Source: United States Senator for South Dakota Mike Rounds
WASHINGTON – U.S. Senator Mike Rounds (R-S.D.) and nine of his Senate colleagues reintroduced legislation to safeguard public companies from bureaucratic overreach. The Mandatory Materiality Requirement Act would only allow the U.S. Securities and Exchange Commission (SEC) to impose future disclosure requirements if the information is important for investors’ decisions.
“The heavy-hand of government is hampering the growth of our businesses and economy,” said Rounds. “This legislation would seek to depoliticize the SEC by preventing the agency from requiring reporting of unnecessary information and instead focus on protecting investors, maintaining fair and efficient markets and facilitating capital formation.”
In March 2022, the SEC issued a rule that would require any public company to disclose both its direct and indirect greenhouse gas emissions, including reporting by downstream suppliers like farmers and ranchers, even if that information is not relevant to investors. This rule would potentially limit access to capital, discourage new companies from going public and result in onerous reporting requirements that will be borne by farmers and small businesses.
The Mandatory Materiality Requirement Act would refocus future SEC disclosure requirements on what is important: the information investors need to make smart investment decisions. Specifically, it would amend both the Securities Act of 1933 and the Securities Exchange Act of 1934 by inserting statutory language directly into both acts saying an “issuer is only required to disclose information in response to disclosure obligation adopted by the Commission to the extent the issuer has determined that such information is important with respect to a voting or investment decision regarding such issuer.”
This legislation is supported by the U.S. Chamber of Commerce and the National Restaurant Association.
“Effective corporate disclosure to investors is a cornerstone of prosperous, well-functioning capital markets,” said U.S. Chamber of Commerce Center of Capital Market Competitiveness Executive Vice President Tom Quaadman. “The Mandatory Materiality Requirement Act is important step to protect the integrity of America’s disclosure environment against those who aim to advance interests other than effective capital formation.”
“As responsible stewards of the environment, the restaurant industry has long supported efforts to assess, improve, and report on environmental impacts,” said Sean Kennedy, Executive Vice President of Public Affairs, National Restaurant Association. “However, the rules governing any oversight of these efforts needs to be reasonable and achievable within the vast structure of the restaurant supply chain. The Mandatory Materiality Requirement Act would safeguard restaurant companies and their food supply partners from overwhelming reporting burdens that could disrupt their business. We appreciate Sen. Rounds support of restaurant operators and the local farmers, ranchers, and food producers who help make our industry essential to U.S. consumers.”
Senators Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), Steve Daines (R-Mont.), Katie Britt (R-Ala.), Chuck Grassley (R-Iowa), John Boozman (R-Ark.), Kevin Cramer (R-N.D.) and Dan Sullivan (R-Alaska) joined Rounds in introducing this legislation.
Rounds also introduced this legislation in the 117th Congress.
Representative Bill Huizenga (R-Mich.) introduced the companion to this legislation in the House of Representatives.
Click HERE for full bill text.
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