79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–879 

ENHANCING MULTI-CLASS SHARE DISCLOSURES ACT 

JULY 31, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 6322] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 6322) 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, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended 

do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

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: 

‘‘(k) DISCLOSURE FOR ISSUERS WITH 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.—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 

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‘‘(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 classes 

of securities that have differing amounts of voting rights in the election of directors.’’. 

PURPOSE AND SUMMARY

On July 10, 2018, Representative Gregory Meeks introduced H.R. 

6322, the ‘‘Enhancing Multi-Class Share Disclosures Act.’’ As modified by an amendment in the nature of a substitute, H.R. 6322 

amends Section 14 of the Securities Exchange Act of 1934 to require issuers with multi-class share structures to make certain disclosures in any proxy or consent solicitation material with respect 

to each person who is a director or executive officer of the issuer 

or who, directly or indirectly, holds five percent or more of the total 

combined voting power of all classes of stock entitled to vote in the 

election of directors. 

BACKGROUND AND NEED FOR LEGISLATION

The goal of H.R. 6322 is to enhance transparency for investors 

by requiring issuers with multi-class share structures to make certain disclosures regarding certain shareholders’ voting power. 

Multi-class share structures have existed in the U.S. since the 

late 1800s. The original intent of these structures was to allow 

companies, particularly family-run businesses, to maintain voting 

control without having to own the majority of equity in their company. For example, in 1925, the Dodge Brothers owners had total 

voting control, while holding only 1.7 percent of equity. But starting in 1926 and ending in 1985, as a result of pushback, certain 

national securities exchanges limited the number of multi-class 

shares that were allowed to list on those exchanges. 

In the 1980’s, in response to a number of hostile takeovers of 

companies and the increasing competitiveness of national securities 

exchanges limitations on multi-class share structures became more 

related. The majority of companies that took advantage of the 

newly-relaxed limitations were media companies such as the Washington Post and New York Times. Media companies viewed multiclass structures as a means to protect journalistic integrity. 

In recent years, the number of multi-class structures has increased beyond family owned companies and media companies. Between 2005 and 2015, the number of companies with multi-class 

share structures increased by 44 percent, and the companies with 

multi-class structures with disparate voting rights currently include Google, Facebook, Snap, LinkedIn, and Nike. The proponents 

of multi-class stock structures point to the fact that they have outperformed their single-class counterparts. From 2006 to 2016, companies included in the S&P 500 with multi-class share structures 

outperformed their single-class counterparts by 26 percent. 

There is room, however, for increased transparency with respect 

to such structures. On March 8, 2018, the U.S. Securities and Exchange Commission’s (SEC) Investor Advisory Committee approved 

a recommendation that called for the SEC to require more disclosures from companies with multi-class shares. Currently, the SEC 

does not require companies to disclose the gap between the equity 

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an individual holds in the company and the number of voting 

shares they control—although many companies already do this for 

their shareholders. Requiring disclosures regarding voting power, 

particularly regarding officers and directors and those who have 

more than 5 percent voting power, will ensure shareholders receive 

more uniform information in proxy materials, particularly because 

companies already are required to disclose ownership information 

for directors, officers, and shareholders controlling more than 5 

percent of equity. 

This legislation, which is based on the SEC’s Investor Advisory 

Committee recommendation, would amend Section 14 of the Securities Exchange Act of 1934 to require companies with multi-class 

share structures to make certain disclosures in any proxy or consent solicitation material. Specifically, the bill requires issuers to 

disclose for directors, executive officers, or a shareholder controlling 

more than 5 percent interest the amount of equity interest they 

hold as a percentage of the total value of outstanding equities and 

the voting power they hold as a percentage of total voting power 

of all classes of securities. 

