H.R. 3623, Improving Access to Capital for Emerging Growth Companies Act

Cost Estimate
April 18, 2014

As ordered reported by the House Committee on Financial Services on March 14, 2014

H.R. 3623 would broaden some of the federal reporting exemptions available to emerging growth companies (EGCs) and allow a grace period to continue operations as an EGC if the company’s status changes. (An EGC is a company that has issued or proposes to issue stock and had gross revenues of less than $1 billion during its most recently completed fiscal year; companies can retain that designation from the Securities and Exchange Commission (SEC) for up to five years.)

Based on information from the SEC, CBO expects that the agency’s costs would increase under H.R. 3623 to revise instructions and other documents to reflect the new treatment of EGCs. In addition, limiting the information EGCs would need to report could increase the SEC’s workload to review registration statements. CBO estimates that implementing H.R. 3623 would cost less than $500,000 per year for those additional activities. Further, the SEC is authorized to collect fees sufficient to offset its annual appropriation; therefore, CBO estimates that the net budgetary effect of H.R. 3623 would be negligible assuming appropriation actions consistent with the agency’s authority.

Enacting H.R. 3623 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.

H.R. 3623 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.