II 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Reopening American 

5 Capital Markets to Emerging Growth Companies Act of 

6 2011’’. 


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1 SEC. 2. DEFINITIONS. 

2 (a) SECURITIES ACT OF 1933.—Section 2(a) of the 

3 Securities Act of 1933 (15 U.S.C. 77b(a)) is amended by 

4 adding at the end the following: 

5 ‘‘(19) The term ‘emerging growth company’ 

6 means an issuer that had total annual gross reve7 nues of less than $1,000,000,000 during its most re8 cently completed fiscal year. An issuer that is an 

9 emerging growth company as of the first day of that 

10 fiscal year shall continue to be deemed an emerging 

11 growth company until the earliest of— 

12 ‘‘(A) the last day of the fiscal year of the 

13 issuer during which it had total annual gross 

14 revenues of $1,000,000,000 or more; 

15 ‘‘(B) the last day of the fiscal year of the 

16 issuer following the fifth anniversary of the date 

17 of the first sale of common equity securities of 

18 the issuer pursuant to an effective registration 

19 statement under this title; and 

20 ‘‘(C) the date on which such issuer is 

21 deemed to be a ‘large accelerated filer’, as de22 fined in section 240.12b–2 of title 17 of the 

23 Code of Federal Regulations, or any successor 

24 thereto.’’. 


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1 (b) SECURITIES EXCHANGE ACT OF 1934.—Section 

2 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 

3 78c(a)) is amended— 

4 (1) by redesignating paragraph (77), as added 

5 by section 941(a) of the Investor Protection and Se6 curities Reform Act of 2010 (Public Law 111–203, 

7 124 Stat. 1890), as paragraph (79); and 

8 (2) by adding at the end the following: 

9 ‘‘(80) The term ‘emerging growth company’ 

10 means an issuer that had total annual gross reve11 nues of less than $1,000,000,000 during its most re12 cently completed fiscal year. An issuer that is an 

13 emerging growth company as of the first day of that 

14 fiscal year shall continue to be deemed an emerging 

15 growth company until the earliest of— 

16 ‘‘(A) the last day of the fiscal year of the 

17 issuer during which it had total annual gross 

18 revenues of $1,000,000,000 or more; 

19 ‘‘(B) the last day of the fiscal year of the 

20 issuer following the fifth anniversary of the date 

21 of the first sale of common equity securities of 

22 the issuer pursuant to an effective registration 

23 statement under the Securities Act of 1933; 

24 and 


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1 ‘‘(C) the date on which such issuer is 

2 deemed to be a ‘large accelerated filer’, as de3 fined in section 240.12b–2 of title 17 of the 

4 Code of Federal Regulations, or any successor 

5 thereto.’’. 

6 (c) OTHER DEFINITIONS.—As used in this title, the 

7 following definitions shall apply: 

8 (1) COMMISSION.—The term ‘‘Commission’’ 

9 means the Securities and Exchange Commission. 

10 (2) INITIAL PUBLIC OFFERING DATE.—The 

11 term ‘‘initial public offering date’’ means the date of 

12 the first sale of common equity securities of an 

13 issuer pursuant to an effective registration state14 ment under the Securities Act of 1933. 

15 SEC. 3. DISCLOSURE OBLIGATIONS. 

16 (a) EXECUTIVE COMPENSATION.— 

17 (1) EXEMPTION.—Section 14A(e) of the Securi18 ties Exchange Act of 1934 (15 U.S.C. 78n–1(e)) is 

19 amended— 

20 (A) by inserting ‘‘An emerging growth 

21 company shall be exempt from the requirements 

22 of subsections (a) and (b).’’ before ‘‘The Com23 mission may’’; and 

24 (B) by striking ‘‘an issuer’’ and inserting 

25 ‘‘any other issuer’’. 


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1 (2) PROXIES.—Section 14(i) of the Securities 

2 Exchange Act of 1934 (15 U.S.C. 78n(i)) is amend3 ed by inserting ‘‘, for any issuer other than an 

4 emerging growth company,’’ after ‘‘including’’. 

5 (3) COMPENSATION DISCLOSURES.—Section 

6 953(b)(1) of the Dodd-Frank Wall Street Reform 

7 and Consumer Protection Act of 2010 (Public Law 

8 111–203; 124 Stat. 1904) is amended by inserting 

9 ‘‘, other than an emerging growth company, as that 

10 term is defined in section 3(a) of the Securities Ex11 change Act of 1934,’’ after ‘‘require each issuer’’. 

