H.R. 3343: Greenlighting Growth Act

The Greenlighting Growth Act amends certain federal securities laws to change the financial reporting requirements for emerging growth companies (EGCs). The key changes aim to simplify the financial statements that EGCs must provide when they go public or apply for public offerings. The bill includes the following modifications:

Changes to Reporting Requirements

1. **Securities Act of 1933 Amendments**:

• The bill allows emerging growth companies to not present financial statements of acquired companies or any related historical financial data for periods before their earliest audited financial period when they are presenting their initial public offering (IPO).
• This means that EGCs are only required to provide the financial data starting from their earliest audited period at the time of their IPO, potentially easing their compliance burden and costs.

2. **Securities Exchange Act of 1934 Amendments**:

• Similar amendments are made regarding the financial statement requirements when an emerging growth company submits its registration statement for its public offerings.
• The law clarifies that any financial statements or information required will follow the same standard as established in the Securities Act of 1933 modifications – focusing only on the periods starting from their earliest audited periods.

Impact on Emerging Growth Companies

By easing the financial reporting requirements, the Greenlighting Growth Act aims to support emerging growth companies, which are typically defined as firms with total annual gross revenues of less than $1.07 billion (as of 2023). These companies often face challenges in accessing capital markets with heavier burdens of financial disclosures. Through the changes in the bill, EGCs may be incentivized to go public, knowing they are not required to present extensive financial histories that may be difficult or costly to compile.

Overall, the Greenlighting Growth Act seeks to foster a more growth-oriented environment for emerging companies by reducing regulatory complexities related to financial disclosures that can hinder their ability to enter public markets.

Relevant Companies

• None found