Greenlighting Growth Act
Greenlighting Growth Act
Plain Language Summary
# Greenl././ Growth Act Summary **What It Does:** The Greenlighting Growth Act would reduce financial reporting requirements for emerging growth companies (EGCs)—smaller companies that recently went public. Specifically, it would allow these companies to skip providing certain financial statements from companies they acquire, particularly statements from before their initial public offering. The bill also prevents the SEC from requiring these companies to present very old financial statements from their acquisitions. **Who It Affects:** This bill primarily affects newly public small and mid-size companies, their investors, and the SEC.
EGCs already qualify for reduced disclosure requirements compared to larger established companies, and this bill would ease those rules further. Investors in these companies could potentially see less financial information available to review before making investment decisions. **Current Status:** The bill has passed the House of Representatives and is now awaiting action in the Senate. Supporters argue it reduces regulatory burden on growing companies, while critics may worry it limits transparency for investors evaluating these firms.
CRS Official Summary
Greenlighting Growth ActThis bill limits the financial information an emerging growth company (EGC) must submit to the Securities and Exchange Commission. An EGC is a type of issuer that qualifies for reduced disclosures after its initial public offering (IPO) if its annual gross revenues are below a specific dollar amount. For example, an EGC must currently provide two years of financial statements after its IPO, rather than the three required for other companies. Under the bill, an emerging growth company is not required to present certain financial statements from acquired companies. This applies to statements from the time period prior to the earliest audited period presented in connection with the EGC’s IPO. In addition, the bill provides that no issuer that was formerly an EGC is required to present financial statements older than its earliest audit performed in connection with its IPO.
Latest Action
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.