12 (b) FINANCIAL DISCLOSURES.— 

13 (1) SECURITIES ACT OF 1933.—Section 7(a) of 

14 the Securities Act of 1933 (15 U.S.C. 77g(a)) is 

15 amended by adding at the end the following: ‘‘An 

16 emerging growth company need not present more 

17 than 2 years of audited financial statements in order 

18 for the registration statement of such emerging 

19 growth company with respect to an initial public of20 fering of its common equity securities to be effective, 

21 and in any other registration statement to be filed 

22 with the Commission, an emerging growth company 

23 need not present financial data for any period prior 

24 to the earliest audited period presented in connection 

25 with its initial public offering.’’. 


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1 (2) SECURITIES EXCHANGE ACT OF 1934.—Sec2 tion 13(a) of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78m(a)) is amended by adding at the 

4 end the following: ‘‘In any registration statement, 

5 periodic report, or other reports to be filed with the 

6 Commission, an emerging growth company need not 

7 present financial data for any period prior to the 

8 earliest audited period presented in connection with 

9 its initial public offering.’’. 

10 (c) NEW ACCOUNTING PRONOUNCEMENTS.—Section 

11 19(b)(1)(A) of the Securities Act of 1933 (15 U.S.C. 

12 77s(b)(1)(A)) is amended— 

13 (1) in clause (iv), by striking ‘‘and’’ at the end; 

14 and 

15 (2) by adding at the end the following: 

16 ‘‘(vi) has not established any account17 ing principles that would require an emerg18 ing growth company to comply with any 

19 new or revised financial accounting stand20 ard as of an effective date that is earlier 

21 than the effective date that applies to a 

22 company that is not an issuer, as defined 

23 in section 2(a)(7) of the Sarbanes-Oxley 

24 Act of 2002 (15 U.S.C. 7201(a)(7)); and’’. 


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1 (d) OTHER DISCLOSURES.—An emerging growth 

2 company may comply with section 229.303(a) of title 17 

3 of the Code of Federal Regulations, or any successor 

4 thereto, by providing information required by such section 

5 with respect to the financial statements of the emerging 

6 growth company for each period presented pursuant to 

7 subsection (b). An emerging growth company may comply 

8 with section 229.402 of title 17 of the Code of Federal 

9 Regulations, or any successor thereto, by disclosing the 

10 same information as any issuer with a market value of 

11 outstanding voting and nonvoting common equity held by 

12 non-affiliates of less than $75,000,000. 

13 SEC. 4. INTERNAL CONTROLS AUDIT. 

14 Section 404(b) of the Sarbanes-Oxley Act of 2002 

15 (15 U.S.C. 7262(b)) is amended by inserting ‘‘, other than 

16 an issuer that is an emerging growth company (as defined 

17 in section 3 of the Securities Exchange Act of 1934),’’ 

18 before ‘‘shall attest to’’. 

19 SEC. 5. AUDITING STANDARDS. 

20 Section 103(a)(3) of the Sarbanes-Oxley Act of 2002 

21 (15 U.S.C. 7213(a)(3)) is amended by adding at the end 

22 the following: 

23 ‘‘(C) TRANSITION PERIOD FOR EMERGING

24 GROWTH COMPANIES.—Any rules of the Board 

25 requiring mandatory audit firm rotation or a 


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1 supplement to the auditor’s report in which the 

2 auditor would be required to provide additional 

3 information about the audit and the financial 

4 statements of the issuer (auditor discussion and 

5 analysis) shall not apply to an emerging growth 

6 company, as defined in section 3 of the Securi7 ties Exchange Act of 1934. Any additional rules 

8 adopted by the Board after the date of enact9 ment of this subparagraph shall not apply to 

10 any emerging growth company, unless the Com11 mission determines that the application of such 

12 additional requirements to emerging growth 

13 companies is necessary or appropriate in the 

14 public interest, after considering the protection 

15 of investors and whether the action will promote 

16 efficiency, competition, and capital formation.’’. 

17 SEC. 6. AVAILABILITY OF INFORMATION ABOUT EMERGING 

18 GROWTH COMPANIES. 

19 (a) PROVISION OF RESEARCH.—Section 2(a)(3) of 

20 the Securities Act of 1933 (15 U.S.C. 77b(a)(3)) is 

21 amended by adding at the end the following: ‘‘The publica22 tion or distribution by a broker or dealer of a research 

23 report about an emerging growth company that is the sub24 ject of a proposed public offering of the common equity 

25 securities of such emerging growth company pursuant to 


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1 a registration statement that the issuer proposes to file, 

2 or has filed, or that is effective shall be deemed for pur3 poses of paragraph (10) of this subsection and section 5(c) 

4 not to constitute an offer for sale or offer to sell a security, 

5 even if the broker or dealer is participating or will partici6 pate in the registered offering of the securities of the 

7 issuer. As used in this paragraph, the term ‘‘research re8 port’’ means a written, electronic, or oral communication 

9 that includes information, opinions, or recommendations 

10 with respect to securities of an issuer or an analysis of 

11 a security or an issuer, whether or not it provides informa12 tion reasonably sufficient upon which to base an invest13 ment decision.’’. 

