House Advances Bills to Amend Securities Laws

The House of Representatives advanced a number of bills that would amend or supplement the securities laws:

• H.R. 2792, the Small Entity Update Act, would require the SEC to conduct a study, to be submitted to Congress, on whether the definition of "small entity" (i) aligns with the growth of the financial markets since its definition was last amended and (ii) allows for a "meaningful" number of entities to fall under the definition. The bill would require the SEC to revise the rules based on the findings from the report.

• H.R. 2795, the Enhancing Multi-Class Share Disclosures Act, would require issuers with multi-class share structures to provide proxy or consent solicitation material for shareholder meetings that would disclose the number of shares of each class of securities that may vote in the election of directors and their respective voting power. The bill defines the term "multi-class share structure" as a "capitalization structure that contains two or more classes of securities that have differing amounts of voting rights in the election of directors."

• H.R. 2796, the Promoting Opportunities for Non-Traditional Capital Formation Act, would require the Advocate for Small Business Capital Formation to offer educational resources and capital raising opportunities for traditionally underrepresented businesses, including (i) women- and minority-owned small businesses, (ii) businesses in rural areas and (iii) small businesses affected by natural disasters. The bill would require the Advocate for Small Business Capital Formation to meet annually with state securities commission representatives on how to support small businesses.

• H.R. 2797, the Equal Opportunity for All Investors Act of 2023, would allow investors to take a certification examination to be deemed an "accredited investor." The proposed examination would test the investor’s ability to demonstrate competency on a number of topics including different security types, disclosure requirements under securities laws, corporate governance, financial statements and securities registration requirements.