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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1933 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1933

  To increase American job creation and economic growth by improving 
  access to the public capital markets for emerging growth companies.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            December 1, 2011

   Mr. Schumer (for himself, Mr. Toomey, Mr. Warner, and Mr. Crapo) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
  To increase American job creation and economic growth by improving 
  access to the public capital markets for emerging growth companies.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Reopening American Capital Markets 
to Emerging Growth Companies Act of 2011''.

SEC. 2. DEFINITIONS.

    (a) Securities Act of 1933.--Section 2(a) of the Securities Act of 
1933 (15 U.S.C. 77b(a)) is amended by adding at the end the following:
            ``(19) The term `emerging growth company' means an issuer 
        that had total annual gross revenues of less than 
        $1,000,000,000 during its most recently completed fiscal year. 
        An issuer that is an emerging growth company as of the first 
        day of that fiscal year shall continue to be deemed an emerging 
        growth company until the earliest of--
                    ``(A) the last day of the fiscal year of the issuer 
                during which it had total annual gross revenues of 
                $1,000,000,000 or more;
                    ``(B) the last day of the fiscal year of the issuer 
                following the fifth anniversary of the date of the 
                first sale of common equity securities of the issuer 
                pursuant to an effective registration statement under 
                this title; and
                    ``(C) the date on which such issuer is deemed to be 
                a `large accelerated filer', as defined in section 
                240.12b-2 of title 17 of the Code of Federal 
                Regulations, or any successor thereto.''.
    (b) Securities Exchange Act of 1934.--Section 3(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
            (1) by redesignating paragraph (77), as added by section 
        941(a) of the Investor Protection and Securities Reform Act of 
        2010 (Public Law 111-203, 124 Stat. 1890), as paragraph (79); 
        and
            (2) by adding at the end the following:
            ``(80) The term `emerging growth company' means an issuer 
        that had total annual gross revenues of less than 
        $1,000,000,000 during its most recently completed fiscal year. 
        An issuer that is an emerging growth company as of the first 
        day of that fiscal year shall continue to be deemed an emerging 
        growth company until the earliest of--
                    ``(A) the last day of the fiscal year of the issuer 
                during which it had total annual gross revenues of 
                $1,000,000,000 or more;
                    ``(B) the last day of the fiscal year of the issuer 
                following the fifth anniversary of the date of the 
                first sale of common equity securities of the issuer 
                pursuant to an effective registration statement under 
                the Securities Act of 1933; and
                    ``(C) the date on which such issuer is deemed to be 
                a `large accelerated filer', as defined in section 
                240.12b-2 of title 17 of the Code of Federal 
                Regulations, or any successor thereto.''.
    (c) Other Definitions.--As used in this title, the following 
definitions shall apply:
            (1) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (2) Initial public offering date.--The term ``initial 
        public offering date'' means the date of the first sale of 
        common equity securities of an issuer pursuant to an effective 
        registration statement under the Securities Act of 1933.

SEC. 3. DISCLOSURE OBLIGATIONS.

