WASHINGTON – U.S. Senator Mike Rounds (R-S.D.) introduced 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 making decisions.
“American businesses should not be used as a gateway to advance climate change policy,” said Rounds. “The heavy-hand of government is hampering the growth of our businesses and economy. This legislation would seek to prevent the SEC from requiring reporting of unnecessary information and instead focus on protecting investors, maintaining fair and efficient markets and facilitating capital formation.”
In March of 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 isn’t 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 amend both the Securities Act of 1933 and the Securities Exchange Act of 1934 by inserting statutory language directly into both acts to require the SEC to determine that “there is a substantial likelihood that a reasonable investor of the issuer would consider the information…to be important with respect to an investment decision regarding the issuer,” when imposing a new disclosure obligation.
Rounds was joined in introducing this legislation by Senators Cynthia Lummis (R-Wyo.), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), John Boozman (R-Ark.), Steve Daines (R-Mont.), Chuck Grassley (R-Iowa) and Dan Sullivan (R-Alaska).
Click HERE for full bill text.