Enhancing Multi-Class Share Disclosures Act

Floor Speech

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Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3357) to amend the Securities Exchange Act of 1934 to require issuers with a multi-class stock structure to make certain disclosures in any proxy or consent solicitation material, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 3357

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``Enhancing Multi-Class Share Disclosures Act''. SEC. 2. DISCLOSURE RELATING TO MULTI-CLASS SHARE STRUCTURES.

Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n) is amended by adding at the end the following:

``(l) Disclosure Relating to Multi-class Share Structures.--

``(1) Disclosure.--The Commission shall, by rule, require each issuer with a multi-class share structure to disclose the information described in paragraph (2) in any proxy or consent solicitation material for an annual meeting of the shareholders of the issuer, or any other filing as the Commission determines appropriate.

``(2) Content of disclosure.--A disclosure made under paragraph (1) shall include, with respect to each person who is a director, director nominee, or named executive officer of the issuer, or who is the beneficial owner of securities with 5 percent or more of the total combined voting power of all classes of securities entitled to vote in the election of directors--

``(A) the number of shares of all classes of securities entitled to vote in the election of directors beneficially owned by such person, expressed as a percentage of the total number of the outstanding securities of the issuer entitled to vote in the election of directors; and

``(B) the amount of voting power held by such person, expressed as a percentage of the total combined voting power of all classes of the securities of the issuer entitled to vote in the election of directors.

``(3) Multi-class share structure.--In this subsection, the term `multi-class share structure' means a capitalization structure that contains 2 or more types of securities that have differing amounts of voting rights in the election of directors.''.

Mr. Speaker, I rise in strong support of H.R. 3357, the Enhancing Multi-Class Share Disclosures Act.

Mr. Speaker, multiclass structures have existed in American capital markets for many decades, helping founders retain control of their companies without holding a majority of the economic interest. These structures are important for certain business models, like family businesses, but they also raise questions about transparency and shareholder rights.

Since this information is not required to be disclosed, shareholders might not always understand how control is concentrated within a public company.

Mr. Meeks' bill rightsizes this issue by requiring companies to provide clear information about voting power, especially where insiders or significant shareholders hold outsized influence.

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Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate for this bill. H.R. 3357, ENHANCING MULTI-CLASS SHARE DISCLOSURES ACT, AS REPORTED BY THE HOUSE COMMITTEE ON HOUSE FINANCIAL SERVICES ON JUNE 3, 2025 ------------------------------------------------------------------------ By fiscal year, millions of dollars-- ------------------------------- 2025 2025-2030 2025-2035 ------------------------------------------------------------------------ Direct Spending (Outlays)............... 0 0 0 Revenues................................ 0 0 0 Increase or Decrease (-) in the Deficit. 0 0 0 Spending Subject to Appropriation * * ** (Outlays).............................. ------------------------------------------------------------------------ * = between -$500,000 and $500,000. ** not estimated.

Increases net direct spending in any of the four consecutive 10-year periods beginning in 2036? No.

Increases on-budget deficits in any of the four consecutive 10-year periods beginning in 2036? No.

Statutory pay-as-you-go procedures apply? No.

Mandate Effects:

Contains intergovernmental mandate? No.

Contains private-sector mandate? Yes, Under Threshold.

H.R. 3357 would direct the Securities and Exchange Commission (SEC) to issue rules requiring securities issuers with multi-class stock structures to disclose to all shareholders information about the shares of all classes of securities owned by and the voting power of particular shareholders specified in the bill. A multi-class stock structure is one in which a company offers two or more classes of securities with different voting rights in an election of directors.

Using information about the cost of similar rulemakings, CBO estimates that implementing H.R. 3357 would cost $1 million over the 2025-2030 period. CBO expects the commission would need three employees, at an average annual cost of $330,000 for each employee, to issue rules over one year. Because the SEC is authorized to collect fees each year to offset its annual appropriation, CBO expects that the net effect on discretionary spending over the 2025-2030 period would be negligible, assuming appropriation actions consistent with that authority.

If the SEC increased fees to offset the costs for rulemaking as required by the bill, H.R. 3357 would increase the cost of an existing mandate as defined in the Unfunded Mandates Reform Act (UMRA) on private entities required to pay those fees. CBO estimates that the incremental cost of the mandate would be small and would fall well below the annual threshold for private-sector mandates established in UMRA ($206 million in 2025, adjusted annually for inflation).

The bill would not impose any intergovernmental mandates.

The CBO staff contacts for this estimate are Aurora Swanson (for federal costs) and Rachel Austin (for mandates). The estimate was reviewed by H. Samuel Papenfuss, Deputy Director of Budget Analysis. Phillip L. Swagel, Director, Congressional Budget Office.
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Mr. HILL of Arkansas. Mr. Speaker, I am prepared to close, and I reserve the balance of my time.

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Mr. HILL of Arkansas. Mr. Speaker, I rise, as I said, in support of this bill. I agree with the ranking member of the full committee. It deserves strong bipartisan support, and I yield back the balance of my time.

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Mr. HILL of Arkansas. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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