HEARINGS

The Committee on Financial Services has not held a hearing examining matters relating to H.R. 6322. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

July 11, 2018, and ordered H.R. 6322 to be reported favorably to 

the House, as amended, by voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. On a motion by 

Chairman Hensarling, the amendment in the nature of a substitute 

was adopted by voice vote. A secondary motion by Chairman Hensarling to report the bill favorably to the House, as amended, was 

agreed to by a voice vote, a quorum being present. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 6322 will help 

ensure that shareholders are aware of certain consequences of 

multi-class share structures by requiring companies to disclose 

both the number of equity shares and amount of voting power that 

each director, officer and shareholder with greater than 5% interest 

has in the company. 

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NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 17, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3555, H.R. 6177, H.R. 

6319, H.R. 6320, H.R. 6321, H.R. 6322, H.R. 6323, and H.R. 6324. 

If you wish further details on these estimates, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

MARK P. HADLEY

(For Keith Hall, Director). 

Enclosure. 

Securities and Exchange Commission Legislation 

On July 11, the House Committee on Financial Services ordered 

eight bills to be reported related to the rules, regulations, and operations of the Securities and Exchange Commission (SEC). The bills 

are: 

• H.R. 3555, the Exchange Regulatory Improvement Act, 

would require the Securities and Exchange Commission (SEC) 

to issue regulations regarding its definition of what constitutes 

a facility used by a national securities exchange; 

• H.R. 6177, the Developing and Empowering our Aspiring 

Leaders Act of 2018, would direct the SEC to conduct a rulemaking to expand what types of asset acquisitions are considered qualifying investments for a venture capital fund; 

• H.R. 6319, the Expanding Investment in Small Business 

Act, would require the SEC to conduct a study on the limitation on the amount of outstanding securities a closed-end fund 

may hold from a single issuer and still be classified as diversified; 

• H.R. 6320, the Promoting Transparent Standards for Corporate Insiders Act, would require the SEC to conduct a study 

of various proposals to change agency rules regarding the use 

of written trading plans by certain securities traders; 

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• H.R. 6321, the Investment Adviser Regulatory Flexibility 

Improvement Act, would require the SEC to revise the definitions of a small business and small organization applicable for 

assessing the effect of the agency’s rulemakings under the Investment Advisers Act of 1940 on those entities; • H.R. 6322, the Enhancing Multi-Class Share Disclosures 

Act, would direct the SEC to issue a rule requiring securities 

issuers with multi-class stock structures to make disclosures 

regarding the voting power of certain individuals; • H.R. 6323, the National Senior Investor Initiative Act of 

2018, would direct the SEC to establish a taskforce to identify 

challenges that senior investors face and to report on its findings every two years; and • H.R. 6324, the Middle Market IPO Underwriting Cost Act, 

would direct the SEC to study the costs associated with small 

and medium-sized companies undertaking an initial public offering and to report on its findings. 

Using information from the SEC regarding the costs of similar 

activities, CBO estimates that implementing seven of those bills— 

H.R. 3555, H.R. 6177, H.R. 6319, H.R. 6320, H.R. 6321, H.R. 6322, 

and H.R. 6324—would each have a gross cost of about $1 million 

for the agency to conduct the required studies and rulemakings and 

to issue reports. CBO estimates that implementing the eighth 

bill—H.R. 6323—would have a gross cost of $7 million over the 

2019–2023 period for the SEC to establish and carry out the functions of the taskforce established under the bill. 

However, the SEC is authorized to collect fees sufficient to offset 

its annual appropriation; therefore, CBO estimates that the net effect on discretionary spending of implementing each of those bills 

would be negligible, assuming appropriation actions consistent with 

that authority. H.R. 6323 also would require the Government Accountability Office (GAO) to conduct a study on the economic costs 

of the financial exploitation of senior citizens and CBO estimates 

that implementing that section would cost GAO less than $500,000; 

such spending would be subject to the availability of appropriated 

funds. 

None of the bills would affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply for any of the eight 

bills. 

None of the bills would increase net direct spending or on-budget 

deficits in any of the four consecutive 10-year periods beginning in 

2029, CBO estimates. 

