IB Union Calendar No. 275 118th CONGRESS 1st Session H. R. 4790 [Report No. 118–336] IN THE HOUSE OF REPRESENTATIVES July 20, 2023 Mr. Huizenga (for himself, Mr. Meuser , Mr. Lucas , and Mr. Mooney ) introduced the following bill; which was referred to the Committee on Financial Services December 22, 2023 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 July 20, 2023 A BILL To amend the Federal securities laws with respect to the materiality of disclosure requirements, to establish the Public Company Advisory Committee, and for other purposes.

1. Short title; table of contents (a) Short title This Act may be cited as the Guiding Uniform and Responsible Disclosure Requirements and Information Limits Act of 2023 or the GUARDRAIL Act of 2023 . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Title I—Mandatory Materiality Requirement Sec. 101. Limitation on disclosure requirements. Title II—SEC justification of non-material disclosure mandates Sec. 201. SEC justification of non-material disclosure mandates. Title III—Public Company Advisory Committee Sec. 301. Public Company Advisory Committee. Title IV—Protecting U.S. Business Sovereignty Sec. 401. Study on detrimental impact of the Directive on Corporate Sustainability Due Diligence and Corporate Sustainability Reporting Directive. I Mandatory Materiality Requirement 101. Limitation on disclosure requirements (a) Securities Act of 1933 Section 2(b) of the Securities Act of 1933 ( 15 U.S.C. 77b(b) ) is amended— (1) in the subsection heading, by inserting ; Limitation on Disclosure Requirements after Formation ; (2) by striking Whenever and inserting the following: (1) In general Whenever ; and (3) by adding at the end the following: (2) Limitation (A) In general Whenever pursuant to this title the Commission is engaged in rulemaking regarding disclosure obligations of issuers, the Commission shall expressly provide that an issuer is only required to disclose information in response to such disclosure obligations to the extent the issuer has determined that such information is material with respect to a voting or investment decision regarding the securities of such issuer. (B) Applicability Subparagraph (A) shall not apply with respect to the removal of any disclosure requirement with respect to an issuer. (C) Rule of construction For the purposes of this paragraph, information is considered material with respect to a voting or investment decision regarding the securities of an issuer if there is a substantial likelihood that a reasonable investor would view the failure to disclose that information as having significantly altered the total mix of information made available to the investor. . (b) Securities Exchange Act of 1934 Section 3(f) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(f) ) is amended— (1) in the subsection heading, by inserting ; Limitation on Disclosure Requirements after Formation ; (2) by striking Whenever and inserting the following: (1) In general Whenever ; and (3) by adding at the end the following: (2) Limitation (A) In general Whenever pursuant to this title the Commission is engaged in rulemaking regarding disclosure obligations of issuers, the Commission shall expressly provide that an issuer is only required to disclose information in response to such disclosure obligations to the extent the issuer has determined that such information is material with respect to a voting or investment decision regarding the securities of such issuer. (B) Applicability Subparagraph (A) shall not apply with respect to the removal of any disclosure requirement with respect to an issuer. (C) Rule of construction For the purposes of this paragraph, information is considered material with respect to a voting or investment decision regarding the securities of an issuer if there is a substantial likelihood that a reasonable investor would view the failure to disclose that information as having significantly altered the total mix of information made available to the investor. . II SEC justification of non-material disclosure mandates 201. SEC justification of non-material disclosure mandates Section 23 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78w ) is amended by adding at the end the following: (e) Non-material disclosure mandates (1) Disclosure The Commission shall maintain a list on the website of the Commission that contains— (A) each mandate under the Federal securities laws and regulations that requires the disclosure of non-material information; and (B) for each such disclosure mandate, an explanation of why the mandate is required. (2) Study and report The Commission shall, every 5 years, issue a report to the Congress justifying each disclosure contained on the list required under paragraph (1). (3) No private liability for failing to make a non-material disclosure A person who fails to disclose non-material information required to be disclosed under the Federal securities laws or regulations shall not be liable for such failure in any private action. . III Public Company Advisory Committee 301. Public Company Advisory Committee The Securities Exchange Act of 1934 is amended by inserting after section 40 ( 15 U.S.C. 78qq ) the following: 40A. Public Company Advisory Committee (a) Establishment and purpose (1) Establishment There is established within the Commission the Public Company Advisory Committee (referred to in this section as the ‘Committee’). (2) Purpose The Committee shall— (A) provide the Commission with advice on its rules, regulations, and policies with regard to its mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, as they relate to— (i) existing and emerging regulatory priorities of the Commission; (ii) issues relating to the public reporting and corporate governance of public companies; (iii) issues relating to the proxy process for shareholder meetings held by public companies; (iv) issues relating to trading in the securities of public companies; and (v) issues relating to capital formation; and (B) submit to the Commission such findings and recommendations as the Committee determines are appropriate, including recommendations for proposed regulatory and legislative changes. (b) Membership (1) In general The membership of the Committee shall be not