H. R. 3005—29
the Securities Exchange Act of 1934 (as amended by subsection
(a) of this section) that occur on or after September 1, 1997.
SEC. 406. TIME FOR PAYMENT.
Section 4(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78d(e)) is amended by inserting before the period at the end thereof
the following: ‘‘and the Commission may also specify the time
that such fee shall be determined and paid relative to the filing
of any statement or document with the Commission’’.
SEC. 407. SENSE OF THE CONGRESS CONCERNING FEES.
It is the sense of the Congress that, in order to maintain
the competitiveness of United States securities markets relative
to foreign markets, no fee should be assessed on transactions involv-
ing portfolios of equity securities taking place at times of day
characterized by low volume and during nontraditional trading
hours.
TITLE V—REDUCING THE COST OF
SAVING AND INVESTMENT
SEC. 501. EXEMPTION FOR ECONOMIC, BUSINESS, AND INDUSTRIAL
DEVELOPMENT COMPANIES.
Section 6(a) of the Investment Company Act of 1940 (15 U.S.C.
80a–6(a)) is amended by adding at the end the following new
paragraph:
‘‘(5)(A) Any company that is not engaged in the business
of issuing redeemable securities, the operations of which are
subject to regulation by the State in which the company is
organized under a statute governing entities that provide finan-
cial or managerial assistance to enterprises doing business,
or proposing to do business, in that State if—
‘‘(i) the organizational documents of the company state
that the activities of the company are limited to the pro-
motion of economic, business, or industrial development
in the State through the provision of financial or manage-
rial assistance to enterprises doing business, or proposing
to do business, in that State, and such other activities
that are incidental or necessary to carry out that purpose;
‘‘(ii) immediately following each sale of the securities
of the company by the company or any underwriter for
the company, not less than 80 percent of the securities
of the company being offered in such sale, on a class-
by-class basis, are held by persons who reside or who
have a substantial business presence in that State;
‘‘(iii) the securities of the company are sold, or proposed
to be sold, by the company or by any underwriter for
the company, solely to accredited investors, as that term
is defined in section 2(a)(15) of the Securities Act of 1933,
or to such other persons that the Commission, as necessary
or appropriate in the public interest and consistent with
the protection of investors, may permit by rule, regulation,
or order; and
‘‘(iv) the company does not purchase any security issued
by an investment company or by any company that would
be an investment company except for the exclusions from
H. R. 3005—30
the definition of the term ‘investment company’ under para-
graph (1) or (7) of section 3(c), other than—
‘‘(I) any debt security that is rated investment
grade by not less than 1 nationally recognized statis-
tical rating organization; or
‘‘(II) any security issued by a registered open-end
investment company that is required by its investment
policies to invest not less than 65 percent of its total
assets in securities described in subclause (I) or securi-
ties that are determined by such registered open-end
investment company to be comparable in quality to
securities described in subclause (I).
‘‘(B) Notwithstanding the exemption provided by this para-
graph, section 9 (and, to the extent necessary to enforce section
9, sections 38 through 51) shall apply to a company described
in this paragraph as if the company were an investment com-
pany registered under this title.
‘‘(C) Any company proposing to rely on the exemption pro-
vided by this paragraph shall file with the Commission a
notification stating that the company intends to do so, in such
form and manner as the Commission may prescribe by rule.
‘‘(D) Any company meeting the requirements of this para-
graph may rely on the exemption provided by this paragraph
upon filing with the Commission the notification required by
subparagraph (C), until such time as the Commission deter-
mines by order that such reliance is not in the public interest
or is not consistent with the protection of investors.
‘‘(E) The exemption provided by this paragraph may be
subject to such additional terms and conditions as the Commis-
sion may by rule, regulation, or order determine are necessary
or appropriate in the public interest or for the protection of
investors.’’.
SEC. 
502. 
INTRASTATE 
CLOSED-END 
INVESTMENT 
COMPANY
EXEMPTION.