None of the bills contain intergovernmental mandates as defined 

in the Unfunded Mandate Reform Act (UMRA) and would not affect the budgets of state, local, or tribal governments. All of them 

would require the SEC to take actions that could raise the agency’s 

administrative costs and the fees it collects to offset those costs. If 

the SEC increased fees, it would increase the cost of an existing 

mandate on private entities required to pay those fees. CBO estimates that none of the bills would increase fees in an amount that 

would exceed the annual threshold for private-sector mandates established in UMRA ($160 million in 2018, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Stephen Rabent (for 

federal costs) and Rachel Austin (for mandates). The estimate was 

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reviewed by H. Samuel Papenfuss, Deputy Assistant Director for 

Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires one directed rule making within the meaning of such section. The directed rulemaking 

requires the SEC to issue a rule to require each issuer with a 

multi-class share structure to make certain disclosures in any 

proxy or consent solicitation material with respect to each person 

who is a director or executive officer of the issuer or who holds five 

percent or more of the total combined voting power of all classes 

of stock entitled to vote in the election of directors. 

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SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 6322 as the ‘‘Enhancing Multi-Class Share 

Disclosures Act.’’ 

Section 2. Disclosure to multi-class share structures 

This section amends Section 14 of the Securities Exchange Act 

of 1934 by mandating certain disclosures by issuers of multi-class 

share structures. Specifically, this section requires certain disclosures in any proxy or consent solicitation material with respect to 

each person who is a director or executive officer of the issuer or 

who holds five percent or more of the total combined voting power 

of all classes of stock entitled to vote in the election of directors. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

PROXIES

SEC. 14. (a)(1) It shall be unlawful for any person, by the use of 

the mails or by any means or instrumentality of interstate commerce or of any facility of a national securities exchange or otherwise, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the 

use of his name to solicit any proxy or consent or authorization in 

respect of any security (other than an exempted security) registered 

pursuant to section 12 of this title. 

(2) The rules and regulations prescribed by the Commission 

under paragraph (1) may include— 

(A) a requirement that a solicitation of proxy, consent, or authorization by (or on behalf of) an issuer include a nominee 

submitted by a shareholder to serve on the board of directors 

of the issuer; and 

(B) a requirement that an issuer follow a certain procedure 

in relation to a solicitation described in subparagraph (A). 

8 

(b)(1) It shall be unlawful for any member of a national securities 

exchange, or any broker or dealer registered under this title, or any 

bank, association, or other entity that exercises fiduciary powers, 

in contravention of such rules and regulations as the Commission 

may prescribe as necessary or appropriate in the public interest or 

for the protection of investors, to give, or to refrain from giving a 

proxy, consent, authorization, or information statement in respect 

of any security registered pursuant to section 12 of this title, or any 

security issued by an investment company registered under the Investment Company Act of 1940, and carried for the account of a 

customer. 

(2) With respect to banks, the rules and regulations prescribed 

by the Commission under paragraph (1) shall not require the disclosure of the names of beneficial owners of securities in an account 

held by the bank on the date of enactment of this paragraph unless 

the beneficial owner consents to the disclosure. The provisions of 

this paragraph shall not apply in the case of a bank which the 

Commission finds has not made a good faith effort to obtain such 

consent from such beneficial owners. 

(c) Unless proxies, consents, or authorizations in respect of a security registered pursuant to section 12 of this title, or a security 

issued by an investment company registered under the Investment 

Company Act of 1940, are solicited by or on behalf of the management of the issuer from the holders of record of such security in 

accordance with the rules and regulations prescribed under subsection (a) of this section, prior to any annual or other meeting of 

the holders of such security, such issuer shall, in accordance with 

rules and regulations prescribed by the Commission, file with the 

Commission and transmit to all holders of record of such security 

information substantially equivalent to the information which 

would be required to be transmitted if a solicitation were made, but 

no information shall be required to be filed or transmitted pursuant to this subsection before July 1, 1964. 

