HR3343-119

What This Bill Does

The Greenlighting Growth Act reduces historical financial-statement obligations for emerging growth companies that have acquired other businesses. Under Securities Act section 7(a)(2), an emerging growth company would not need to present acquired-company financial statements or related information otherwise required by SEC Regulation S-X rules 3-05 or 8-04 for any period before the earliest audited period of the emerging growth company included with its initial public offering. If that issuer later ceases to be an emerging growth company, the SEC still could not require financial statements of the issuer, or acquired-company financial statements or related information, for periods before that earliest audited IPO period. The bill applies parallel relief to Exchange Act section 12(b) exchange-listing applications, so emerging growth companies seeking national securities exchange listings also avoid earlier acquired-company financial statements before the earliest audited period presented with the application.

Who Benefits and How

Emerging growth company applicants, IPO issuers, national securities exchange listing applicants, venture-backed companies that made acquisitions, private equity-backed issuers, securities lawyers preparing IPO filings, underwriting banks, and capital-formation advisers benefit because the bill reduces the accounting history they must assemble for acquired businesses and preserves that relief even if the issuer outgrows emerging growth company status after the offering or listing process.

Who Bears the Burden and How

Public equity investors, institutional investors reviewing IPO filings, securities analysts, accounting firms serving acquired businesses, auditing firms serving acquired businesses, SEC Corporation Finance staff, SEC disclosure reviewers, investor-protection advocates, and financial journalists bear burdens or lose information because the bill narrows access to pre-IPO acquired-company financial statements that could otherwise reveal acquisition quality, historical losses, revenue trends, or integration risk.

Key Provisions

• Amends Securities Act section 7(a)(2) to excuse emerging growth companies from earlier acquired-company financial statements in IPO filings.
• Applies the relief to SEC Regulation S-X rules 3-05 and 8-04 or successor requirements.
• Preserves the relief after an issuer later ceases to be an emerging growth company.
• Amends Exchange Act section 12(b) to apply similar relief to national securities exchange listing applications.
• Limits the relief to periods before the earliest audited period of the emerging growth company presented in the IPO or listing application.