Section 6(d)(1) of the Investment Company Act of 1940 (15
U.S.C. 80a–6(d)(1)) is amended by striking ‘‘$100,000’’ and inserting
‘‘$10,000,000, or such other amount as the Commission may set
by rule, regulation, or order’’.
SEC. 503. DEFINITION OF ELIGIBLE PORTFOLIO COMPANY.
Section 2(a)(46)(C) of the Investment Company Act of 1940
(15 U.S.C. 80a–2(a)(46)(C)) is amended—
(1) in clause (ii), by striking ‘‘or’’ at the end;
(2) by redesignating clause (iii) as clause (iv); and
(3) by inserting after clause (ii) the following:
‘‘(iii) it has total assets of not more than
$4,000,000, and capital and surplus (shareholders’
equity less retained earnings) of not less than
$2,000,000, except that the Commission may adjust
such amounts by rule, regulation, or order to reflect
changes in 1 or more generally accepted indices or
other indicators for small businesses; or’’.
SEC. 504. DEFINITION OF BUSINESS DEVELOPMENT COMPANY.
Section 2(a)(48)(B) of the Investment Company Act of 1940
(15 U.S.C. 80a–2(a)(48)(B)) is amended by adding at the end the
following: ‘‘provided further that a business development company
H. R. 3005—31
need not make available significant managerial assistance with
respect to any company described in paragraph (46)(C)(iii), or
with respect to any other company that meets such criteria as
the Commission may by rule, regulation, or order permit, as consist-
ent with the public interest, the protection of investors, and the
purposes of this title; and’’.
SEC. 505. ACQUISITION OF ASSETS BY BUSINESS DEVELOPMENT
COMPANIES.
Section 55(a)(1)(A) of the Investment Company Act of 1940
(15 U.S.C. 80a–54(a)(1)(A)) is amended—
(1) by striking ‘‘or from any person’’ and inserting ‘‘from
any person’’; and
(2) by inserting before the semicolon ‘‘, or from any other
person, subject to such rules and regulations as the Commission
may prescribe as necessary or appropriate in the public interest
or for the protection of investors’’.
SEC. 506. CAPITAL STRUCTURE AMENDMENTS.
Section 61(a) of the Investment Company Act of 1940 (15 U.S.C.
80a–60(a)) is amended—
(1) in paragraph (2), by striking ‘‘if such business develop-
ment company’’ and all that follows through the end of the
paragraph and inserting a period;
(2) in paragraph (3)(A)—
(A) by striking ‘‘senior securities representing indebted-
ness accompanied by’’;
(B) by inserting ‘‘accompanied by securities,’’ after ‘‘of
such company,’’; and
(C) in clause (ii), by striking ‘‘senior’’; and
(3) in paragraph (3)—
(A) in subparagraph (A), by striking ‘‘and’’ at the end;
(B) in subparagraph (B), by striking the period at
the end of clause (iv) and inserting ‘‘; and’’; and
(C) by inserting immediately after subparagraph (B)
the following new subparagraph:
‘‘(C) a business development company may issue war-
rants, options, or rights to subscribe to, convert to, or
purchase voting securities not accompanied by securities,
if—
‘‘(i) such warrants, options, or rights satisfy the
conditions in clauses (i) and (iii) of subparagraph (A);
and
‘‘(ii) the proposal to issue such warrants, options,
or rights is authorized by the shareholders or partners
of such business development company, and such issu-
ance is approved by the required majority (as defined
in section 57(o)) of the directors of or general
partners in such company on the basis that such issu-
ance is in the best interests of the company and its
shareholders or partners.’’.
SEC. 507. FILING OF WRITTEN STATEMENTS.
Section 64(b)(1) of the Investment Company Act of 1940 (15
U.S.C. 80a–63(b)(1)) is amended by inserting ‘‘and capital structure’’
after ‘‘portfolio’’.
H. R. 3005—32
SEC. 508. CHURCH EMPLOYEE PENSION PLANS.