(d)(1) It shall be unlawful for any person, directly or indirectly, 

by use of the mails or by any means or instrumentality of interstate commerce or of any facility of a national securities exchange 

or otherwise, to make a tender offer for, or a request or invitation 

for tenders of, any class of any equity security which is registered 

pursuant to section 12 of this title, or any equity security of an insurance company which would have been required to be so registered except for the exemption contained in section 12(g)(2)(G) of 

this title, or any equity security issued by a closed-end investment 

company registered under the Investment Company Act of 1940, if, 

after consummation thereof, such person would, directly or indirectly, be the beneficial owner of more than 5 per centum of such 

class, unless at the time copies of the offer or request or invitation 

are first published or sent or given to security holders such person 

has filed with the Commission a statement containing such of the 

information specified in section 13(d) of this title, and such additional information as the Commission may by rules and regulations 

prescribe as necessary or appropriate in the public interest or for 

the protection of investors. All requests or invitations for tenders 

or advertisements making a tender offer or requesting or inviting 

tenders, of such a security shall be filed as a part of such statement 

and shall contain such of the information contained in such stateVerDate Sep 11 2014 07:17 Aug 02, 2018 Jkt 079006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR879.XXX HR879
9 

ment as the Commission may by rules and regulations prescribe. 

Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain such information as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or 

for the protection of investors, and shall be filed with the Commission not later than the time copies of such material are first published or sent or given to security holders. Copies of all statements, 

in the form in which such material is furnished to security holders 

and the Commission, shall be sent to the issuer not later than the 

date such material is first published or sent or given to any security holders. 

(2) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, 

holding, or disposing of securities of an issuer, such syndicate or 

group shall be deemed a ‘‘person’’ for purposes of this subsection. 

(3) In determining, for purposes of this subsection, any percentage of a class of any security, such class shall be deemed to consist 

of the amount of the outstanding securities of such class, exclusive 

of any securities of such class held by or for the account of the 

issuer or a subsidiary of the issuer. 

(4) Any solicitation or recommendation to the holders of such a 

security to accept or reject a tender offer or request or invitation 

for tenders shall be made in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 

(5) Securities deposited pursuant to a tender offer or request or 

invitation for tenders may be withdrawn by or on behalf of the depositor at any time until the expiration of seven days after the time 

definitive copies of the offer or request or invitation are first published or sent or given to security holders, and at any time after 

sixty days from the date of the original tender offer or request or 

invitation, except as the Commission may otherwise prescribe by 

rules, regulations, or order as necessary or appropriate in the public interest or for the protection of investors. 

(6) Where any person makes a tender offer, or request or invitation for tenders, for less than all the outstanding equity securities 

of a class, and where a greater number of securities is deposited 

pursuant thereto within ten days after copies of the offer or request 

or invitation are first published or sent or given to security holders 

than such person is bound or willing to take up and pay for, the 

securities taken up shall be taken up as nearly as may be pro rata, 

disregarding fractions, according to the number of securities deposited by each depositor. The provisions of this subsection shall also 

apply to securities deposited within ten days after notice of an increase in the consideration offered to security holders, as described 

in paragraph (7), is first published or sent or given to security holders. 

(7) Where any person varies the terms of a tender offer or request or invitation for tenders before the expiration thereof by increasing the consideration offered to holders of such securities, 

such person shall pay the increased consideration to each security 

holder whose securities are taken up and paid for pursuant to the 

tender offer or request or invitation for tenders whether or not 

10 

such securities have been taken up by such person before the variation of the tender offer or request or invitation. 

(8) The provisions of this subsection shall not apply to any offer 

for, or request or invitation for tenders of, any security— 

(A) if the acquisition of such security, together with all other 

acquisitions by the same person of securities of the same class 

during the preceding twelve months, would not exceed 2 per 

centum of that class; 

(B) by the issuer of such security; or 

(C) which the Commission, by rules or regulations or by 

order, shall exempt from the provisions of this subsection as 

not entered into for the purpose of, and not having the effect 

of, changing or influencing the control of the issuer or otherwise as not comprehended within the purposes of this subsection. 

