HR3323-119

What This Bill Does

The Helping Startups Continue To Grow Act updates the emerging growth company definition in both the Securities Act of 1933 and the Securities Exchange Act of 1934. It raises the annual revenue threshold from $1 billion to $3 billion wherever the term appears. It extends the time a company can remain an emerging growth company after its first registered common-equity sale from the fifth anniversary to the 10-year anniversary. It removes subparagraph (D), which is the provision that can end emerging growth company status based on large debt issuance. The reported text also redesignates a duplicate Exchange Act paragraph and updates a Securities Act crowdfunding cross-reference from section 3(a)(80) to section 3(a).

Who Benefits and How

Pre-IPO startups benefit because the larger revenue threshold can preserve emerging-growth status as they scale. Recently public companies benefit because the window for reduced disclosure and compliance treatment extends from five years to ten years. Mid-size public companies with revenue between $1 billion and $3 billion benefit because they can qualify for emerging-growth treatment. IPO underwriters benefit from a larger pool of companies eligible for scaled public-offering rules. Venture capital firms benefit if portfolio companies can remain in a lighter disclosure regime for longer.

Who Bears the Burden and How

The Securities and Exchange Commission must update forms, guidance, filing review practices, and cross-references. Retail public-market investors may receive less disclosure from a larger group of companies for a longer period. Institutional public-market investors must price securities with reduced disclosure in more offerings. Public-company auditors and disclosure counsel must apply revised eligibility rules. Investor advocacy organizations bear a policy burden because the bill expands scaled disclosure at the expense of some investor information.

Key Provisions

• Amends the Securities Act emerging growth company definition to raise the revenue cap from $1 billion to $3 billion.
• Amends the Exchange Act emerging growth company definition to raise the same revenue cap.
• Extends the post-IPO emerging-growth window from five years to ten years.
• Repeals the subparagraph that can terminate emerging-growth status based on large debt issuance.
• Modifies Exchange Act paragraph numbering and a Securities Act crowdfunding cross-reference.