(a) AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.—
Section 3(c) of the Investment Company Act of 1940 (15 U.S.C.
80a–3(c)) is amended by adding at the end the following new para-
graph:
‘‘(14) Any church plan described in section 414(e) of the
Internal Revenue Code of 1986, if, under any such plan, no
part of the assets may be used for, or diverted to, purposes
other than the exclusive benefit of plan participants or bene-
ficiaries, or any company or account that is—
‘‘(A) established by a person that is eligible to establish
and maintain such a plan under section 414(e) of the
Internal Revenue Code of 1986; and
‘‘(B) substantially all of the activities of which
consist of—
‘‘(i) managing or holding assets contributed to such
church plans or other assets which are permitted to
be commingled with the assets of church plans under
the Internal Revenue Code of 1986; or
‘‘(ii) administering or providing benefits pursuant
to church plans.’’.
(b) AMENDMENT TO THE SECURITIES ACT OF 1933.—Section 3(a)
of the Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by
adding at the end the following new paragraph:
‘‘(13) Any security issued by or any interest or participation
in any church plan, company or account that is excluded from
the definition of an investment company under section 3(c)(14)
of the Investment Company Act of 1940.’’.
(c) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.—
(1) EXEMPTED SECURITIES.—Section 3(a)(12)(A) of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)) is
amended—
(A) in clause (v), by striking ‘‘and’’ at the end;
(B) by redesignating clause (vi) as clause (vii); and
(C) by inserting after clause (v) the following new
clause:
‘‘(vi) solely for purposes of sections 12, 13, 14,
and 16 of this title, any security issued by or any
interest or participation in any church plan, company,
or account that is excluded from the definition of
an investment company under section 3(c)(14) of the
Investment Company Act of 1940; and’’.
(2) EXEMPTION FROM BROKER-DEALER PROVISIONS.—Section
3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is
amended by adding at the end the following new subsection:
‘‘(g) CHURCH PLANS.—No church plan described in section 414(e)
of the Internal Revenue Code of 1986, no person or entity eligible
to establish and maintain such a plan under the Internal Revenue
Code of 1986, no company or account that is excluded from the
definition of an investment company under section 3(c)(14) of the
Investment Company Act of 1940, and no trustee, director, officer
or employee of or volunteer for such plan, company, account
person, or entity, acting within the scope of that person’s employ-
ment or activities with respect to such plan, shall be deemed to
be a ‘broker’, ‘dealer’, ‘municipal securities broker’, ‘municipal secu-
rities dealer’, ‘government securities broker’, ‘government securities
H. R. 3005—33
dealer’, ‘clearing agency’, or ‘transfer agent’ for purposes of this
title—
‘‘(1) solely because such plan, company, person, or entity
buys, holds, sells, trades in, or transfers securities or acts
as an intermediary in making payments in connection with
transactions in securities for its own account in its capacity
as trustee or administrator of, or otherwise on behalf of, or
for the account of, any church plan, company, or account that
is excluded from the definition of an investment company under
section 3(c)(14) of the Investment Company Act of 1940; and
‘‘(2) if no such person or entity receives a commission
or other transaction-related sales compensation in connection
with any activities conducted in reliance on the exemption
provided by this subsection.’’.
(d) AMENDMENT TO THE INVESTMENT ADVISERS ACT OF 1940.—
Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C.
80b–3(b)) is amended—
(1) in paragraph (3), by striking ‘‘or’’ at the end;
(2) in paragraph (4), by striking the period at the end
and inserting ‘‘; or’’; and
(3) by adding at the end the following new paragraph:
‘‘(5) any plan described in section 414(e) of the Internal
Revenue Code of 1986, any person or entity eligible to establish
and maintain such a plan under the Internal Revenue Code
of 1986, or any trustee, director, officer, or employee of or
volunteer for any such plan or person, if such person or entity,
acting in such capacity, provides investment advice exclusively
to, or with respect to, any plan, person, or entity or any com-
pany, account, or fund that is excluded from the definition
of an investment company under section 3(c)(14) of the Invest-
ment Company Act of 1940.’’.
