I 
116TH CONGRESS 
2D SESSION 
H. R. 5851 
To amend the Internal Revenue Code of 1986 to allow certain qualified 
over-the-counter securities to be treated as readily traded on an estab-
lished securities market for the purpose of diversification requirements 
for employee stock ownership plans. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 11, 2020 
Mr. HIGGINS of New York (for himself and Mr. KELLY of Pennsylvania) in-
troduced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow cer-
tain qualified over-the-counter securities to be treated 
as readily traded on an established securities market 
for the purpose of diversification requirements for em-
ployee stock ownership plans. 
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 ‘‘2019 ESOP Fairness 
Act’’. 
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SEC. 2. CERTAIN SECURITIES TREATED AS PUBLICLY 
TRADED. 
(a) IN GENERAL.—Paragraph (35) of section 401(a) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new subparagraph: 
‘‘(I) RULES RELATING TO PUBLICLY TRAD-
ED
SECURITIES.—For purposes of this para-
graph— 
‘‘(i) IN GENERAL.—The term ‘publicly 
traded employer securities’ means em-
ployer securities which are readily tradable 
on an established securities market. 
‘‘(ii) SPECIAL RULE.—A security shall 
be treated as described in clause (i) if the 
security— 
‘‘(I) is the subject of priced 
quotations by at least 2 dealers, pub-
lished and made continuously avail-
able on an interdealer quotation sys-
tem (as such term is used in section 
13 of the Securities Exchange Act of 
1934) which has made the request de-
scribed in section 6(j) of such Act to 
be treated as an alternative trading 
system, 
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‘‘(II) is not a penny stock (as de-
fined by section 3(a)(51) of such Act), 
‘‘(III) is issued by a company 
which is not a shell company (as such 
term is used in section 4(d)(6) of the 
Securities Act of 1933) or a blank 
check company (as defined in section 
7(b)(3) of such Act), and is not sub-
ject to bankruptcy proceedings, 
‘‘(IV) in the case of a security 
issued by a company incorporated in 
the United States, the issuer pub-
lishes, not less frequently than annu-
ally, financial statements audited by 
an independent auditor registered 
with the Public Company Accounting 
Oversight Board established under the 
Sarbanes-Oxley Act of 2002, and 
‘‘(V) in the case of a security 
issued by a company incorporated out-
side of the United States, the issuer— 
‘‘(aa) is subject to the re-
porting requirements of sections 
13 or 15(d) of the Securities Ex-
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change Act of 1934 (15 U.S.C. 
78m or 78o(d)), 
‘‘(bb) is subject to the re-
porting requirements of section 
230.257 of title 17, Code of Fed-
eral Regulations, or 
‘‘(cc) is exempt from such 
requirements 
under 
section 
240.12g3–2(b) of title 17, Code 
of Federal Regulations, and 
has published all information which is 
required by such Act or Rule, as ap-
plicable, to be publicly available.’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (G) 
of section 401(a)(35) of the Internal Revenue Code of 
1986 is amended by striking clause (v) and by redesig-
nating clause (vi) as clause (v). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after the 
date of the enactment of this Act. 
Æ 
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