    (a) Executive Compensation.--
            (1) Exemption.--Section 14A(e) of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78n-1(e)) is amended--
                    (A) by inserting ``An emerging growth company shall 
                be exempt from the requirements of subsections (a) and 
                (b).'' before ``The Commission may''; and
                    (B) by striking ``an issuer'' and inserting ``any 
                other issuer''.
            (2) Proxies.--Section 14(i) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78n(i)) is amended by inserting ``, for any 
        issuer other than an emerging growth company,'' after 
        ``including''.
            (3) Compensation disclosures.--Section 953(b)(1) of the 
        Dodd-Frank Wall Street Reform and Consumer Protection Act of 
        2010 (Public Law 111-203; 124 Stat. 1904) is amended by 
        inserting ``, other than an emerging growth company, as that 
        term is defined in section 3(a) of the Securities Exchange Act 
        of 1934,'' after ``require each issuer''.
    (b) Financial Disclosures.--
            (1) Securities act of 1933.--Section 7(a) of the Securities 
        Act of 1933 (15 U.S.C. 77g(a)) is amended by adding at the end 
        the following: ``An emerging growth company need not present 
        more than 2 years of audited financial statements in order for 
        the registration statement of such emerging growth company with 
        respect to an initial public offering of its common equity 
        securities to be effective, and in any other registration 
        statement to be filed with the Commission, an emerging growth 
        company need not present financial data for any period prior to 
        the earliest audited period presented in connection with its 
        initial public offering.''.
            (2) Securities exchange act of 1934.--Section 13(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) is amended 
        by adding at the end the following: ``In any registration 
        statement, periodic report, or other reports to be filed with 
        the Commission, an emerging growth company need not present 
        financial data for any period prior to the earliest audited 
        period presented in connection with its initial public 
        offering.''.
    (c) New Accounting Pronouncements.--Section 19(b)(1)(A) of the 
Securities Act of 1933 (15 U.S.C. 77s(b)(1)(A)) is amended--
            (1) in clause (iv), by striking ``and'' at the end; and
            (2) by adding at the end the following:
                            ``(vi) has not established any accounting 
                        principles that would require an emerging 
                        growth company to comply with any new or 
                        revised financial accounting standard as of an 
                        effective date that is earlier than the 
                        effective date that applies to a company that 
                        is not an issuer, as defined in section 2(a)(7) 
                        of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
                        7201(a)(7)); and''.
    (d) Other Disclosures.--An emerging growth company may comply with 
section 229.303(a) of title 17 of the Code of Federal Regulations, or 
any successor thereto, by providing information required by such 
section with respect to the financial statements of the emerging growth 
company for each period presented pursuant to subsection (b). An 
emerging growth company may comply with section 229.402 of title 17 of 
the Code of Federal Regulations, or any successor thereto, by 
disclosing the same information as any issuer with a market value of 
outstanding voting and nonvoting common equity held by non-affiliates 
of less than $75,000,000.

SEC. 4. INTERNAL CONTROLS AUDIT.

    Section 404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7262(b)) is amended by inserting ``, other than an issuer that is an 
emerging growth company (as defined in section 3 of the Securities 
Exchange Act of 1934),'' before ``shall attest to''.

SEC. 5. AUDITING STANDARDS.

    Section 103(a)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7213(a)(3)) is amended by adding at the end the following:
                    ``(C) Transition period for emerging growth 
                companies.--Any rules of the Board requiring mandatory 
                audit firm rotation or a supplement to the auditor's 
                report in which the auditor would be required to 
                provide additional information about the audit and the 
                financial statements of the issuer (auditor discussion 
                and analysis) shall not apply to an emerging growth 
                company, as defined in section 3 of the Securities 
                Exchange Act of 1934. Any additional rules adopted by 
                the Board after the date of enactment of this 
                subparagraph shall not apply to any emerging growth 
                company, unless the Commission determines that the 
                application of such additional requirements to emerging 
                growth companies is necessary or appropriate in the 
                public interest, after considering the protection of 
                investors and whether the action will promote 
                efficiency, competition, and capital formation.''.

SEC. 6. AVAILABILITY OF INFORMATION ABOUT EMERGING GROWTH COMPANIES.

