Encouraging Public Offerings Act of 2023

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 2793, the Encouraging Public Offerings Act of 2023, sponsored by the gentlewoman from Missouri.

I think the gentlewoman has laid it out clearly. We are talking here about the process by which a company goes public, and this allows the company to do two things before they go public.

One of those is to confer with prospective investors, and the other is to get a nonpublic review by the SEC staff of their registration statement.

This process of allowing these things to happen has been tried with ESG companies. The SEC has now adopted it as a policy for other companies, and now this bill would codify that decision.

I should point out this bill came before our committee, and the vote was 39-1. This bill codifies the recent SEC rule that allows any issuer, not just an ESG, to submit a confidential draft of their registration statement for nonpublic review.

This bill also allows the issuers to confer with prospective investors; in effect, testing the waters about whether a public offering makes sense.

By freeing all issuers to use these two methods and codifying the SEC's administrative action, we can provide all companies with the assurance that these tools will be available to them.

This bill codifies, as I have said, the 2019 SEC rulemaking that allows

issuers to test the waters before going public.

This allows the issuer to gauge interest in their public offering by talking to certain institutional investors without first needing to file a registration statement.

Given the cost of going through the entire process, it only makes sense to allow companies to talk to institutional investors before they decide to go public and commit themselves to that large cost.

Overall, this makes it easier for companies to access our capital markets to get the capital they need to grow their businesses.

Mr. Speaker, this bill is one that should be adopted. The vote in committee was 39-1. I urge my colleagues to support it.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise today in support of H.R. 2793, the Encouraging Public Offerings Act of 2023.

This bill provides statutory authority for all issuers of securities to use certain offering procedures that are available to emerging growth companies.

Specifically, the bill allows under statute issuers of securities to communicate with potential investors to ascertain interest in a contemplated securities offering, either before or after the filing of a registration statement (i.e., test the waters).

Additionally, issuers are allowed under statute to submit a confidential draft registration statement to the Securities and Exchange Commission for review prior to public filing or within one year after the initial public offering or registration.

This bill strikes ``an emerging growth company or any person authorized to act on behalf of an emerging growth company'' and inserts ``an issuer or any person authorized to act on behalf of an issuer.''

This bill further adds the following additional requirements:

(A) In general--the Commission may promulgate regulations, subject to public notice and comment, to impose such other terms, conditions, or requirements on the engaging in oral or written communications described under paragraph (1) by an issuer other than an emerging growth company as the Commission determines appropriate.

(B) Report to Congress--Prior to any rulemaking described under subparagraph (A), the Commission shall submit to Congress a report containing a list of the findings supporting the basis of the rulemaking.

The Congressional Budget Office estimates that it would cost an insignificant amount for the agency to justify any further rulemakings to the Congress because the SEC already allows such practices under current policy.

The Congressional Budget Office expects that the net effect on discretionary spending over the 2023-2028 period would be negligible, assuming appropriation actions consistent with that authority, because the SEC is authorized to collect fees each year to offset its annual appropriation.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2793) to amend the Securities Act of 1933 to expand the ability to use testing the waters and confidential draft registration submissions, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on this bill.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am proud to rise today in support of my bill, H.R. 2793, the Encouraging Public Offerings Act.

This bipartisan piece of legislation would encourage more companies to go public and expand provisions of the JOBS Act by codifying an existing SEC rule.

The SEC rule that this bill codifies allows for all companies to test the waters by communicating directly with certain potential investors before filing for an IPO.

Although small companies are known to drive technological innovation and job creation, they frequently face obstacles in obtaining funding in the capital markets.

These obstacles often are the result of the disproportionately larger burden that securities regulations--written for large public companies--place on small companies when they seek to go public.

Title I of the JOBS Act established a new category of issuers known as emerging growth companies or EGCs. To qualify as an EGC, a company must maintain a certain threshold of annual revenue.

The law provides that EGCs with a 5-year on-ramp to comply with certain regulatory requirements related to disclosure and reporting.

Additionally, title I allows for EGCs to test the waters by meeting with investors to explain their business structure before issuing an

Mr. Speaker, I strongly urge my colleagues to support H.R. 2793, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.