(e) It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary 

in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation 

for tenders, or any solicitation of security holders in opposition to 

or in favor of any such offer, request, or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, 

such acts and practices as are fraudulent, deceptive, or manipulative. 

(f) If, pursuant to any arrangement or understanding with the 

person or persons acquiring securities in a transaction subject to 

subsection (d) of this section or subsection (d) of section 13 of this 

title, any persons are to be elected or designated as directors of the 

issuer, otherwise than at a meeting of security holders, and the 

persons so elected or designated will constitute a majority of the directors of the issuer, then, prior to the time any such person takes 

office as a director, and in accordance with rules and regulations 

prescribed by the Commission, the issuer shall file with the Commission, and transmit to all holders of record of securities of the 

issuer who would be entitled to vote at a meeting for election of directors, information substantially equivalent to the information 

which would be required by subsection (a) or (c) of this section to 

be transmitted if such person or persons were nominees for election 

as directors at a meeting of such security holders. 

(g)(1)(A) At the time of filing such preliminary proxy solicitation 

material as the Commission may require by rule pursuant to subsection (a) of this section that concerns an acquisition, merger, consolidation, or proposed sale or other disposition of substantially all 

the assets of a company, the person making such filing, other than 

a company registered under the Investment Company Act of 1940, 

shall pay to the Commission the following fees: 

(i) for preliminary proxy solicitation material involving an 

acquisition, merger, or consolidation, if there is a proposed payment of cash or transfer of securities or property to shareholders, a fee at a rate that, subject to paragraph (4), is equal 

to $92 per $1,000,000 of such proposed payment, or of the 

11 

value of such securities or other property proposed to be transferred; and 

(ii) for preliminary proxy solicitation material involving a 

proposed sale or other disposition of substantially all of the assets of a company, a fee at a rate that, subject to paragraph 

(4), is equal to $92 per $1,000,000 of the cash or of the value 

of any securities or other property proposed to be received 

upon such sale or disposition. 

(B) The fee imposed under subparagraph (A) shall be reduced 

with respect to securities in an amount equal to any fee paid to the 

Commission with respect to such securities in connection with the 

proposed transaction under section 6(b) of the Securities Act of 

1933 (15 U.S.C. 77f(b)), or the fee paid under that section shall be 

reduced in an amount equal to the fee paid to the Commission in 

connection with such transaction under this subsection. Where two 

or more companies involved in an acquisition, merger, consolidation, sale, or other disposition of substantially all the assets of a 

company must file such proxy material with the Commission, each 

shall pay a proportionate share of such fee. 

(2) At the time of filing such preliminary information statement 

as the Commission may require by rule pursuant to subsection (c) 

of this section, the issuer shall pay to the Commission the same fee 

as required for preliminary proxy solicitation material under paragraph (1) of this subsection. 

(3) At the time of filing such statement as the Commission may 

require by rule pursuant to subsection (d)(1) of this section, the 

person making the filing shall pay to the Commission a fee at a 

rate that, subject to paragraph (4), is equal to $92 per $1,000,000 

of the aggregate amount of cash or of the value of securities or 

other property proposed to be offered. The fee shall be reduced with 

respect to securities in an amount equal to any fee paid with respect to such securities in connection with the proposed transaction 

under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)), 

or the fee paid under that section shall be reduced in an amount 

equal to the fee paid to the Commission in connection with such 

transaction under this subsection. 

(4) ANNUAL ADJUSTMENT.—For each fiscal year, the Commission shall by order adjust the rate required by paragraphs (1) 

and (3) for such fiscal year to a rate that is equal to the rate 

(expressed in dollars per million) that is applicable under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) for 

such fiscal year. 

