[Congressional Record (Bound Edition), Volume 161 (2015), Part 8]
[House]
[Pages 11450-11451]
[From the U.S. Government Publishing Office, www.gpo.gov]




             SMALL COMPANY SIMPLE REGISTRATION ACT OF 2015

  Mr. HURT of Virginia. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 1723) to direct the Securities and Exchange 
Commission to revise Form S-1 so as to permit smaller reporting 
companies to use forward incorporation by reference for such form.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1723

       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 ``Small Company Simple 
     Registration Act of 2015''.

     SEC. 2. FORWARD INCORPORATION BY REFERENCE FOR FORM S-1.

       Not later than 45 days after the date of the enactment of 
     this Act, the Securities and Exchange Commission shall revise 
     Form S-1 so as to permit a smaller reporting company (as 
     defined in section 230.405 of title 17, Code of Federal 
     Regulations) to incorporate by reference in a registration 
     statement filed on such form any documents that such company 
     files with the Commission after the effective date of such 
     registration statement.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Hurt) and the gentlewoman from California (Ms. Maxine 
Waters) each will control 20 minutes.
  The Chair recognizes the gentleman from Virginia.


                             General Leave

  Mr. HURT of Virginia. 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 
gentleman from Virginia?
  There was no objection.
  Mr. HURT of Virginia. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 1723, the Small Company Simple 
Registration Act. I would like to thank Representative Wagner and 
Representative Sewell for their efforts to successfully move this 
legislation through the Financial Services Committee on a unanimous, 
bipartisan vote.
  H.R. 1723 simplifies the registration process by amending the SEC's 
form S-1 registration statement, the basic registration form for new 
securities offerings, to allow smaller reporting companies to 
incorporate by reference any documents filed with the SEC after the 
effective date of the form S-1.
  This forward incorporation by reference eliminates the need for 
filing excessive paperwork with each subsequent filing, thereby 
lowering compliance costs associated with filing redundant paperwork. 
Streamlining this requirement allows eligible companies to direct more 
resources to growing their business.
  H.R. 1723 is consistent with the recommendations of the SEC's 
Government-Business Forum on Small Business Capital Formation final 
report and has been endorsed by several witnesses before the Capital 
Markets Subcommittee.
  For example, Tom Quaadman of the United States Chamber of Commerce 
testified that, by enacting H.R. 1723, smaller companies can use 
forward incorporation as a way to streamline disclosures and get the 
information to investors without repetitive disclosures. He went on to 
say that the explosion of disclosures for smaller companies isn't 
providing material information to investors.
  Additionally, Professor John Coffee with Columbia University Law 
School previously testified that, for some time, the SEC's Government-
Business Forum on Small Business Capital Formation has called for 
changes to permit smaller reporting companies that have filed a form S-
1 to incorporate, by reference, documents filed with the SEC. I believe 
this one does have real efficiency justifications and could help 
smaller issuers.
  H.R. 1723 is a commonsense update to our securities laws that will 
more appropriately tailor their requirement for smaller companies. I 
ask my colleagues to join me in supporting H.R. 1723.
  I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, H.R. 1723, the Small Company Simple Registration Act of 
2015 is a commonsense provision to help smaller companies avoid having 
to obtain an audit related to a filing that is itself already audited. 
The bill would no longer require a company to amend its registration 
statement when it issues a quarterly or annual filing.
  Although one witness noted the concern that all information would no 
longer be reflected in a single document, she recommended that the 
SEC's public filing system be improved and that the issuer be required 
to post the registration statement on its Web site, complete with 
hyperlinks to the documents that are incorporated by reference. This 
seems like a reasonable approach. I believe that the SEC can do both 
and likely would if H.R. 1723 is passed.

