documents, and reports under subsection 
(d). 
‘‘(iii) Engages on behalf of any party 
in a transaction involving a shell company, 
other than a business combination related 
shell company. 
‘‘(iv) Directly, or indirectly through 
any of its affiliates, provides financing re-
lated to the transfer of ownership of an eli-
gible privately held company. 
‘‘(v) Assists any party to obtain fi-
nancing from an unaffiliated third party 
without— 
‘‘(I) complying with all other ap-
plicable laws in connection with such 
assistance, including, if applicable, 
Regulation T (12 C.F.R. 220 et seq.); 
and 
‘‘(II) disclosing any compensation 
in writing to the party. 
‘‘(vi) Represents both the buyer and 
the seller in the same transaction without 
providing clear written disclosure as to the 
parties the broker represents and obtaining 
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written consent from both parties to the 
joint representation. 
‘‘(vii) Facilitates a transaction with a 
group of buyers formed with the assistance 
of the M&A broker to acquire the eligible 
privately held company. 
‘‘(viii) Engages in a transaction in-
volving the transfer of ownership of an eli-
gible privately held company to a passive 
buyer or group of passive buyers. For pur-
poses of the preceding sentence, a buyer 
that is actively involved in managing the 
acquired company is not a passive buyer, 
regardless of whether such buyer is itself 
owned by passive beneficial owners. 
‘‘(ix) Binds a party to a transfer of 
ownership of an eligible privately held com-
pany. 
‘‘(C) 
DISQUALIFICATIONS.—An 
M&A 
broker is not exempt from registration under 
this paragraph if such broker is subject to— 
‘‘(i) suspension or revocation of reg-
istration under paragraph (4); 
‘‘(ii) a statutory disqualification de-
scribed in section 3(a)(39); 
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‘‘(iii) a disqualification under the 
rules adopted by the Commission under 
section 926 of the Investor Protection and 
Securities Reform Act of 2010 (15 U.S.C. 
77d note); or 
‘‘(iv) a final order described in para-
graph (4)(H). 
‘‘(D) RULE OF CONSTRUCTION.—Nothing 
in this paragraph shall be construed to limit 
any other authority of the Commission to ex-
empt any person, or any class of persons, from 
any provision of this title, or from any provision 
of any rule or regulation thereunder. 
‘‘(E) DEFINITIONS.—In this paragraph: 
‘‘(i) 
BUSINESS
COMBINATION
RE-
LATED SHELL COMPANY.—The term ‘busi-
ness combination related shell company’ 
means a shell company that is formed by 
an entity that is not a shell company— 
‘‘(I) solely for the purpose of 
changing the corporate domicile of 
that entity solely within the United 
States; or 
‘‘(II) solely for the purpose of 
completing a business combination 
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transaction (as defined under section 
230.165(f) of title 17, Code of Fed-
eral Regulations) among one or more 
entities other than the company itself, 
none of which is a shell company. 
‘‘(ii) 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 part-
ner, member or manager of a limited 
liability company, or corporate officer 
of a corporation or limited liability 
company, and exercises executive re-
sponsibility (or has similar status or 
functions); 
‘‘(II) has the right to vote 25 
percent or more of a class of voting 
securities or the power to sell or direct 
the sale of 25 percent or more of a 
class of voting securities; or 
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‘‘(III) in the case of a partner-
ship or limited liability company, has 
the right to receive upon dissolution, 
or has contributed, 25 percent or 
more of the capital. 
‘‘(iii) ELIGIBLE
PRIVATELY
HELD 
COMPANY.—The term ‘eligible privately 
held company’ means a privately held com-
pany that meets both of the following con-
ditions: 
‘‘(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 informa-
tion, 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 com-
pany meets either or both of the fol-
lowing conditions (determined in ac-
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cordance 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. 
For purposes of this subclause, the 
Commission may by rule modify the 
dollar figures if the Commission deter-
mines that such a modification is nec-
essary or appropriate in the public in-
terest or for the protection of inves-
tors. 
‘‘(iv) 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 com-
pany, regardless of whether the broker acts 
on behalf of a seller or buyer, through the 
purchase, sale, exchange, issuance, repur-
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erations and, if the financial state-
ments of the issuer are audited, re-
viewed, or compiled, any related state-
ment by the independent accountant, 
a balance sheet dated not more than 
120 days before the date of the offer, 
and information pertaining to the 
management, business, results of op-
erations for the period covered by the 
foregoing financial statements, and 
material loss contingencies of the 
issuer. 
‘‘(v) SHELL
COMPANY.—The term 
‘shell company’ means a company that at 
the time of a transaction with an eligible 
privately held company— 
‘‘(I) has no or nominal oper-
ations; and 
‘‘(II) has— 
‘‘(aa) no or nominal assets; 
‘‘(bb) assets consisting solely 
of cash and cash equivalents; or 
‘‘(cc) assets consisting of 
any amount of cash and cash 
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equivalents and nominal other as-
sets. 
‘‘(F) INFLATION ADJUSTMENT.— 
‘‘(i) IN GENERAL.—On the date that 
is 5 years after the date of the enactment 
of this paragraph, and every 5 years there-
after, each dollar amount in subparagraph 
(E)(iii)(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 pre-
ceding the calendar year in which the 
adjustment is being made by the an-
nual value of such index (or suc-
cessor) for the calendar year ending 
December 31, 2020; and 
‘‘(II) multiplying such dollar 
amount by the quotient obtained 
under subclause (I). 
‘‘(ii) 
ROUNDING.—Each 
dollar 
amount determined under clause (i) shall 
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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. 
Æ 
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