‘‘(D) set forth disclosure requirements for
soliciting material distributed in connection
with a limited partnership rollup transaction,
including requirements for clear, concise, and
comprehensible disclosure with respect to—
‘‘(i) any changes in the business plan,
voting rights, form of ownership interest or
the general partner’s compensation in the
proposed limited partnership rollup trans-
action from each of the original limited
partnerships;
‘‘(ii) the conflicts of interest, if any, of
the general partner;
‘‘(iii) whether it is expected that there
will be a significant difference between the
exchange values of the limited partnerships
and the trading price of the securities to
be issued in the limited partnership rollup
transaction;
‘‘(iv) the valuation of the limited part-
nerships and the method used to determine
the value of limited partners’ interests to
be exchanged for the securities in the lim-
ited partnership rollup transaction;
‘‘(v) the differing risks and effects of
the transaction for investors in different
limited partnerships proposed to be in-
cluded, and the risks and effects of com-
pleting the transaction with less than all
limited partnerships;
‘‘(vi) a statement by the general part-
ner as to whether the proposed limited
partnership rollup transaction is fair or
unfair to investors in each limited partner-
ship, a discussion of the basis for that con-
clusion, and the general partner’s evalua-
tion, and a description of alternatives to
the limited partnership rollup transaction,
such as liquidation; and
‘‘(vii) such other matters deemed nec-
essary or appropriate by the Commission.
‘‘(E) provide that such soliciting materials
contain or be accompanied by an opinion on the
fairness of the proposed transaction to holders
of each security which is subject to the pro-
posed transaction that—
‘‘(i) includes such information, rep-
resentations, and undertakings with re-
spect to the analysis of the transaction,
scope of review, preparation of the opinion,
and basis for and methods of arriving at
conclusions as the Commission may require
in such rules; and
‘‘(ii) is prepared by a person—
‘‘(I) who does not receive any
compensation that is contingent on
the transaction’s approval or comple-
tion;
‘‘(II) who meets such additional
standards of independence from the
person or persons proposing the rollup
transaction as shall be required in the
rules prescribed by the Commission;
‘‘(III) who has been given access
by the issuer to its personnel and
premises and relevant books and
records; and
‘‘(IV) who has represented to
have undertaken an independent anal-
ysis of the fairness of the proposed
rollup transaction to holders based
upon 
the 
information 
obtained
through such access and upon other
independently obtained information;
‘‘(F) require that the soliciting material in-
clude a clear and concise summary of the lim-
ited partnership rollup transaction (including a
summary of the matters referred to in clauses
(i) through (vi) of subparagraph (D) and a
summary of the matter referred to in subpara-
graph (E)), with the risks of the limited part-
nership rollup transaction set forth prominently
in the forepart thereof;
‘‘(G) provide that any solicitation or offer-
ing period with respect to any proxy solicita-
tion, tender offer, or information statement in
a limited partnership rollup transaction shall be
for not less than the lesser of 60 calendar days
or the maximum number of days permitted
under applicable State law; and
‘‘(H) contain such other provisions as the
Commission determines to be necessary or ap-
propriate for the protection of investors in lim-
ited partnership rollup transactions.
‘‘(2) EXEMPTIONS.—The Commission may, con-
sistent with the public interest, the protection of in-
vestors, and the purposes of this Act, exempt by rule
or order any security or class of securities, any
transaction or class of transactions, or any person or
class of persons, in whole or in part, conditionally or
unconditionally, from the requirements imposed pur-
suant to paragraph (1) or from the definition con-
tained in paragraph (4).
‘‘(3) EFFECT
ON
COMMISSION
AUTHORITY.—
Nothing in this subsection limits the authority of the
Commission under subsection (a) or (d) or any other
provision of this title or precludes the Commission
from imposing, under subsection (a) or (d) or any
other provision of this title, a remedy or procedure
required to be imposed under this subsection.
‘‘(4) DEFINITION
OF
LIMITED
PARTNERSHIP
ROLLUP TRANSACTION.—As used in this subsection,
the term ‘limited partnership rollup transaction’
means, except as provided in paragraph (5), a trans-
action involving—
‘‘(A) the combination or reorganization of
limited partnerships, directly or indirectly, in
which some or all investors in the limited part-
nerships receive new securities or securities in
another entity, other than a transaction—
‘‘(i) in which—
‘‘(I) the investors’ limited part-
nership securities are reported under
a transaction reporting plan declared
effective before January 1, 1991, by
the Commission under section 11A;
and
‘‘(II) the investors receive new
securities or securities in another en-
tity that are reported under a trans-
action reporting plan declared effec-
tive before January 1, 1991, by the
Commission under section 11A;
‘‘(ii) involving only issuers that are
not required to register or report under
section 12 both before and after the trans-
action;
‘‘(iii) in which the securities to be is-
sued or exchanged are not required to be
and are not registered under the Securities
Act of 1933;
‘‘(iv) which will result in no signifi-
cant adverse change to investors in any of
the limited partnerships with respect to
voting rights, the term of existence of the
entity, management compensation, or in-
vestment objectives; or
‘‘(v) where each investor is provided
an option to receive or retain a security
under substantially the same terms and
conditions as the original issue; or
‘‘(B) the reorganization of a single limited
partnership in which some or all investors in
the limited partnership receive new securities or
securities in another entity, and—
‘‘(i) transactions in the security issued
are reported under a transaction reporting
plan declared effective before January 1,
1991, by the Commission under section
11A;
‘‘(ii) the investors’ limited partnership
securities are not reported under a trans-
action reporting plan declared effective be-
fore January 1, 1991, by the Commission
under section 11A;
‘‘(iii) the issuer is required to register
or report under section 12, both before and
after the transaction, or the securities to
be issued or exchanged are required to be
or are registered under the Securities Act
of 1933;
‘‘(iv) there are significant adverse
changes to security holders in voting
rights, the term of existence of the entity,
management compensation, or investment
objectives; and
‘‘(v) investors are not provided an op-
tion to receive or retain a security under
substantially the same terms and condi-
tions as the original issue.
