I 118th CONGRESS 2d Session H. R. 7757 IN THE HOUSE OF REPRESENTATIVES March 20, 2024 Mr. Sherman (for himself and Mrs. Spartz ) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Securities Exchange Act of 1934 to require disclosures with respect to certain financial risks relating to the People’s Republic of China, and for other purposes.

1. Short title This Act may be cited as the China Risk Reporting Act . 2. Disclosure with respect to certain financial risks relating to the People’s Republic of China (a) Sense of Congress It is the sense of Congress that investing in China poses unique risks that investors should carefully consider. (b) Annual disclosures Section 13 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m ) is amended by adding at the end the following: (t) Disclosure with respect to certain financial risks relating to the People’s Republic of China (1) In general Each issuer required to file an annual report under subsection (a) shall include in such report— (A) with respect to each covered foreign market, a description (including quantification, if possible) of— (i) the degree to which each supply chain of such issuer relies upon or is exposed to the covered foreign market; and (ii) the operations of such issuer in the covered foreign market; (B) a narrative description of the issuer’s China risk; and (C) if the issuer identifies a material China risk, a narrative description with respect to each China risk identified by the issuer of— (i) the actions the issuer has taken or will take to minimize that China risk; and (ii) the additional actions the issuer may take to minimize that China risk if a covered event occurs. (2) Rule of construction Nothing in this subsection shall be construed to require an issuer to— (A) disclose the assessment of such issuer as to the likelihood that a covered event or any China risk will occur; or (B) provide any third-party assessment of such likelihood. (3) Definitions In this subsection: (A) China risk The term China risk means an issuer’s exposure to material financial consequences caused by the Chinese Communist Party, the Government of the People’s Republic of China, or firms or other entities operating in the People’s Republic of China stemming from reasonably likely, imminent, or ongoing factors, including— (i) consequences for the operations of the issuer— (I) in a covered foreign market; and (II) caused by disruptions to supply chains, including supply chains for— (aa) goods or services originating in a covered foreign market; and (bb) goods transported through or over the East China Sea or South China Sea; (ii) devaluation, seizure, expropriation, denial of access, or nationalization of assets, including intellectual property, of the issuer in a covered foreign market; (iii) imperfect rule of law, unequal or imperfect enforcement of intellectual property rights, or biased judicial proceedings; (iv) with respect to any equity investments the issuer has within a covered foreign market, impediments to exercising full voting rights of American or non-Chinese shareholders or any firm in which the issuer has an equity investment taking actions against the interests of the firm’s shareholders in favor of the interests of the Chinese Communist Party or the Government of the People’s Republic of China; and (v) other material financial impact on the operations of the issuer caused by the Chinese Communist Party, the Government of the People’s Republic of China, or firms or other entities operating in the People’s Republic of China. (B) Covered event The term covered event — (i) means a significant disruption to the economic relations between the United States and the People’s Republic of China, including— (I) a partial or full trade embargo of the People’s Republic of China by the United States (or vice versa); (II) trade or financial sanctions imposed on the People’s Republic of China by the United States (or vice versa); and (III) the United States revoking permanent normal trade relations with the People’s Republic of China (or vice versa); and (ii) includes disruptions resulting from PRC military action against Taiwan. (C) Covered foreign market The term covered foreign market means mainland China, the Hong Kong special administrative region, the Macau special administrative region, Taiwan, Japan, Mongolia, the Democratic People’s Republic of Korea, and the Republic of Korea. (D) Mainland China The term mainland China means the People’s Republic of China, excluding the Hong Kong special administrative region and the Macau special administrative region. (E) Operations The term operations may include, with respect to an issuer required to file an annual report under subsection (a), the assets, personnel, sales and revenue, liabilities, technology, intellectual property, and other notable ties or activities of such issuer. (F) PRC military action against Taiwan The term PRC military action against Taiwan — (i) means a campaign of armed aggression by the People’s Republic of China against the Government of Taiwan (or the territories under its control); and (ii) includes— (I) a firepower strike campaign; (II) an island landing campaign; and (III) a full or partial blockade (by sea or air). . (c) Disclosure at time of registration Section 12(b) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78l(b) ) is amended by adding at the end the following: (4) The information described under section 13(t)(1). . (d) Effective date The amendments made by this section shall take effect on the date that is 180 days after the date of the enactment of this section.