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WASHINGTON, D.C. — Representative Zach Nunn (IA-03) today joined Representative Janelle Bynum (OR-05) to introduced the Encouraging Local Emerging Ventures and Economic Growth Act (ELEVATE) Act, bipartisan legislation that would reduce bureaucratic red tape for small and mid-sized businesses seeking to raise capital investment through Initial Public Offerings (IPOs).
Under current law, companies must submit three years of audited financial statements to the Securities and Exchange Commission (SEC) to go public, even when a company simply wants to spin off a part of their existing business.
“When investment capital gets trapped on the coasts by large firms and D.C. regulators, it’s Iowa’s small businesses that suffer,” said Rep. Nunn. “The ELEVATE Act is a commonsense fix that would level the playing field for Iowa businesses who look to outside investment to grow their business. It’s time we let Main Street play by the same rules as Wall Street.”
“Oregon’s small businesses deserve a fair shot to start up, grow, and compete,” said Rep. Bynum. “The ELEVATE Act will cut through the red tape, making it easier for local entrepreneurs to get off the ground and into the marketplace. I’m proud to introduce a bill that ensures our policies work for the people who are building Oregon’s – and America’s – economy by supporting innovation, growth, and greater access to capital for small businesses.”
Those startup or spinoff businesses are classified as emerging growth companies (EGCs) by the SEC, yet they face stricter reporting requirements than other IPOs. Currently, these companies must provide an additional year of audited financial data. This is an expensive and time-consuming hurdle that often prevents smaller firms from accessing capital markets.
The ELEVATE Act makes a commonsense update to the Securities Exchange Act of 1934 to align the financial disclosure requirements for all EGCs. Specifically, it allows qualifying companies to submit just two years of audited financials instead of three, letting firms compete on an even playing field, whether launching an IPO or spinning off part of a parent company.
The legislation has strong bipartisan support and passed the House Financial Services Committee unanimously in the 118th Congress.
Text of the bill can be found here.
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