‘‘(5) EXCLUSION FROM DEFINITION.—As used
in this subsection, the term ‘limited partnership roll-
up transaction’ does not include a transaction that
involves only a limited partnership or partnerships
having an operating policy or practice of retaining
cash available for distribution and reinvesting pro-
ceeds from the sale, financing, or refinancing of as-
sets in accordance with such criteria as the Commis-
sion determines appropriate.
‘‘(6) DEFINITION OF PARTNERSHIP.—The term
‘partnership’ includes such other entity having a
substantially economically equivalent form of owner-
ship instrument as the Commission determines, by
rule consistent with the purposes of this subsection,
to include within this definition.’’.
(b) SCHEDULE FOR REGULATIONS.—The Securities
and Exchange Commission shall, not later than 12 months
after the date of enactment of this Act, conduct rule-
making proceedings and prescribe final regulations under
the Securities Act of 1933 and the Securities Exchange
Act of 1934 to implement the requirements of section
14(h) of the Securities Exchange Act of 1934, as amended
by subsection (a).
SEC. 3. RULES OF FAIR PRACTICE IN ROLLUP TRANS-
ACTIONS.
(a) REGISTERED SECURITIES ASSOCIATION RULE.—
Section 15A(b) of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3(b)) is amended by adding at the end
the following new paragraph:
‘‘(12) The rules of the association to promote
just and equitable principles of trade, as required by
paragraph (6), include rules to prevent members of
the association from participating in any limited
partnership rollup transaction (as such term is de-
fined in paragraphs (4) and (5) of section 14(h)) un-
less such transaction was conducted in accordance
with procedures designed to protect the rights of
limited partners, including—
‘‘(A) the right of dissenting limited part-
ners to the following: (i) an appraisal and com-
pensation, or (ii) if the association finds that
granting the rights under clause (i) of this sub-
paragraph would be infeasible or not in the fi-
nancial interest of the dissenting limited part-
ners, other comparable rights designed to pro-
tect dissenting limited partners, which may in-
clude the rights set forth in subparagraph (B);
‘‘(B) when the association determines it to
be necessary to the protection of such rights,
the use of a committee that is independent, as
determined in accordance with rules prescribed
by the association, of the general partner or
sponsor and that would have the authority to
protect the interest of limited partners, includ-
ing (but not limited to) the authority (but not
the obligation) to hire independent advisors to
represent all limited partners at the partner-
ship’s expense, to negotiate the proposed trans-
action with the general partner or sponsor on
behalf of the limited partners, and to make a
recommendation to the limited partners with re-
spect to the proposed transaction, but not the
authority to provide consents or authorizations
to the proposed transaction on behalf of limited
partners;
‘‘(C) the right not to have their voting
power unfairly reduced or abridged;
ners, other comparable rights designed to pro-
tect dissenting limited partners, which may in-
clude the rights set forth in subparagraph (B);
‘‘(B) when the association determines it to
be necessary to the protection of such rights,
the use of a committee that is independent, as
determined in accordance with rules prescribed
by the association, of the general partner or
sponsor and that would have the authority to
protect the interest of limited partners, includ-
ing (but not limited to) the authority (but not
the obligation) to hire independent advisors to
represent all limited partners at the partner-
ship’s expense, to negotiate the proposed trans-
action with the general partner or sponsor on
behalf of the limited partners, and to make a
recommendation to the limited partners with re-
spect to the proposed transaction, but not the
authority to provide consents or authorizations
to the proposed transaction on behalf of limited
partners;
‘‘(C) the right not to have their voting
power unfairly reduced or abridged;
‘‘(D) the right not to bear an unfair por-
tion of the costs of a proposed rollup trans-
action that is rejected; and
‘‘(E) restrictions on the conversion of con-
tingent interests or fees into non-contingent in-
terests or fees and restrictions on the receipt of
a non-contingent equity interest in exchange for
fees for services which have not yet been pro-
vided.
As used in this paragraph, the term ‘dissenting lim-
ited partner’ means a holder of a beneficial interest
in a limited partnership that is the subject of a lim-
ited partnership transaction who casts a vote against
the transaction and complies with procedures estab-
lished by the association, except that for purposes of
an exchange or tender offer such term means any
person who files an objection in writing under the
rules of the association during the period during
which the offer is outstanding.’’.
(d) EFFECT ON EXISTING AUTHORITY.—The amend-
ments made by this section shall not limit the authority
of the Securities and Exchange Commission, a registered
securities association, or a national securities exchange
under any provision of the Securities Exchange Act of
1934, or preclude the Commission or such association or
exchange from imposing, under any other such provision,
a remedy or procedure required to be imposed under such
amendments.
(e) EFFECTIVE DATE.—The amendments made by
this section shall become effective 18 months after the
date of enactment of this Act and shall apply to any secu-
rity resulting from a partnership rollup transaction (as
such term is defined in section 14(h)(4) of the Securities
Exchange Act of 1934) that is issued on or after the date
of enactment of this Act.
Passed the House of Representatives, March 2,
1993.
Attest:
DONNALD K. ANDERSON,
Clerk.
HR 617 RFS——2