    (a) Provision of Research.--Section 2(a)(3) of the Securities Act 
of 1933 (15 U.S.C. 77b(a)(3)) is amended by adding at the end the 
following: ``The publication or distribution by a broker or dealer of a 
research report about an emerging growth company that is the subject of 
a proposed public offering of the common equity securities of such 
emerging growth company pursuant to a registration statement that the 
issuer proposes to file, or has filed, or that is effective shall be 
deemed for purposes of paragraph (10) of this subsection and section 
5(c) not to constitute an offer for sale or offer to sell a security, 
even if the broker or dealer is participating or will participate in 
the registered offering of the securities of the issuer. As used in 
this paragraph, the term ``research report'' means a written, 
electronic, or oral communication that includes information, opinions, 
or recommendations with respect to securities of an issuer or an 
analysis of a security or an issuer, whether or not it provides 
information reasonably sufficient upon which to base an investment 
decision.''.
    (b) Securities Analyst Communications.--Section 15D of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-6) is amended--
            (1) by redesignating subsection (c) as subsection (d); and
            (2) by inserting after subsection (b) the following:
    ``(c) Limitation.--Notwithstanding subsection (a) or any other 
provision of law, neither the Commission nor any national securities 
association registered under section 15A may adopt or maintain any rule 
or regulation in connection with an initial public offering of the 
common equity of an emerging growth company--
            ``(1) restricting, based on functional role, which 
        associated persons of a broker, dealer, or member of a national 
        securities association, may arrange for communications between 
        a securities analyst and a potential investor; or
            ``(2) restricting a securities analyst from participating 
        in any communications with the management of an emerging growth 
        company that is also attended by any other associated person of 
        a broker, dealer, or member of a national securities 
        association whose functional role is other than as a securities 
        analyst.''.
    (c) Expanding Permissible Communications.--Section 5 of the 
Securities Exchange Act of 1933 (15 U.S.C. 77e) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d) Limitation.--Notwithstanding any other provision of this 
section, an emerging growth company or any person authorized to act on 
behalf of an emerging growth company may engage in oral or written 
communications with potential investors that are qualified 
institutional buyers or institutions that are accredited investors, as 
such terms are respectively defined in section 230.144A and section 
230.501(a) of title 17 of the Code of Federal Regulations, or any 
successor thereto, to determine whether such investors might have an 
interest in a contemplated securities offering, either prior to or 
following the date of filing of a registration statement with respect 
to such securities with the Commission, subject to the requirement of 
subsection (b)(2).''.
    (d) Post Offering Communications.--Neither the Commission nor any 
national securities association registered under section 15A of the 
Securities Exchange Act of 1934 may adopt or maintain any rule or 
regulation prohibiting any broker, dealer, or member of a national 
securities association from publishing or distributing any research 
report or making a public appearance, with respect to the securities of 
an emerging growth company, either--
            (1) within any prescribed period of time following the 
        initial public offering date of the emerging growth company; or
            (2) within any prescribed period of time prior to the 
        expiration date of any agreement between the broker, dealer, or 
        member of a national securities association and the emerging 
        growth company or its shareholders that restricts or prohibits 
        the sale of securities held by the emerging growth company or 
        its shareholders after the initial public offering date.

SEC. 7. OTHER MATTERS.

    Section 6 of the Securities Act of 1933 (15 U.S.C. 77f) is amended 
by adding at the end the following:
    ``(e) Emerging Growth Companies.--
            ``(1) In general.--Any emerging growth company, prior to 
        its initial public offering date, may confidentially submit to 
        the Commission a draft registration statement, for confidential 
        nonpublic review by the staff of the Commission prior to public 
        filing, provided that the initial confidential submission and 
        all amendments thereto shall be publicly filed with the 
        Commission not later than 21 days before the date on which the 
        issuer conducts a road show, as such term is defined in section 
        230.433(h)(4) of title 17 of the Code of Federal Regulations, 
        or any successor thereto.
            ``(2) Confidentiality.--Notwithstanding any other provision 
        of this title, the Commission shall not be compelled to 
        disclose any information provided to or obtained by the 
        Commission pursuant to this subsection. For purposes of section 
        552 of title 5, United States Code, this subsection shall be 
        considered a statute described in subsection (b)(3)(B) of such 
        section 552. Information described in or obtained pursuant to 
        this subsection shall be deemed to constitute confidential 
        information for purposes of section 24(b)(2) of the Securities 
        Exchange Act of 1934.''.
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