(5) FEE COLLECTION.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter shall 

be deposited and credited as general revenue of the Treasury 

and shall not be available for obligation. 

(6) REVIEW; EFFECTIVE DATE; PUBLICATION.—In exercising its 

authority under this subsection, the Commission shall not be 

required to comply with the provisions of section 553 of title 

5, United States Code. An adjusted rate prescribed under paragraph (4) shall be published and take effect in accordance with 

section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)). 

(7) PRO RATA APPLICATION.—The rates per $1,000,000 required by this subsection shall be applied pro rata to amounts 

and balances of less than $1,000,000. 

12 

(8) Notwithstanding any other provision of law, the Commission 

may impose fees, charges, or prices for matters not involving any 

acquisition, merger, consolidation, sale, or other disposition of assets described in this subsection, as authorized by section 9701 of 

title 31, United States Code, or otherwise. 

(h) PROXY SOLICITATIONS AND TENDER OFFERS IN CONNECTION

WITH LIMITED PARTNERSHIP ROLLUP TRANSACTIONS.— 

(1) PROXY RULES TO CONTAIN SPECIAL PROVISIONS.—It shall 

be unlawful for any person to solicit any proxy, consent, or authorization concerning a limited partnership rollup transaction, 

or to make any tender offer in furtherance of a limited partnership rollup transaction, unless such transaction is conducted in 

accordance with rules prescribed by the Commission under 

subsections (a) and (d) as required by this subsection. Such 

rules shall— 

(A) permit any holder of a security that is the subject of 

the proposed limited partnership rollup transaction to engage in preliminary communications for the purpose of determining whether to solicit proxies, consents, or authorizations in opposition to the proposed limited partnership 

rollup transaction, without regard to whether any such 

communication would otherwise be considered a solicitation of proxies, and without being required to file soliciting 

material with the Commission prior to making that determination, except that— 

(i) nothing in this subparagraph shall be construed 

to limit the application of any provision of this title 

prohibiting, or reasonably designed to prevent, fraudulent, deceptive, or manipulative acts or practices under 

this title; and 

(ii) any holder of not less than 5 percent of the outstanding securities that are the subject of the proposed limited partnership rollup transaction who engages in the business of buying and selling limited 

partnership interests in the secondary market shall be 

required to disclose such ownership interests and any 

potential conflicts of interests in such preliminary 

communications; 

(B) require the issuer to provide to holders of the securities that are the subject of the limited partnership rollup 

transaction such list of the holders of the issuer’s securities as the Commission may determine in such form and 

subject to such terms and conditions as the Commission 

may specify; 

(C) prohibit compensating any person soliciting proxies, 

consents, or authorizations directly from security holders 

concerning such a limited partnership rollup transaction— 

(i) on the basis of whether the solicited proxy, consent, or authorization either approves or disapproves 

the proposed limited partnership rollup transaction; or 

(ii) contingent on the approval, disapproval, or completion of the limited partnership rollup transaction; 

(D) set forth disclosure requirements for soliciting material distributed in connection with a limited partnership 

13 

rollup transaction, including requirements for clear, concise, and comprehensible disclosure with respect to— 

(i) any changes in the business plan, voting rights, 

form of ownership interest, or the compensation of the 

general partner in the proposed limited partnership 

rollup transaction from each of the original limited 

partnerships; 

(ii) the conflicts of interest, if any, of the general 

partner; 

(iii) whether it is expected that there will be a significant difference between the exchange values of the 

limited partnerships and the trading price of the securities to be issued in the limited partnership rollup 

transaction; 

(iv) the valuation of the limited partnerships and 

the method used to determine the value of the interests of the limited partners to be exchanged for the securities in the limited partnership rollup transaction; 

(v) the differing risks and effects of the limited partnership rollup transaction for investors in different 

limited partnerships proposed to be included, and the 

risks and effects of completing the limited partnership 

rollup transaction with less than all limited partnerships; 

(vi) the statement by the general partner required 

under subparagraph (E); 