fewer than 10, and not more than 20, members appointed by the Commission from among individuals who— (A) are officers, directors, or senior officials of public companies registered with the Commission under the Securities Act or 1933 and this Act, except for those public companies that own asset management, fixed income, investment advisory, broker-dealer, or proxy services businesses; (B) are executives or other individuals with senior managerial responsibility in business, professional, trade, and industry associations that represent the interests of such public companies; or (C) are professional advisers and service providers to such public companies (including attorneys, accountants, investment bankers, and financial advisers). (2) Qualifications At least 50 percent of the Committee membership shall be drawn from individuals who would qualify for membership under paragraph (1)(A). (3) Term (A) In general Each member of the Committee appointed under paragraph (1) shall serve for a term of 4 years. (B) Vacancies Vacancies among the members, whether caused by the resignation, death, removal, expiration of a term, or otherwise, will be filled consistent with the Commission’s procedures then in effect. (C) Staggered terms The members of the Committee shall serve staggered terms, with one-third of the initial members of the Committee each serving for 1, 2, or 3 years. (4) Members not on other advisory committees Public companies and other organizations that are currently represented on any other Commission Advisory Committee are not eligible to have representatives also serve on the Public Company Advisory Committee. (5) Members not Commission employees Members appointed under paragraph (1) shall not be considered to be employees or agents of the Commission solely because of membership on the Committee. (c) Chair; Vice Chair; Secretary; Assistant Secretary (1) In general The members of the Committee shall elect, from among the members of the Committee— (A) a Chair; (B) a Vice Chair; (C) a Secretary; and (D) an Assistant Secretary. (2) Term Each member elected under paragraph (1) shall serve for a term of two years in the capacity the member was elected under paragraph (1). (3) Subcommittees The Chair may create subcommittees that hold public or non-public meetings and provide recommendations to the full Committee. (d) Meetings (1) Frequency of meetings The Committee shall meet— (A) not less frequently than twice annually, at the call of the Chair of the Committee; and (B) from time to time, at the call of the Commission. (2) Notice The Chair of the Committee shall give the members of the Committee written notice of each meeting, not later than two weeks before the date of the meeting. (e) Compensation and travel expenses Each member of the Committee who is not a full-time employee of the United States shall— (1) be entitled to receive compensation at a rate not to exceed the daily equivalent of the annual rate of basic pay in effect for a position at level V of the Executive Schedule under section 5316 of title 5, United States Code, for each day during which the members is engaged in the actual performance of the duties of the Committee; and (2) while away from the home or regular place of business of the member in the performance of services for the Committee, be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703(b) of title 5, United States Code. (f) Staff The Commission shall make available to the Committee such staff as the Chair of the Committee determines are necessary to carry out this section. (g) Review by Commission The Commission shall— (1) review the findings and recommendations of the Committee; and (2) each time the Committee submits a finding or recommendation to the Commission, promptly issue a public statement— (A) assessing the finding or recommendation of the Committee; and (B) disclosing the action, if any, the Commission intends to take with respect to the finding or recommendation. (h) Committee findings Nothing in this section shall require the Commission to agree to or act upon any finding or recommendation of the Committee. (i) Nonapplicability of FACA Chapter 10 of part I of title 5, United States Code, shall not apply to the Committee and its activities. . IV Protecting U.S. Business Sovereignty 401. Study on detrimental impact of the Directive on Corporate Sustainability Due Diligence and Corporate Sustainability Reporting Directive (a) Study The Securities and Exchange Commission shall conduct a study to examine and evaluate— (1) the detrimental impact and potential detrimental impact of each of the Directives on— (A) United States companies, consumers, and investors; and (B) the economy of the United States; (2) the extent to which each of the Directives aligns with international conventions and declarations on human rights and environmental obligations; and (3) the legal basis for the extraterritorial reach of each of the Directives. (b) Report Not later than 1 year after the date of the enactment of this Act, the Securities and Exchange Commission shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, the Secretary of State, the Secretary of Commerce, and the United States Trade Representative a report that includes— (1) the results of the study conducted under this section; and (2) recommendations for policymakers and relevant stakeholders on potential mitigating measures, alternative approaches, or modifications to each of the Directives that would address any concerns identified in the study. (c) Access to information The Securities and Exchange Commission may request from private entities such relevant data and information as the Securities and Exchange Commission determines necessary to carry out the study required under this section and such private entities shall provide such requested data and information to the Securities and Exchange Commission. (d) Directives defined In this section the term Directives means— (1) the proposed directive entitled Corporate Sustainability Due Diligence adopted by the European Commission on February 23, 2022; and (2) the Corporate Sustainability Reporting Directive of the European Commission effective January 5, 2023.

December 22, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed