```

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1923 Introduced in Senate (IS)]

113th CONGRESS
  2d Session
                                S. 1923

      To amend the Securities Exchange Act of 1934 to exempt from 
    registration brokers performing services in connection with the 
       transfer of ownership of smaller privately held companies.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 14, 2014

Mr. Manchin (for himself and Mr. Vitter) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
      To amend the Securities Exchange Act of 1934 to exempt from 
    registration brokers performing services in connection with the 
       transfer of ownership of smaller privately held companies.

    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 ``Small Business Mergers, 
Acquisitions, Sales, and Brokerage Simplification Act of 2014''.

SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION BROKERS.

    Section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(b)) is amended by adding at the end the following:
            ``(13) Registration exemption for merger and acquisition 
        brokers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an M&A broker shall be exempt from 
                registration under this section.
                    ``(B) Excluded activities.--An M&A broker is not 
                exempt from registration under this paragraph if such 
                broker does any of the following:
                            ``(i) Directly or indirectly, in connection 
                        with the transfer of ownership of an eligible 
                        privately held company, receives, holds, 
                        transmits, or has custody of the funds or 
                        securities to be exchanged by the parties to 
                        the transaction.
                            ``(ii) Engages on behalf of an issuer in a 
                        public offering of any class of securities that 
                        is registered, or is required to be registered, 
                        with the Commission under section 12 or with 
                        respect to which the issuer files, or is 
                        required to file, periodic information, 
                        documents, and reports under subsection (d).
                    ``(C) Rule of construction.--Nothing in this 
                paragraph shall be construed to limit any other 
                authority of the Commission to exempt any person, or 
                any class of persons, from any provision of this title, 
                or from any provision of any rule or regulation 
                thereunder.
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Control.--The term `control' means 
                        the power, directly or indirectly, to direct 
                        the management or policies of a company, 
                        whether through ownership of securities, by 
                        contract, or otherwise. There is a presumption 
                        of control for any person who--
                                    ``(I) is a director, general 
                                partner, member or manager of a limited 
                                liability company, or officer 
                                exercising executive responsibility (or 
                                has similar status or functions);
                                    ``(II) has the right to vote 20 
                                percent or more of a class of voting 
                                securities or the power to sell or 
                                direct the sale of 20 percent or more 
                                of a class of voting securities; or
                                    ``(III) in the case of a 
                                partnership or limited liability 
                                company, has the right to receive upon 
                                dissolution, or has contributed, 20 
                                percent or more of the capital.
                            ``(ii) Eligible privately held company.--
                        The term `eligible privately held company' 
                        means a company that meets both of the 
                        following conditions:
                                    ``(I) The company does not have any 
                                class of securities registered, or 
                                required to be registered, with the 
                                Commission under section 12 or with 
                                respect to which the company files, or 
                                is required to file, periodic 
                                information, documents, and reports 
                                under subsection (d).
                                    ``(II) In the fiscal year ending 
                                immediately before the fiscal year in 
                                which the services of the M&A broker 
                                are initially engaged with respect to 
                                the securities transaction, the company 
                                meets either or both of the following 
                                conditions (determined in accordance 
                                with the historical financial 
                                accounting records of the company):
                                            ``(aa) The earnings of the 
                                        company before interest, taxes, 
                                        depreciation, and amortization 
                                        are less than $25,000,000.
                                            ``(bb) The gross revenues 
                                        of the company are less than 
                                        $250,000,000.
                            ``(iii) M&A broker.--The term `M&A broker' 
                        means a broker, and any person associated with 
                        a broker, engaged in the business of effecting 
                        securities transactions solely in connection 
                        with the transfer of ownership of an eligible 
                        privately held company, regardless of whether 
                        the broker acts on behalf of a seller or buyer, 
                        through the purchase, sale, exchange, issuance, 
                        repurchase, or redemption of, or a business 
                        combination involving, securities or assets of 
                        the eligible privately held company, if the 
                        broker reasonably believes that--
                                    ``(I) upon consummation of the 
                                transaction, any person acquiring 
                                securities or assets of the eligible 
                                privately held company, acting alone or 
                                in concert, will control and, directly 
                                or indirectly, will be active in the 
                                management of the eligible privately 
                                held company or the business conducted 
                                with the assets of the eligible 
                                privately held company; and
                                    ``(II) if any person is offered 
                                securities in exchange for securities 
                                or assets of the eligible privately 
                                held company, such person will, prior 
                                to becoming legally bound to consummate 
                                the transaction, receive or have 
                                reasonable access to the most recent 
                                year-end balance sheet, income 
                                statement, statement of changes in 
                                financial position, and statement of 
                                owner's equity of the issuer of the 
                                securities offered in exchange, and, if 
                                the financial statements of the issuer 
                                are audited, the related report of the 
                                independent auditor, a balance sheet 
                                dated not more than 120 days before the 
                                date of the offer, and information 
                                pertaining to the management, business, 
                                results of operations for the period 
                                covered by the foregoing financial 
                                statements, and material loss 
                                contingencies of the issuer.
                    ``(E) Inflation adjustment.--
                            ``(i) In general.--On the date that is 5 
                        years after the date of the enactment of the 
                        Small Business Mergers, Acquisitions, Sales, 
                        and Brokerage Simplification Act of 2014, and 
                        every 5 years thereafter, each dollar amount in 
                        subparagraph (D)(ii)(II) shall be adjusted by--
                                    ``(I) dividing the annual value of 
                                the Employment Cost Index For Wages and 
                                Salaries, Private Industry Workers (or 
                                any successor index), as published by 
                                the Bureau of Labor Statistics, for the 
                                calendar year preceding the calendar 
                                year in which the adjustment is being 
                                made by the annual value of such index 
                                (or successor) for the calendar year 
                                ending December 31, 2012; and
                                    ``(II) multiplying such dollar 
                                amount by the quotient obtained under 
                                subclause (I).
                            ``(ii) Rounding.--Each dollar amount 
                        determined under clause (i) shall be rounded to 
                        the nearest multiple of $100,000.''.

SEC. 3. EFFECTIVE DATE.

    This Act and any amendment made by this Act shall take effect on 
the date that is 90 days after the date of the enactment of this Act.
                                 <all>
```