Their shareholders, including everyday
American families, believe in the potential of these companies and
demonstrate this faith by investing in their equities. This flood of
new capital allows companies to do research and development, hire
Americans, and innovate for the greater good.
My legislation strengthens our capital markets by requiring more
transparency around multiclass shareholder companies.
For annual shareholder meetings, companies will have to disclose the
true distribution of voting power of insiders, like directors or
executives, who hold more voting rights than their ownership share
would suggest.
An imbalanced power structure could limit other investors' abilities
to direct strategy or hold boards accountable. Basically, this bill
gives Main Street investors the complete and full picture and the
necessary information to make smart and informed decisions.
Let me be clear: I very much understand the benefit of multiclass
share structures and think they have a place in corporate governance.
Major companies from outside of the United States have chosen to list
in New York City precisely because we have more flexible multiclass
structures. Yet, our advantage over other financial hubs, like Hong
Kong and Shanghai, is not just one set of regulations. It is the
transparency and openness of our capital markets, and transparency
strengthens markets.
By doubling down on our strengths, this bill will further cement our
competitive lead and aid investors along the way.
Mr. Speaker, I call on my colleagues to support my legislation.
Mr. HILL of Arkansas. Mr. Speaker, I am prepared to close, and I
reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, Mr. Meeks' bill clarifies for investors the truth around
multiclass shares--specifically, the difference between a corporate
insider's ownership interests versus their true voting power. These two
things are generally disclosed in ways that are hard for everyday
investors to understand.
This bill solves that problem by ensuring that this gap is quantified
for investors via a clearly disclosed ratio, as was recommended by the
SEC Investor Advisory Committee.
Mr. Speaker, I urge my colleagues to support this bill, and I yield
back the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I rise, as I said, in support of
this bill. I agree with the ranking member of the full committee. It
deserves strong bipartisan support, and I yield back the balance of my
time.
The SPEAKER pro tempore (Mr. Moore of North Carolina). The question
is on the motion offered by the gentleman from Arkansas (Mr. Hill) that
the House suspend the rules and pass the bill, H.R. 3357, 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.
Mr. HILL of Arkansas. 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.
____________________