2019 ESOP Fairness Act

2019 ESOP Fairness Act

This bill allows certain over-the-counter securities to be treated as publicly traded employer securities for purposes of the diversification requirements for employee stock ownership plans (ESOPs).

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5851 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 5851

 To amend the Internal Revenue Code of 1986 to allow certain qualified 
   over-the-counter securities to be treated as readily traded on an 
   established securities market for the purpose of diversification 
            requirements for employee stock ownership plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 11, 2020

  Mr. Higgins of New York (for himself and Mr. Kelly of Pennsylvania) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow certain qualified 
   over-the-counter securities to be treated as readily traded on an 
   established securities market for the purpose of diversification 
            requirements for employee stock ownership plans.

    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 ``2019 ESOP Fairness Act''.

SEC. 2. CERTAIN SECURITIES TREATED AS PUBLICLY TRADED.

    (a) In General.--Paragraph (35) of section 401(a) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(I) Rules relating to publicly traded 
                securities.--For purposes of this paragraph--
                            ``(i) In general.--The term `publicly 
                        traded employer securities' means employer 
                        securities which are readily tradable on an 
                        established securities market.
                            ``(ii) Special rule.--A security shall be 
                        treated as described in clause (i) if the 
                        security--
                                    ``(I) is the subject of priced 
                                quotations by at least 2 dealers, 
                                published and made continuously 
                                available on an interdealer quotation 
                                system (as such term is used in section 
                                13 of the Securities Exchange Act of 
                                1934) which has made the request 
                                described in section 6(j) of such Act 
                                to be treated as an alternative trading 
                                system,
                                    ``(II) is not a penny stock (as 
                                defined by section 3(a)(51) of such 
                                Act),
                                    ``(III) is issued by a company 
                                which is not a shell company (as such 
                                term is used in section 4(d)(6) of the 
                                Securities Act of 1933) or a blank 
                                check company (as defined in section 
                                7(b)(3) of such Act), and is not 
                                subject to bankruptcy proceedings,
                                    ``(IV) in the case of a security 
                                issued by a company incorporated in the 
                                United States, the issuer publishes, 
                                not less frequently than annually, 
                                financial statements audited by an 
                                independent auditor registered with the 
                                Public Company Accounting Oversight 
                                Board established under the Sarbanes-
                                Oxley Act of 2002, and
                                    ``(V) in the case of a security 
                                issued by a company incorporated 
                                outside of the United States, the 
                                issuer--
                                            ``(aa) is subject to the 
                                        reporting requirements of 
                                        sections 13 or 15(d) of the 
                                        Securities Exchange Act of 1934 
                                        (15 U.S.C. 78m or 78o(d)),
                                            ``(bb) is subject to the 
                                        reporting requirements of 
                                        section 230.257 of title 17, 
                                        Code of Federal Regulations, or
                                            ``(cc) is exempt from such 
                                        requirements under section 
                                        240.12g3-2(b) of title 17, Code 
                                        of Federal Regulations, and
                                has published all information which is 
                                required by such Act or Rule, as 
                                applicable, to be publicly 
                                available.''.
    (b) Conforming Amendment.--Subparagraph (G) of section 401(a)(35) 
of the Internal Revenue Code of 1986 is amended by striking clause (v) 
and by redesignating clause (vi) as clause (v).
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after the date of the enactment of this 
Act.
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