Rep. Ann Wagner
Two bipartisan capital formation bills sponsored earlier this month by U.S. Rep. Ann Wagner (R-MO) received approval on April 26 from the U.S. House Financial Services Committee and advanced to the full chamber for action.
“As chair of the Financial Services Subcommittee on Capital Markets, promoting greater capital formation and easier access to capital for entrepreneurs has been a major priority of mine,” Rep. Wagner said on Wednesday following the committee’ markup. “Today I am proud to announce the Financial Services Committee passed two of my bills that will help businesses grow and address our many concerns about the SEC’s onerous rulemaking processes.”
The committee approved the Encouraging Public Offerings Act of 2023, H.R. 2793, which Rep. Wagner introduced on April 20 with lead original cosponsor U.S. Rep. Gregory Meeks (D-NY) to expand the ability to use testing the waters and confidential draft registration submissions, according to the text of the bill.
Rep. Wagner said that H.R. 2793 would ensure that all companies — rather than just emerging growth companies — are allowed as issuers to communicate with potential investors to determine interest in a securities offering, either before or after the filing of a registration statement (i.e. test the waters).
The bill also would allow issuers to submit a confidential draft registration statement to the Securities and Exchange Commission (SEC) for review prior to public filing, according to the committee’s memo on the package of bills that members marked up on Wednesday.
“This bill will make listing on exchanges more attractive, strengthening our financial markets and providing main street investors more opportunities to grow their nest egg,” said Rep. Wagner.
The House Financial Services Committee also approved the Small Entity Update Act, H.R. 2792, which Rep. Wagner also introduced on April 20 to direct the SEC to conduct a study, followed by a rulemaking consistent with the results of such study, to include a definition for the term “small entity” under the Regulatory Flexibility Act.
If enacted, H.R. 2792 “will address long-standing concerns that numerous SEC rules do not appropriately balance the SEC’s mandates to protect investors and facilitate capital formation,” Rep. Wagner said.
The congresswoman added that H.R. 2792 would result in a better understanding of regulatory costs on small entities and ensure that the SEC updates its criteria for defining them, “leading to a more targeted regulatory framework for these entities.” U.S. Rep. Jim Himes (D-CT) was among the cosponsors of the bill.
“These impactful bills will ease the regulatory burden on growing companies and encourage more companies to go public, providing better information to interested investors,” said Rep. Wagner. “I thank my colleagues for their strong support of my legislation.”