Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2014 - Amends the Securities Exchange Act of 1934 to exempt from its registration requirements certain merger and acquisition (M&A) brokers and associated persons.
Denies such registration exemption, however, to brokers who: (1) receive, hold, transmit, or have custody of any funds or securities to be exchanged by parties to a transfer of ownership of an eligible privately held company; or (2) engage on behalf of an issuer in a public offering of securities that are either subject to mandatory registration, or with respect to which the issuer must file periodic information, documents, and reports.
Prohibits the construction of this Act to limit any other authority of the Securities and Exchange Commission (SEC) to exempt any person, or any class of persons, from any provision of this Act, including any related rule or regulation.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1923 Introduced in Senate (IS)]
113th CONGRESS
2d Session
S. 1923
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 SENATE OF THE UNITED STATES
January 14, 2014
Mr. Manchin (for himself and Mr. Vitter) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives 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 2014''.
SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION 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 exempt 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 following:
``(i) Directly or indirectly, in connection
with the transfer of ownership of an eligible
privately held company, receives, holds,
transmits, or has custody of the funds 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 registered,
with the Commission under section 12 or with
respect to which the issuer files, or is
required to file, periodic information,
documents, and reports under subsection (d).
``(C) 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 provision of this title,
or from any provision of any rule or regulation
thereunder.
``(D) Definitions.--In this paragraph:
``(i) Control.--The term `control' means
the power, directly or indirectly, to direct
the management or policies of a company,
whether through ownership of securities, by
contract, or otherwise. There is a presumption
of control for any person who--
``(I) is a director, general
partner, member or manager of a limited
liability company, or officer
exercising executive responsibility (or
has similar status or functions);
``(II) has the right to vote 20
percent or more of a class of voting
securities or the power to sell or
direct the sale of 20 percent or more
of a class of voting securities; or
``(III) in the case of a
partnership or limited liability
company, has the right to receive upon
dissolution, or has contributed, 20
percent or more of the capital.
``(ii) Eligible privately held company.--
The term `eligible privately held company'
means a company that meets both of the
following conditions:
``(I) The company does not have any
class of securities registered, or
required to be registered, with the
Commission under section 12 or with
respect to which the company files, or
is required to file, periodic
information, documents, and reports
under subsection (d).
``(II) In the fiscal year ending
immediately 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
accounting records of the company):
``(aa) The earnings of the
company before interest, taxes,
depreciation, and amortization
are less than $25,000,000.
``(bb) The gross revenues
of the company are less than
$250,000,000.
``(iii) M&A broker.--The term `M&A broker'
means a broker, and any person associated with
a broker, engaged in the business of effecting
securities transactions solely in connection
with the transfer of ownership of an eligible
privately held company, regardless of whether
the broker acts on behalf of a seller or buyer,
through the purchase, sale, exchange, issuance,
repurchase, or redemption of, or a business
combination involving, securities or assets of
the eligible privately held company, if the
broker reasonably believes that--
``(I) upon consummation of the
transaction, any person acquiring
securities or assets of the eligible
privately held company, acting alone or
in concert, will control and, directly
or indirectly, will be active in the
management of the eligible privately
held company or the business conducted
with the assets of the eligible
privately held company; and
``(II) if any person is offered
securities in exchange for securities
or assets of the eligible privately
held company, such person will, prior
to becoming legally bound to consummate
the transaction, receive or have
reasonable access to the most recent
year-end balance sheet, income
statement, statement of changes in
financial position, and statement of
owner's equity of the issuer of the
securities offered in exchange, and, if
the financial statements of the issuer
are audited, the related report of the
independent auditor, 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.
``(E) Inflation adjustment.--
``(i) In general.--On the date that is 5
years after the date of the enactment of the
Small Business Mergers, Acquisitions, Sales,
and Brokerage Simplification Act of 2014, and
every 5 years thereafter, each dollar amount in
subparagraph (D)(ii)(II) shall be adjusted by--
``(I) dividing the annual value of
the Employment Cost Index For Wages and
Salaries, Private Industry Workers (or
any successor index), as published by
the Bureau of Labor Statistics, for the
calendar year preceding the calendar
year in which the adjustment is being
made by the annual value of such index
(or successor) for the calendar year
ending December 31, 2012; and
``(II) multiplying such dollar
amount by the quotient obtained under
subclause (I).
``(ii) Rounding.--Each dollar amount
determined under clause (i) shall be rounded 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.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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