Helping Startups Continue to Grow Act

I 116TH CONGRESS 1ST SESSION H. R. 4918 To provide for a 5-year extension of certain exemptions and reduced disclosure requirements for companies that were emerging growth companies and would continue to be emerging growth companies but for the 5-year restriction on emerging growth companies, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 30, 2019 Mr. STEIL (for himself, Mr. HILL of Arkansas, Mr. STIVERS, Mr. GOODEN, and Mr. HOLLINGSWORTH) introduced the following bill; which was re- ferred to the Committee on Financial Services A BILL To provide for a 5-year extension of certain exemptions and reduced disclosure requirements for companies that were emerging growth companies and would continue to be emerging growth companies but for the 5-year restriction on emerging growth companies, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Helping Startups Con- 4 tinue to Grow Act’’. 5 VerDate Sep 11 2014 21:05 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4918.IH H4918 2 •HR 4918 IH SEC. 2. ON-RAMP EXTENSION. 1 (a) DEFINITION OF A RECENT EMERGING GROWTH 2 COMPANY.— 3 (1) SECURITIES ACT OF 1933.—Section 2(a) of 4 the Securities Act of 1933 (15 U.S.C. 77b(a)) is 5 amended by adding at the end the following: 6 ‘‘(20) RECENT EMERGING GROWTH COM- 7 PANY.—The term ‘recent emerging growth company’ 8 means an issuer that— 9 ‘‘(A) was, but is no longer, an emerging 10 growth company; 11 ‘‘(B) would continue to be an emerging 12 growth company but for the application of sub- 13 paragraph (B) of paragraph (19); and 14 ‘‘(C) ceased to be an emerging growth 15 company within the previous 5-year period.’’. 16 (2) SECURITIES EXCHANGE ACT OF 1934.—Sec- 17 tion 3(a) of the Securities Exchange Act of 1934 18 (15 U.S.C. 78c(a)) is amended— 19 (A) by redesignating the second paragraph 20 (80) as paragraph (81); and 21 (B) by adding at the end the following: 22 ‘‘(82) RECENT EMERGING GROWTH COM- 23 PANY.—The term ‘recent emerging growth company’ 24 means an issuer that— 25 VerDate Sep 11 2014 02:29 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4918.IH H4918 3 •HR 4918 IH ‘‘(A) was, but is no longer, an emerging 1 growth company; 2 ‘‘(B) would continue to be an emerging 3 growth company but for the application of sub- 4 paragraph (B) of paragraph (80); and 5 ‘‘(C) ceased to be an emerging growth 6 company within the previous 5-year period.’’. 7 (b) STREAMLINED FINANCIAL DISCLOSURES.— 8 (1) SECURITIES ACT OF 1933.—Section 7(a)(2) 9 of the Securities Act of 1933 (15 U.S.C. 77g(a)(2)) 10 is amended— 11 (A) by inserting after ‘‘An emerging 12 growth company’’ the following: ‘‘and a recent 13 emerging growth company’’; and 14 (B) in subparagraph (A)— 15 (i) by striking ‘‘such emerging growth 16 company’’ and inserting ‘‘such company’’; 17 and 18 (ii) by striking ‘‘an emerging growth 19 company’’ and inserting ‘‘such company’’. 20 (2) SECURITIES EXCHANGE ACT OF 1934.—Sec- 21 tion 13(a) of the Securities Exchange Act of 1934 22 (15 U.S.C. 78m(a)) is amended by adding at the 23 end the following: ‘‘The previous sentence shall 24 apply, to the same extent as such sentence applies 25 VerDate Sep 11 2014 02:29 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4918.IH H4918 4 •HR 4918 IH to an emerging growth company, to a recent emerg- 1 ing growth company.’’. 2 (3) OTHER DISCLOSURES.—A recent emerging 3 growth company (as defined under section 2 of the 4 Securities Act of 1933) may comply with section 5 229.303(a) of title 17, Code of Federal Regulations, 6 or any successor thereto, by providing information 7 required by such section with respect to the financial 8 statements of the company for each period presented 9 pursuant to section 7(a) of the Securities Act of 10 1933 (15 U.S.C. 77g(a)). Such a company may com- 11 ply with section 229.402 of title 17, Code of Federal 12 Regulations, or any successor thereto, by disclosing 13 the same information as any issuer with a market 14 value of outstanding voting and nonvoting common 15 equity held by non-affiliates of less than 16 $75,000,000. 17 (c) DRAFT REGISTRATION STATEMENTS.—Section 18 6(e)(1) of the Securities Act of 1933 (15 U.S.C. 77f(e)(1)) 19 is amended by striking ‘‘emerging growth company’’ each 20 place such term appears and inserting ‘‘emerging growth 21 company or recent emerging growth company’’. 22 (d) EXECUTIVE COMPENSATION DISCLOSURES.— 23 VerDate Sep 11 2014 02:29 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4918.IH H4918 5 •HR 4918 IH (1) CERTAIN SHAREHOLDER DISCLOSURES.— 1 Section 14A(e)(2) of the Securities Exchange Act of 2 1934 (15 U.S.C. 78n–1(e)) is amended— 3 (A) in subparagraph (A), by striking ‘‘An 4 emerging growth company’’ and inserting the 5 following ‘‘Any emerging growth company or re- 6 cent emerging growth company’’; and 7 (B) in subparagraph (B)— 8 (i) in the heading, by striking ‘‘TER- 9 MINATION OF EMERGING GROWTH COM- 10 PANY TREATMENT’’ and inserting ‘‘EXEMP- 11 TION’’; 12 (ii) by striking ‘‘an emerging growth 13 company but is no longer an emerging 14 growth company’’ and inserting ‘‘exempt 15 under subparagraph (A) but is no longer 16 exempt’’; and 17 (iii) in clause (ii), by inserting before 18 the period the following: ‘‘or a recent 19 emerging growth company’’. 20 (2) PAY RATIO DISCLOSURES.—Section 21 953(b)(1) of the Investor Protection and Securities 22 Reform Act of 2010 (15 U.S.C. 78l note) is amend- 23 ed, by striking ‘‘, as that term is defined in’’ and in- 24 VerDate Sep 11 2014 02:29 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4918.IH H4918 6 •HR 4918 IH serting ‘‘or a recent emerging growth company, as 1 such terms are defined, respectively, under’’. 2 (3) PAY VS. PERFORMANCE DISCLOSURES.— 3 Section 14(i) of the Securities Exchange Act of 1934 4 (15 U.S.C. 78n(i)) is amended by inserting after 5 ‘‘emerging growth company’’ the following: ‘‘or a re- 6 cent emerging growth company’’. 7 (4) SIMPLIFIED EXECUTIVE COMPENSATION 8 DISCLOSURES.—The Securities and Exchange Com- 9 mission shall amend section 229.402(l) of title 17, 10 Code of Federal Regulations, to permit a recent 11 emerging growth company (as defined under section 12 2 of the Securities Act of 1933) to make use of the 13 same scaled disclosures for executive compensation 14 that are available pursuant to such section for small- 15 er reporting companies and emerging growth compa- 16 nies. 17 Æ VerDate Sep 11 2014 02:29 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H4918.IH H4918