(vii) such other matters deemed necessary or appropriate by the Commission; 

(E) require a statement by the general partner as to 

whether the proposed limited partnership rollup transaction is fair or unfair to investors in each limited partnership, a discussion of the basis for that conclusion, and an 

evaluation and a description by the general partner of alternatives to the limited partnership rollup transaction, 

such as liquidation; 

(F) provide that, if the general partner or sponsor has 

obtained any opinion (other than an opinion of counsel), 

appraisal, or report that is prepared by an outside party 

and that is materially related to the limited partnership 

rollup transaction, such soliciting materials shall contain 

or be accompanied by clear, concise, and comprehensible 

disclosure with respect to— 

(i) the analysis of the transaction, scope of review, 

preparation of the opinion, and basis for and methods 

of arriving at conclusions, and any representations 

and undertakings with respect thereto; 

(ii) the identity and qualifications of the person who 

prepared the opinion, the method of selection of such 

person, and any material past, existing, or contemplated relationships between the person or any of 

its affiliates and the general partner, sponsor, successor, or any other affiliate; 

(iii) any compensation of the preparer of such opinion, appraisal, or report that is contingent on the 

transaction’s approval or completion; and 

14 

(iv) any limitations imposed by the issuer on the access afforded to such preparer to the issuer’s personnel, premises, and relevant books and records; 

(G) provide that, if the general partner or sponsor has 

obtained any opinion, appraisal, or report as described in 

subparagraph (F) from any person whose compensation is 

contingent on the transaction’s approval or completion or 

who has not been given access by the issuer to its personnel and premises and relevant books and records, the 

general partner or sponsor shall state the reasons therefor; 

(H) provide that, if the general partner or sponsor has 

not obtained any opinion on the fairness of the proposed 

limited partnership rollup transaction to investors in each 

of the affected partnerships, such soliciting materials shall 

contain or be accompanied by a statement of such partner’s or sponsor’s reasons for concluding that such an opinion is not necessary in order to permit the limited partners 

to make an informed decision on the proposed transaction; 

(I) require that the soliciting material include a clear, 

concise, and comprehensible summary of the limited partnership rollup transaction (including a summary of the 

matters referred to in clauses (i) through (vii) of subparagraph (D) and a summary of the matter referred to in subparagraphs (F), (G), and (H)), with the risks of the limited 

partnership rollup transaction set forth prominently in the 

fore part thereof; 

(J) provide that any solicitation or offering period with 

respect to any proxy solicitation, tender offer, or information statement in a limited partnership rollup transaction 

shall be for not less than the lesser of 60 calendar days or 

the maximum number of days permitted under applicable 

State law; and 

(K) contain such other provisions as the Commission determines to be necessary or appropriate for the protection 

of investors in limited partnership rollup transactions. 

(2) EXEMPTIONS.—The Commission may, consistent with the 

public interest, the protection of investors, and the purposes of 

this title, exempt by rule or order any security or class of securities, any transaction or class of transactions, or any person 

or class of persons, in whole or in part, conditionally or unconditionally, from the requirements imposed pursuant to paragraph (1) or from the definition contained in paragraph (4). 

(3) EFFECT ON COMMISSION AUTHORITY.—Nothing in this subsection limits the authority of the Commission under subsection (a) or (d) or any other provision of this title or precludes the Commission from imposing, under subsection (a) or 

(d) or any other provision of this title, a remedy or procedure 

required to be imposed under this subsection. 

