Securities Regulation Daily Wrap Up, SECURITIES OFFERINGS—House passes INVEST Act, (Dec 12, 2025)
The bill contains many of the components of prior JOBS Act updates and some new materials.
The Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act (H.R. 3383) reads like some prior versions of bills that would have amended the Jumpstart Our Business Startups (JOBS) Act but with a few additions. Much of the bill covers well-worn territory regarding business startups, studying protections for seniors, and easing the requirements for emerging growth companies. The bill, sponsored in a bipartisan manner by House Financial Services Committee Chair French Hill (R-Ark), HFC Capital Markets Subcommittee Chair Ann Wagner (R-Mo), Rep. Gregory Meeks (D-NY), and Rep. Josh Gottheimer (D-NJ), passed the House by a vote of 302-123.
“Through this bipartisan package, we expanded access to investment capital for new and expanding businesses; provided new investment options for investors and retirement plans; and lowered the costs for companies seeking to go public,” said Hill.
Title II of the bill, for example, would, among other things, revise the definition of “accredited investor” to include an inflation adjustment mechanism for net worth and income. The provision also would expand the definition to include licensed professionals and persons with certain educational and experiential backgrounds.
Title III would address issues that have arisen in public markets. For one, the bill would re-work the definition of “well-known seasoned issuer” (WKSI) to expand the number of companies that qualify for WKSI status. Currently, WKSI status may be accorded to a public company that has $700 million or more in worldwide market value of its outstanding voting and non-voting common equity held by non-affiliates. Several additional requirements apply for companies to be eligible for WKSI status. The amendments proposed by the INVEST Act would lower the financial threshold to $400 million and, thus, allow more companies to qualify for the scaled disclosure advantages enjoyed by WKSIs.
Title III also would address a modern phenomenon that can arise when fast-growing “unicorn” companies near the time to go public. Specifically, many of these companies have multi-class share structures in which the founders, whom major investors in these companies often believe are necessary to the success of these companies, receive shares that have increased voting power as compared to the common shares available to the majority of public investors. If venture and other investors are more aggressive in reigning in these structures (and sometimes shareholders generally will propose doing so), they may provide that founders’ shares sunset after a period of time, such as five to seven years post-IPO.
While Title III of the INVEST Act does not appear to take a view on the sunsetting of founders shares, it does include a provision that would mandate additional disclosures about these types of shares, including disclosure of the percentage of such shares beneficially owned versus outstanding voting securities and disclosure of the amount (as a percentage) of voting power entitled to vote for directors. “Multi-class share structure” would be defined to mean two or more types of securities with different amounts of voting rights regarding the election of directors.
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