(e) AMENDMENT
TO
THE TRUST INDENTURE ACT
OF 1939.—
Section 304(a)(4)(A) of the Trust Indenture Act of 1939 (15 U.S.C.
77ddd(4)(A)) is amended by striking ‘‘or (11)’’ and inserting ‘‘(11),
or (14)’’.
(f) PROTECTION OF CHURCH EMPLOYEE BENEFIT PLANS UNDER
STATE LAW.—
(1) REGISTRATION
REQUIREMENTS.—Any security issued
by or any interest or participation in any church plan, company,
or account that is excluded from the definition of an investment
company under section 3(c)(14) of the Investment Company
Act of 1940, as added by subsection (a) of this section, and
any offer, sale, or purchase thereof, shall be exempt from any
law of a State that requires registration or qualification of
securities.
(2) TREATMENT
OF
CHURCH
PLANS.—No church plan
described in section 414(e) of the Internal Revenue Code of
1986, no person or entity eligible to establish and maintain
such a plan under the Internal Revenue Code of 1986, no
company or account that is excluded from the definition of
an investment company under section 3(c)(14) of the Investment
Company Act of 1940, as added by subsection (a) of this section,
and no trustee, director, officer, or employee of or volunteer
for any such plan, person, entity, company, or account shall
be required to qualify, register, or be subject to regulation
as an investment company or as a broker, dealer, investment
adviser, or agent under the laws of any State solely because
H. R. 3005—34
such plan, person, entity, company, or account buys, holds,
sells, or trades in securities for its own account or in its capacity
as a trustee or administrator of or otherwise on behalf of,
or for the account of, or provides investment advice to,
for, or on behalf of, any such plan, person, or entity or any
company or account that is excluded from the definition of
an investment company under section 3(c)(14) of the Investment
Company Act of 1940, as added by subsection (a) of this section.
(g) AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.—
Section 30 of the Investment Company Act of 1940 (15 U.S.C.
80a–29) is amended by adding at the end the following new sub-
sections:
‘‘(g) DISCLOSURE TO CHURCH PLAN PARTICIPANTS.—A person
that maintains a church plan that is excluded from the definition
of an investment company solely by reason of section 3(c)(14) shall
provide disclosure to plan participants, in writing, and not less
frequently than annually, and for new participants joining such
a plan after May 31, 1996, as soon as is practicable after joining
such plan, that—
‘‘(1) the plan, or any company or account maintained to
manage or hold plan assets and interests in such plan, com-
pany, or account, are not subject to registration, regulation,
or reporting under this title, the Securities Act of 1933, the
Securities Exchange Act of 1934, or State securities laws; and
‘‘(2) plan participants and beneficiaries therefore will not
be afforded the protections of those provisions.
‘‘(h) NOTICE TO COMMISSION.—The Commission may issue rules
and regulations to require any person that maintains a church
plan that is excluded from the definition of an investment company
solely by reason of section 3(c)(14) to file a notice with the
Commission containing such information and in such form as the
Commission may prescribe as necessary or appropriate in the public
interest or consistent with the protection of investors.’’.
SEC. 
509. 
PROMOTING 
GLOBAL 
PREEMINENCE 
OF 
AMERICAN
SECURITIES MARKETS.
It is the sense of the Congress that—
(1) the United States and foreign securities markets are
increasingly becoming international securities markets, as issu-
ers and investors seek the benefits of new capital and secondary
market opportunities without regard to national borders;
(2) as issuers seek to raise capital across national borders,
they confront differing accounting requirements in the various
regulatory jurisdictions;
(3) the establishment of a high-quality comprehensive set
of generally accepted international accounting standards in
cross-border securities offerings would greatly facilitate inter-
national financing activities and, most significantly, would
enhance the ability of foreign corporations to access and list
in United States markets;
(4) in addition to the efforts made before the date of enact-
ment of this Act by the Commission to respond to the growing
internationalization of securities markets, the Commission
should enhance its vigorous support for the development of
high-quality international accounting standards as soon as
practicable; and
H. R. 3005—35
(5) the Commission, in view of its clear authority under
law to facilitate the access of foreign corporations to list their
securities in United States markets, should report to the Con-
gress, not later than 1 year after the date of enactment of
this Act, on progress in the development of international
accounting standards and the outlook for successful completion
of a set of international standards that would be acceptable
to the Commission for offerings and listings by foreign corpora-
tions in United States markets.