(4) DEFINITION OF LIMITED PARTNERSHIP ROLLUP TRANSACTION.—Except as provided in paragraph (5), as used in this 

subsection, the term ‘‘limited partnership rollup transaction’’ 

means a transaction involving the combination or reorganization of one or more limited partnerships, directly or indirectly, 

in which— 

15 

(A) some or all of the investors in any of such limited 

partnerships will receive new securities, or securities in 

another entity, that will be reported under a transaction 

reporting plan declared effective before the date of enactment of this subsection by the Commission under section 

11A; 

(B) any of the investors’ limited partnership securities 

are not, as of the date of filing, reported under a transaction reporting plan declared effective before the date of 

enactment of this subsection by the Commission under section 11A; 

(C) investors in any of the limited partnerships involved 

in the transaction are subject to a significant adverse 

change with respect to voting rights, the term of existence 

of the entity, management compensation, or investment 

objectives; and 

(D) any of such investors are not provided an option to 

receive or retain a security under substantially the same 

terms and conditions as the original issue. 

(5) EXCLUSIONS FROM DEFINITION.—Notwithstanding paragraph (4), the term ‘‘limited partnership rollup transaction’’ 

does not include— 

(A) a transaction that involves only a limited partnership or partnerships having an operating policy or practice 

of retaining cash available for distribution and reinvesting 

proceeds from the sale, financing, or refinancing of assets 

in accordance with such criteria as the Commission determines appropriate; 

(B) a transaction involving only limited partnerships 

wherein the interests of the limited partners are repurchased, recalled, or exchanged in accordance with the 

terms of the preexisting limited partnership agreements 

for securities in an operating company specifically identified at the time of the formation of the original limited 

partnership; 

(C) a transaction in which the securities to be issued or 

exchanged are not required to be and are not registered 

under the Securities Act of 1933; 

(D) a transaction that involves only issuers that are not 

required to register or report under section 12, both before 

and after the transaction; 

(E) a transaction, except as the Commission may otherwise provide by rule for the protection of investors, involving the combination or reorganization of one or more limited partnerships in which a non-affiliated party succeeds 

to the interests of a general partner or sponsor, if— 

(i) such action is approved by not less than 662⁄3 percent of the outstanding units of each of the participating limited partnerships; and 

(ii) as a result of the transaction, the existing general partners will receive only compensation to which 

they are entitled as expressly provided for in the preexisting limited partnership agreements; or 

(F) a transaction, except as the Commission may otherwise provide by rule for the protection of investors, in 

16 

which the securities offered to investors are securities of 

another entity that are reported under a transaction reporting plan declared effective before the date of enactment of this subsection by the Commission under section 

11A, if— 

(i) such other entity was formed, and such class of 

securities was reported and regularly traded, not less 

than 12 months before the date on which soliciting 

material is mailed to investors; and 

(ii) the securities of that entity issued to investors in 

the transaction do not exceed 20 percent of the total 

outstanding securities of the entity, exclusive of any 

securities of such class held by or for the account of 

the entity or a subsidiary of the entity. 

(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.—The Commission 

shall, by rule, require each issuer to disclose in any proxy or consent solicitation material for an annual meeting of the shareholders 

of the issuer a clear description of any compensation required to be 

disclosed by the issuer under section 229.402 of title 17, Code of 

Federal Regulations (or any successor thereto), including, for any 

issuer other than an emerging growth company, information that 

shows the relationship between executive compensation actually 

paid and the financial performance of the issuer, taking into account any change in the value of the shares of stock and dividends 

of the issuer and any distributions. The disclosure under this subsection may include a graphic representation of the information required to be disclosed. 

(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND DIRECTORS.— The Commission shall, by rule, require each issuer to disclose in 

any proxy or consent solicitation material for an annual meeting of 

the shareholders of the issuer whether any employee or member of 

the board of directors of the issuer, or any designee of such employee or member, is permitted to purchase financial instruments 

(including prepaid variable forward contracts, equity swaps, collars, 

and exchange funds) that are designed to hedge or offset any decrease in the market value of equity securities— 

(1) granted to the employee or member of the board of directors by the issuer as part of the compensation of the employee 

or member of the board of directors; or 

(2) held, directly or indirectly, by the employee or member of 

the board of directors. 

(k) DISCLOSURE FOR ISSUERS WITH 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.—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— 

17 

(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 classes of securities that have differing amounts of voting rights in the election of directors. 

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