Small Business Relief Act
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The bill would exclude qualified institutional buyers and institutional accredited investors from the count of shareholders that triggers mandatory SEC registration and reporting for a company's securities under the Securities Exchange Act of 1934.
What this bill would do
What it would do
The bill would amend Section 12(g)(1) of the Securities Exchange Act of 1934 so that qualified institutional buyers and institutional accredited investors no longer count toward the threshold number of holders of record that requires a company to register a class of securities with the Securities and Exchange Commission and become subject to ongoing public reporting requirements.
By narrowing which investors count toward that cap, the bill would let companies add more sophisticated institutional investors before triggering mandatory registration, without changing the registration requirements themselves or any other provision of securities law.
Key provisions
- 1Would exclude qualified institutional buyers from the count of record holders used to determine mandatory SEC registration for a class of equity securities
- 2Would exclude institutional accredited investors from that same holder-of-record count under the bank and savings association registration threshold provision
Who would be affected
Privately held companies and small or growing businesses that raise capital from institutional investors, along with qualified institutional buyers and institutional accredited investors who invest in those companies' securities, and the Securities and Exchange Commission, which administers the registration threshold.
Why it matters
Companies could take on more institutional capital while staying private longer, delaying the costs and disclosure obligations that come with SEC registration. Supporters frame this as easing capital-raising for growing firms, while the change also means fewer companies would become subject to public reporting at the same investor count as under current law.
What would change
Changes to existing law
Amends Securities Exchange Act of 1934, Section 12(g)(1) (15 U.S.C. § 78l(g)(1)) (Sec. 2)
Excludes qualified institutional buyers and institutional accredited investors from the holder count that triggers mandatory securities registration
Agencies directed to act
Funding and costs
Congressional Budget Office estimate
CBO estimates H.R. 4130 would have no effect on direct spending or revenues, and would cost less than $500,000 in discretionary spending over the 2026–2031 period.
CBO estimates that H.R. 4130, the Small Business Relief Act, would have no effect on direct (mandatory) spending or federal revenues over the 2026–2036 scoring window, leaving the deficit unchanged. The bill would require the SEC to undertake a rulemaking to update its definition of "holders of record," costing less than $500,000 in discretionary spending (funds subject to annual appropriations) over 2026–2031; because the SEC is authorized to collect fees to offset its appropriation, the net effect on discretionary spending is expected to be negligible. CBO identified no intergovernmental mandates, but found one private-sector mandate — potential fee increases on entities that pay SEC fees — whose incremental cost would be well below UMRA's annual private-sector threshold of $214 million.
Legislative status & sources
Latest action
Placed on the Union Calendar, Calendar No. 450.
Official CRS summary
Show the CRS summaryHide the CRS summary
This bill allows issuers of securities to have institutional investors and buyers in a class of securities without needing to comply with certain Securities and Exchange Commission (SEC) registration requirements.
Currently, issuers of securities must register with and periodically report to the SEC when, among other requirements, the number of investors in a class of securities exceeds a specific cap. Under the bill, qualified institutional buyers and institutional accredited investors do not count towards this cap.
Legislative subjects
Business investment and capital; Business records; Finance and Financial Sector; Licensing and registrations; Securities; Small business
Committee report
H. Rept. 119-525