Helping Startups Continue To Grow Act
The Helping Startups Continue To Grow Act updates the statutory definition of an Emerging Growth Company (EGC) under U.S. securities laws. The core change is to raise the revenue threshold that defines an EGC from $1 billion to $3 billion and to extend the period during which an issuer can retain EGC status from five years to ten years after its IPO (with related drafting changes). The bill also includes a technical correction to cross-references and numbering. By widening eligibility and lengthening the EGC period, more companies could benefit from the reduced regulatory burdens and disclosure flexibilities that apply to EGCs, potentially easing access to capital for growing startups but also altering the balance of investor protections for a longer window.
Key Points
- 1Elevates the EGC revenue threshold: Under both the Securities Act of 1933 and the Securities Exchange Act of 1934 definitions, the bill increases the total annual gross revenues criterion from $1,000,000,000 to $3,000,000,000.
- 2Extends the EGC time window: Replaces the current 5-year limit with a 10-year period for an issuer to retain EGC status after its IPO, expanding how long a company can benefit from EGC provisions.
- 3Adds an alternative criterion/clarification: The bill changes the wording from “fifth” year to “10-year” and adds an “or” clause, signaling an expanded or alternative path to qualify as an EGC (the precise structural effect depends on the bill’s legislative drafting of the subsections).
- 4Removes a subparagraph: The amendments strike a subparagraph in the EGC criteria, altering the set of conditions that define EGC eligibility.
- 5Technical corrections: Redesignates a paragraph in the Exchange Act and updates cross-references to ensure consistency with the reorganized text.
- 6Status and process: Introduced in the House by Mr. Steil (with Mrs. Wagner as a co-sponsor; later additional sponsor Mr. Liccardo), referred to the Committee on Financial Services, amended and reported with a House floor amendment, and scheduled for consideration in the Committee of the Whole.