[[Page 11451]]

  This one change has the potential to help companies save $10,000, and 
with all SEC filings able to be quickly found online, it does not 
diminish investor protections in any way.
  Last Congress, this provision was unfortunately attached to a larger 
bill that did not make a lot of sense. I am glad to see it has now been 
offered on its own, as I think it now has a much better likelihood of 
moving to the President's desk. I certainly support the adoption of 
this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HURT of Virginia. Mr. Speaker, I yield such time as she may 
consume to the gentlewoman from Missouri (Mrs. Wagner), who is the 
author of this bill.
  Mrs. WAGNER. Mr. Speaker, I thank my colleague, Mr. Hurt, for 
yielding.
  I am glad that the House is taking up H.R. 1723, the Small Company 
Simple Registration Act, which will take a much-needed step in helping 
remove financial barriers and make it more efficient for small 
businesses to go public.
  This bipartisan legislation, which I have sponsored with Ms. Terri 
Sewell from Alabama and which was approved by the House Financial 
Services Committee on a completely unanimous vote of 60-0, would make a 
simple change in the basic registration form for new securities 
offerings, the form S-1.
  Specifically, it would allow smaller reporting companies to 
incorporate by reference any documents filed with the SEC after the 
effective date, which means that those companies will not have to go 
through the trouble of refiling the form S-1 again and again.

                              {time}  1430

  This will have a profound impact on these small companies by cutting 
compliance costs, as they will not have to file redundant paperwork and 
wait on the SEC to approve their filing in order to raise capital and 
grow their small business.
  Small companies are increasingly leading the way in terms of 
technological innovation and job creation but consistently struggle 
with finding adequate access to capital in order to grow their 
business. It is a fact that small businesses are the main driver of 
economic growth in our country, as they create more jobs than any other 
business sector in America.
  In fact, the Kauffman Foundation, which is a nonprofit economic 
resource organization based in Kansas City, Missouri, estimated in 2010 
that startups create an average of 3 million jobs annually and stated: 
``Without startups, there would be no net job growth in the U.S. 
economy.'' It is clear that we must empower small businesses with every 
avenue to grow and, therefore, create jobs.
  For many small businesses looking to take the next step in expanding, 
going public is an attractive option that grants them access to the 
capital markets and allows them to issue stock to a wider range of 
investors. However, the ``price of admission'' for this avenue to 
raising capital is continually increasing through the amount of 
compliance and red tape required. For many, it simply is not worth it.
  Indeed, our securities laws are structured today in a way that favors 
large companies over small startups, which are struggling to gain 
market share, by increasingly requiring more legal compliance and 
providing exemptions for companies over certain revenue thresholds.
  The JOBS Act from 2012 made many improvements to this system and 
provided small companies additional access to the equity markets. My 
bill, the Small Company Simple Registration Act, expands upon the 
progress of the JOBS Act by making securities registration forms more 
efficient for the main driver of our economy, small business.
  During a hearing before the House Financial Services Committee 
earlier this year, a representative of BIO, Mr. Kovacs from PTC 
Therapeutics, testified about their experiences with doing a follow-on 
offering inside of a year of their IPO using form S-1. Ultimately, they 
had to go and update the entire S-1, which is a process that took weeks 
of work and required help from outside legal counsel.
  If the ``forward incorporation by reference'' provision from H.R. 
1723 had been in place, they could simply include a reference to any 
additional documentation filed alongside their original S-1 form, which 
would have taken much less time and required significantly less legal 
help.
  Additionally, investors would still be protected by having access to 
all needed information from the S-1 form, as well as any additional 
documentation.
  I would like to close by urging support for this commonsense and 
strong bipartisan piece of legislation that would streamline the 
paperwork that small businesses are required to file. This is something 
that the SEC's own working group on small business capital formation 
has recommended for several years now, but which the SEC itself has 
failed to act upon.
  Furthermore, this piece of legislation passed the committee earlier 
this year on a unanimous vote 60-0.
  I urge passage of this legislation.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  I am pleased to also support this legislation. This bipartisan 
legislation is another example of how we can work together on the 
Financial Services Committee on behalf of small businesses in this 
country.
  Both Democrats and Republicans have said over and over again that we 
must do everything that we can to support our small businesses. That is 
from capital formation to making sure that we get rid of bureaucratic 
rules and regulations.
  Again, this is another great example of that, and I am pleased to be 
a part of that.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HURT of Virginia. Mr. Speaker, I yield myself such time as I may 
consume.
  I would, again, like to thank the ranking member for working together 
on this piece of bipartisan legislation.
  I also want to thank the chairman, Chairman Hensarling, as well as 
Representative Wagner and Representative Sewell, for their laser focus 
on streamlining SEC regulations that are unnecessary and costly while 
still maintaining a rock-solid commitment to investor protection. It is 
my hope the House will adopt this measure.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Virginia (Mr. Hurt) that the House suspend the rules and 
pass the bill, H.R. 1723.
  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. HURT of Virginia. 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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