IB 
Union Calendar No. 233 
117TH CONGRESS 
2D SESSION 
H. R. 935 
[Report No. 117–313] 
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 
FEBRUARY 8, 2021 
Mr. HUIZENGA (for himself, Mr. HIGGINS of New York, Mr. POSEY, and Mrs. 
CAROLYN B. MALONEY of New York) introduced the following bill; which 
was referred to the Committee on Financial Services 
MAY 10, 2022 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 8, 2021] 
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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. 
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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 Mergers, 
Acquisitions, Sales, and Brokerage Simplification Act of 
2021’’. 
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 fol-
lowing: 
‘‘(i) Directly or indirectly, in connec-
tion with the transfer of ownership of an el-
igible privately held company, receives, 
holds, transmits, or has custody of the funds 
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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, period information, 
documents, and reports under subsection 
(d). 
‘‘(iii) Engages on behalf of any party 
in a transaction involving a shell company, 
other than a business combination related 
shell company. 
‘‘(iv) Directly, or indirectly through 
any of its affiliates, provides financing re-
lated to the transfer of ownership of an eli-
gible privately held company. 
‘‘(v) Assists any party to obtain fi-
nancing from an unaffiliated third party 
without— 
‘‘(I) complying with all other ap-
plicable laws in connection with such 
assistance, including, if applicable, 
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Regulation T (12 C.F.R. 220 et seq.); 
and 
‘‘(II) disclosing any compensation 
in writing to the party. 
‘‘(vi) Represents both the buyer and the 
seller in the same transaction without pro-
viding clear written disclosure as to the 
parties the broker represents and obtaining 
written consent from both parties to the 
joint representation. 
‘‘(vii) Facilitates a transaction with a 
group of buyers formed with the assistance 
of the M&A broker to acquire the eligible 
privately held company. 
‘‘(viii) Engages in a transaction in-
volving the transfer of ownership of an eli-
gible privately held company to a passive 
buyer or group of passive buyers. 
‘‘(ix) Binds a party to a transfer of 
ownership of an eligible privately held com-
pany. 
‘‘(C) DISQUALIFICATION.—An M&A broker 
is not exempt from registration under this para-
graph if such broker (and if and as applicable, 
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including any officer, director, member, man-
ager, partner, or employee of such broker)— 
‘‘(i) has been barred from association 
with a broker or dealer by the Commission, 
any State, or any self-regulatory organiza-
tion; or 
‘‘(ii) is suspended from association 
with a broker or dealer. 
‘‘(D) RULE OF CONSTRUCTION.—Nothing in 
this paragraph shall be construed to limit any 
other authority of the Commission to exempt any 
person, or any class of persons, from any provi-
sion of this title, or from any provision of any 
rule or regulation thereunder. 
‘‘(E) DEFINITIONS.—In this paragraph: 
‘‘(i) BUSINESS COMBINATION RELATED 
SHELL COMPANY.—The term ‘business com-
bination related shell company’ means a 
shell company that is formed by an entity 
that is not a shell company— 
‘‘(I) solely for the purpose of 
changing the corporate domicile of that 
entity solely within the United States; 
or 
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‘‘(II) solely for the purpose of 
completing a business combination 
transaction (as defined under section 
230.165(f) of title 17, Code of Federal 
Regulations) among one or more enti-
ties other than the company itself, none 
of which is a shell company. 
‘‘(ii) CONTROL.—The term ‘control’ 
means the power, directly or indirectly, to 
direct the management or policies of a com-
pany, whether through ownership of securi-
ties, by contract, or otherwise. There is a 
presumption of control if, upon completion 
of a transaction, the buyer or group of buy-
ers— 
‘‘(I) has the right to vote 25 per-
cent or more of a class of voting securi-
ties or the power to sell or direct the 
sale of 25 percent or more of a class of 
voting securities; or 
‘‘(II) in the case of a partnership 
or limited liability company, has the 
right to receive upon dissolution, or 
has contributed, 25 percent or more of 
the capital. 