14 (b) SECURITIES ANALYST COMMUNICATIONS.—Sec15 tion 15D of the Securities Exchange Act of 1934 (15 

16 U.S.C. 78o–6) is amended— 

17 (1) by redesignating subsection (c) as sub18 section (d); and 

19 (2) by inserting after subsection (b) the fol20 lowing: 

21 ‘‘(c) LIMITATION.—Notwithstanding subsection (a) 

22 or any other provision of law, neither the Commission nor 

23 any national securities association registered under section 

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1 nection with an initial public offering of the common eq2 uity of an emerging growth company— 

3 ‘‘(1) restricting, based on functional role, which 

4 associated persons of a broker, dealer, or member of 

5 a national securities association, may arrange for 

6 communications between a securities analyst and a 

7 potential investor; or 

8 ‘‘(2) restricting a securities analyst from par9 ticipating in any communications with the manage10 ment of an emerging growth company that is also 

11 attended by any other associated person of a broker, 

12 dealer, or member of a national securities associa13 tion whose functional role is other than as a securi14 ties analyst.’’. 

15 (c) EXPANDING PERMISSIBLE COMMUNICATIONS.— 

16 Section 5 of the Securities Exchange Act of 1933 (15 

17 U.S.C. 77e) is amended— 

18 (1) by redesignating subsection (d) as sub19 section (e); and 

20 (2) by inserting after subsection (c) the fol21 lowing: 

22 ‘‘(d) LIMITATION.—Notwithstanding any other provi23 sion of this section, an emerging growth company or any 

24 person authorized to act on behalf of an emerging growth 

25 company may engage in oral or written communications 


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1 with potential investors that are qualified institutional 

2 buyers or institutions that are accredited investors, as 

3 such terms are respectively defined in section 230.144A 

4 and section 230.501(a) of title 17 of the Code of Federal 

5 Regulations, or any successor thereto, to determine wheth6 er such investors might have an interest in a contemplated 

7 securities offering, either prior to or following the date of 

8 filing of a registration statement with respect to such se9 curities with the Commission, subject to the requirement 

10 of subsection (b)(2).’’. 

11 (d) POST OFFERING COMMUNICATIONS.—Neither 

12 the Commission nor any national securities association 

13 registered under section 15A of the Securities Exchange 

14 Act of 1934 may adopt or maintain any rule or regulation 

15 prohibiting any broker, dealer, or member of a national 

16 securities association from publishing or distributing any 

17 research report or making a public appearance, with re18 spect to the securities of an emerging growth company, 

19 either— 

20 (1) within any prescribed period of time fol21 lowing the initial public offering date of the emerg22 ing growth company; or 

23 (2) within any prescribed period of time prior 

24 to the expiration date of any agreement between the 

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1 sociation and the emerging growth company or its 

2 shareholders that restricts or prohibits the sale of 

3 securities held by the emerging growth company or 

4 its shareholders after the initial public offering date. 

5 SEC. 7. OTHER MATTERS. 

6 Section 6 of the Securities Act of 1933 (15 U.S.C. 

7 77f) is amended by adding at the end the following: 

8 ‘‘(e) EMERGING GROWTH COMPANIES.— 

9 ‘‘(1) IN GENERAL.—Any emerging growth com10 pany, prior to its initial public offering date, may 

11 confidentially submit to the Commission a draft reg12 istration statement, for confidential nonpublic review 

13 by the staff of the Commission prior to public filing, 

14 provided that the initial confidential submission and 

15 all amendments thereto shall be publicly filed with 

16 the Commission not later than 21 days before the 

17 date on which the issuer conducts a road show, as 

18 such term is defined in section 230.433(h)(4) of title 

19 17 of the Code of Federal Regulations, or any suc20 cessor thereto. 

21 ‘‘(2) CONFIDENTIALITY.—Notwithstanding any 

22 other provision of this title, the Commission shall 

23 not be compelled to disclose any information pro24 vided to or obtained by the Commission pursuant to 

25 this subsection. For purposes of section 552 of title 


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1 5, United States Code, this subsection shall be con2 sidered a statute described in subsection (b)(3)(B) 

3 of such section 552. Information described in or ob4 tained pursuant to this subsection shall be deemed 

5 to constitute confidential information for purposes of 

6 section 24(b)(2) of the Securities Exchange Act of 

7 1934.’’. 

Æ 


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