pany meets either or both of the fol-
lowing conditions (determined in ac-
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. 
‘‘(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 com-
pany, regardless of whether the broker acts 
on behalf of a seller or buyer, through the 
purchase, sale, exchange, issuance, repur-
chase, or redemption of, or a business com-
bination involving, securities or assets of 
the eligible privately held company, if the 
broker reasonably believes that— 
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‘‘(I) upon consummation of the 
transaction, any person acquiring se-
curities or assets of the eligible pri-
vately held company, acting alone or 
in concert, will control and, directly or 
indirectly, will be active in the man-
agement 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 se-
curities in exchange for securities or 
assets of the eligible privately held 
company, such person will, prior to 
becoming legally bound to consum-
mate the transaction, receive or have 
reasonable access to the most recent 
fiscal year-end financial statements of 
the issuer of the securities as custom-
arily prepared by the management of 
the issuer in the normal course of op-
erations and, if the financial state-
ments of the issuer are audited, re-
viewed, or compiled, any related state-
ment by the independent accountant, 
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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. 
‘‘(iv) PUBLIC SHELL COMPANY.—The 
term ‘public shell company’ is a company 
that at the time of a transaction with an 
eligible privately held company— 
‘‘(I) has any class of securities 
registered, or required to be reg-
istered, with the Commission under 
section 12 or that is required to file 
reports pursuant to subsection (d); 
‘‘(II) has no or nominal oper-
ations; and 
‘‘(III) 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 the Small Business Mergers, Acquisi-
tions, Sales, and Brokerage Simplification 
Act of 2017, and every 5 years thereafter, 
each 
dollar 
amount 
in 
subparagraph 
(E)(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 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, 2012; and 
‘‘(II) multiplying such dollar 
amount by the quotient obtained 
under subclause (I). 
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‘‘(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. 
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Union Calendar No. 318 
115TH CONGRESS 
1ST SESSION 
H. R. 477 
[Report No. 115–431] 
A BILL 
To amend the Securities Exchange Act of 1934 to 
exempt from registration brokers performing 
services in connection with the transfer of owner-
ship of smaller privately held companies. 
NOVEMBER 30, 2017 
Committed to the Committee of the Whole House on the 
State of the Union and ordered to be printed 
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