NYC Gazette

WASHINGTON, D.C. – On May 30, 2023, the U.S. House of Representatives passed Rep. Gregory W. Meeks' bill that would close documented gaps in transparency around multi-class governance structures for the benefit of traditional investors.  

Rep. Meeks delivered the following remarks on the House floor:

"Mr. Speaker, I rise today to urge my colleagues to support H.R. 2795, The ‘Enhancing Multi-Class Share Disclosures Act.’ I’d like to thank Ranking Member Waters for her leadership and continued support of this legislation. This billcloses documented gaps in transparency around multi-class governance structures for the benefit of traditional investors. 

"These structures – while they may add value – can pose significant risks for investors. Multi-class governance structures allow corporate insiders or beneficial owners to hold an outsized amount of voting power relative to their shares.  This could limit other investors' abilities to influence management, direct strategy, and hold misaligned boards accountable. 

"As the SEC’s Investor Advisory Committee found, the disclosure regime around such arrangements is simply insufficient.  

"Under current rules, the difference between a corporate insider’s voting power and their ownership interest – regardless of how large that gap may be – is either not fully disclosed or lacks clarity. This commonsense bill makes sure that investors have the clearest information available to make the best possible decisions. 

"Let me be clear – multi-class governance structures have their value. While reforms are necessary, their outright ban would do little for Main Street investors looking to gain a return on the next startup.  We’ve seen companies employ these structures to access the public markets and open their profits to everyday investors, while still retaining the vision and direction of their founders.  

"Information is at the core of any well-working capital markets system and more robust information is always best for investors.  This bill will ensure Main Street can make an informed decision as they look to invest in tomorrow’s next successful business. I urge my colleagues to support this bill. I yield back."  

Original source can be found here.