SEC. 510. STUDIES AND REPORTS.
(a) IMPACT OF TECHNOLOGICAL ADVANCES.—
(1) STUDY.—
(A) IN
GENERAL.—The Commission shall conduct a
study of—
(i) the impact of technological advances and the
use of on-line information systems on the securities
markets, including steps that the Commission has
taken 
to 
facilitate 
the 
electronic 
delivery 
of
prospectuses to institutional and other investors;
(ii) how such technologies have changed the way
in which the securities markets operate; and
(iii) any steps taken by the Commission to address
such changes.
(B) CONSIDERATIONS.—In conducting the study under
subparagraph (A), the Commission shall consider how the
Commission has adapted its enforcement policies and
practices in response to technological developments with
regard to—
(i) disclosure, prospectus delivery, and other
customer protection regulations;
(ii) intermediaries and exchanges in the domestic
and international financial services industry;
(iii) reporting by issuers, including communications
with holders of securities;
(iv) the relationship of the Commission with other
national regulatory authorities and organizations to
improve coordination and cooperation; and
(v) the relationship of the Commission with State
regulatory authorities and organizations to improve
coordination and cooperation.
(2) REPORT.—Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit a report to
the Congress on the results of the study conducted under para-
graph (1).
(b) SHAREHOLDER PROPOSALS.—
(1) STUDY.—The Commission shall conduct a study of—
(A) whether shareholder access to proxy statements
pursuant to section 14 of the Securities Exchange Act of
1934 has been impaired by recent statutory, judicial, or
regulatory changes; and
(B) the ability of shareholders to have proposals relat-
ing to corporate practices and social issues included as
part of proxy statements.
(2) REPORT.—Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit a report to
the Congress on the results of the study conducted under para-
H. R. 3005—36
graph (1), together with any recommendations for regulatory
or legislative changes that it considers necessary to improve
shareholder access to proxy statements.
(c) PREFERENCING.—
(1) STUDY.—The Commission shall conduct a study of the
impact on investors and the national market system of the
practice known as ‘‘preferencing’’ on one or more registered
securities exchanges, including consideration of—
(A) how preferencing impacts—
(i) the execution prices received by retail securities
customers whose orders are preferenced; and
(ii) the ability of retail securities customers in
all markets to obtain executions of their limit orders
in preferenced securities; and
(B) the costs of preferencing to such customers.
(2) REPORT.—Not later than 6 months after the date of
enactment of this Act, the Commission shall submit a report
to the Congress on the results of the study conducted under
paragraph (1).
(3) DEFINITION.—For purposes of this subsection, the term
‘‘preferencing’’ refers to the practice of a broker acting as a
dealer on a national securities exchange, directing the orders
of customers to buy or sell securities to itself for execution
under rules that permit the broker to take priority in execution
over same-priced orders or quotations entered prior in time.
(d) BROKER-DEALER UNIFORMITY.—
(1) STUDY.—The Commission, after consultation with reg-
istered securities associations, national securities exchanges,
and States, shall conduct a study of the impact of disparate
State licensing requirements on associated persons of registered
brokers or dealers and methods for States to attain uniform
licensing requirements for such persons.
(2) REPORT.—Not later than 1 year after the date of enact-
ment of this Act, the Commission shall submit to the Congress
a report on the study conducted under paragraph (1). Such
report shall include recommendations concerning appropriate
methods described in paragraph (1)(B), including any necessary
legislative changes to implement such recommendations.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.