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‘‘(iii) ELIGIBLE PRIVATELY HELD COM-
PANY.—The term ‘eligible privately held 
company’ means a privately held company 
that meets both of the following conditions: 
‘‘(I) The company does not have 
any class of securities registered, or re-
quired to be registered, with the Com-
mission under section 12 or with re-
spect to which the company files, or is 
required to file, periodic information, 
documents, and reports under sub-
section (d). 
‘‘(II) In the fiscal year ending im-
mediately before the fiscal year in 
which the services of the M&A broker 
are initially engaged with respect to 
the securities transaction, the company 
meets either or both of the following 
conditions (determined in accordance 
with the historical financial account-
ing records of the company): 
‘‘(aa) The earnings of the 
company before interest, taxes, de-
preciation, 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. 
For purposes of this subclause, the 
Commission may by rule modify the 
dollar figures if the Commission deter-
mines that such a modification is nec-
essary or appropriate in the public in-
terest or for the protection of investors. 
‘‘(iv) M&A BROKER.—The term ‘M&A 
broker’ means a broker, and any person as-
sociated with a broker, engaged in the busi-
ness of effecting securities transactions sole-
ly in connection with the transfer of owner-
ship of an eligible privately held company, 
regardless of whether the broker acts on be-
half of a seller or buyer, through the pur-
chase, sale, exchange, issuance, repurchase, 
or redemption of, or a business combination 
involving, securities or assets of the eligible 
privately held company, if the broker rea-
sonably believes that— 
‘‘(I) upon consummation of the 
transaction, any person acquiring se-
curities or assets of the eligible pri-
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vately held company, acting alone or 
in concert— 
‘‘(aa) will control the eligible 
privately held company or the 
business conducted with the assets 
of the eligible privately held com-
pany; and 
‘‘(bb) directly or indirectly, 
will be active in the management 
of the eligible privately held com-
pany or the business conducted 
with the assets of the eligible pri-
vately held company, including 
without limitation, for example, 
by— 
‘‘(AA) electing executive 
officers; 
‘‘(BB) 
approving 
the 
annual budget; 
‘‘(CC) serving as an ex-
ecutive or other executive 
manager; or 
‘‘(DD) 
carrying 
out 
such other activities as the 
Commission may, by rule, 
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determine to be in the public 
interest; and 
‘‘(II) if any person is offered secu-
rities in exchange for securities or as-
sets of the eligible privately held com-
pany, such person will, prior to becom-
ing legally bound to consummate the 
transaction, receive or have reasonable 
access to the most recent fiscal year- 
end financial statements of the issuer 
of the securities as customarily pre-
pared by the management of the issuer 
in the normal course of operations and, 
if the financial statements of the issuer 
are audited, reviewed, or compiled, any 
related statement 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 
operations for the period covered by the 
foregoing financial statements, and 
material loss contingencies of the 
issuer. 
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‘‘(v) SHELL COMPANY.—The term ‘shell 
company’ means a company that at the 
time of a transaction with an eligible pri-
vately held company— 
‘‘(I) has no or nominal oper-
ations; and 
‘‘(II) 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 equiva-
lents and nominal other assets. 
‘‘(F) INFLATION ADJUSTMENT.— 
‘‘(i) IN GENERAL.—On the date that is 
5 years after the date of the enactment of 
this paragraph, and every 5 years there-
after, each dollar amount in subparagraph 
(E)(iii)(II) shall be adjusted by— 
‘‘(I) dividing the annual value of 
the Employment Cost Index For Wages 
and Salaries, Private Industry Work-
ers (or any successor index), as pub-
lished by the Bureau of Labor Statis-
tics, for the calendar year preceding 
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the calendar year in which the adjust-
ment is being made by the annual 
value of such index (or successor) for 
the calendar year ending December 31, 
2020; and 
‘‘(II) 
multiplying 
such 
dollar 
amount by the quotient obtained under 
subclause (I). 
‘‘(ii) ROUNDING.—Each dollar amount 
determined under clause (i) shall be round-
ed 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. 233 
117TH CONGRESS 
2D SESSION 
H. R. 935 
[Report No. 117–313] 
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. 
MAY 10, 2022 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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