I 
115TH CONGRESS 
1ST SESSION 
H. R. 477 
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 HOUSE OF REPRESENTATIVES 
JANUARY 12, 2017 
Mr. HUIZENGA (for himself, Mr. POSEY, and Mr. HIGGINS of New York) in-
troduced the following bill; which was referred to the Committee on Fi-
nancial Services 
A BILL 
To amend the Securities Exchange Act of 1934 to exempt 
from registration brokers performing services in connec-
tion with the transfer of ownership of smaller privately 
held companies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Merg-
ers, Acquisitions, Sales, and Brokerage Simplification Act 
of 2017’’. 
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SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND AC-
QUISITION 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 ex-
empt 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 connec-
tion 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 reg-
istered, with the Commission under section 
12 or with respect to which the issuer files, 
or is required to file, periodic information, 
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documents, and reports under subsection 
(d). 
‘‘(iii) Engages on behalf of any party 
in a transaction involving a public shell 
company. 
‘‘(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); 
‘‘(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. 
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‘‘(E) 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 part-
ner, 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 partner-
ship 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 
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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-
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. 
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‘‘(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— 
‘‘(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 
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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, 
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. 
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‘‘(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 
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, 
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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). 
‘‘(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. 
Æ 
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