,,ii #aagth ,,congress #ast ,session ,s4 #ccia ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #ad1 #bjba,mr4 ,kennedy introduced the following bill2 which was read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,a ,,bill ,to amend the ,securities ,exchange ,act of #aicd to establish a registration exemption for merger and acquisition brokers1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,mergers1 ,acquisitions1 ,sales1 and ,brokerage ,simplification ,act of #bjba4 #b4 ,registration exemption for merger and acquisition brokers 7a7 ,in general ,section #ae7;b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b77 is amended by adding at the end the following3 7#ac7 ,registration exemption for merger and acquisition brokers 7,a7 ,definitions ,in this paragraph3 7i7 ,business combination related shell company ,the term business combination related shell company means a shell company that is formed by an entity that is not a shell company solely for the purpose of-- 7,i7 changing the corporate domicile of that entity solely within the ,united ,states2 or 7,,ii7 completing a business combination transaction 7as defined in section #bcj4afe7;f7 of title #ag1 ,code of ,federal ,regulations1 or any successor regulation7 among not less than #a entity other than the company itself1 none of which is a shell company4 7ii7 ,control 7,i7 ,in general ,the term control means the power1 directly or indirectly1 to direct the management or policies of a company1 whether through ownership of securities1 by contract1 or otherwise4 7,,ii7 ,presumption ,for the purposes of subclause 7,i71 there shall be a presumption of control if1 upon completion of a transaction1 a buyer or group of buyers-- 7aa7 has the right to vote #be percent or more of a class of voting securities or the power to sell or direct the sale of #be percent or more of a class of voting securities2 or 7bb7 in the case of a partnership or limited liability company1 has the right to receive upon dissolution1 or has contributed1 #be percent or more of the capital4 7iii7 ,eligible privately held company ,the term eligible privately held company means a privately held company that meets both of the following conditions3 7,i7 ,the company does not have any class of securities-- 7aa7 registered1 or required to be registered1 with the ,commission under section #ab2 or 7bb7 with respect to which the company files1 or is required to file1 periodic information1 documents1 and reports under subsection 7d74 7,,ii7 7aa7 ,in the fiscal year ending immediately before the fiscal year in which the services of an ,m,a broker are initially engaged with respect to a securities transaction1 the company meets either of the following conditions 7determined in accordance with the historical financial accounting records of the company73 7,,aa7 ,the earnings of the company before interest1 taxes1 depreciation1 and amortization are less than #be1jjj1jjj4 7,,bb7 ,the gross revenues of the company are less than #bej1jjj1jjj4 7bb7 ,for purposes of this subclause1 the ,commission may1 by rule1 modify the dollar figures in subitem 7,,aa7 or 7,,bb7 of item 7aa7 if the ,commission determines that such a modification is necessary or appropriate in the public interest or for the protection of investors4 7iv7 ,m,a broker ,the term ,m,a broker means a broker1 and any person associated with a broker1 engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company1 regardless of whether the broker acts on behalf of a seller or buyer1 through the purchase1 sale1 exchange1 issuance1 repurchase1 or redemption of1 or a business combination involving1 securities or assets of the eligible privately held company1 if the broker reasonably believes that-- 7,i7 upon consummation of the transaction1 any person acquiring securities or assets of the eligible privately held company1 acting alone or in concert-- 7aa7 will control the eligible privately held company or the business conducted with the assets of the eligible privately held company2 and 7bb7 directly or indirectly1 will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company1 including without limitation1 by-- 7,,aa7 electing executive officers2 7,,bb7 approving the annual budget2 7,,cc7 serving as an executive or other executive manager2 or 7,,dd7 carrying out such other activities as the ,commission may1 by rule1 determine to be in the public interest2 and 7,,ii7 if any person is offered securities in exchange for securities or assets of the eligible privately held company1 that person will1 before becoming legally bound to consummate the transaction1 receive or have reasonable access to-- 7aa7 the most recent fiscal year-end financial statements of the issuer of the securities1 as customarily prepared by the management of the issuer in the normal course of operations2 and 7bb7 if the financial statements of the issuer are audited1 reviewed1 or compiled-- 7,,aa7 any related statement by the independent accountant2 7,,bb7 a balance sheet dated not more than #abj days before the date of the offer2 and 7,,cc7 information pertaining to the management1 business1 results of operations for the period covered by the foregoing financial statements and material loss contingencies of the issuer4 7v7 ,shell company ,the term shell company means a company that1 as of the date of a transaction with an eligible privately held company-- 7,i7 has no or nominal operations2 and 7,,ii7 has-- 7aa7 no or nominal assets2 7bb7 assets consisting solely of cash and cash equivalents2 or 7cc7 assets consisting of any amount of cash and cash equivalents and nominal other assets4 7,b7 ,exemption ,except as provided in subparagraph 7,c71 an ,m,a broker shall be exempt from registration under this section4 7,c7 ,excluded activities ,an ,m,a broker is not exempt from registration under this paragraph if the ,m,a broker does any of the following3 7i7 ,directly or indirectly1 in connection with the transfer of ownership of an eligible privately held company1 receives1 holds1 transmits1 or has custody of the funds or securities to be exchanged by the parties to the transaction4 7ii7 ,engages on behalf of an issuer in a public offering of any class of securities-- 7,i7 that is registered1 or is required to be registered1 with the ,commission under section #ab2 or 7,,ii7 with respect to which the issuer files1 or is required to file1 period information1 documents1 and reports under subsection 7d74 7iii7 ,engages on behalf of any party in a transaction involving a shell company1 other than a business combination related shell company4 7iv7 ,directly1 or indirectly through any of its affiliates1 provides financing relating to the transfer of ownership of an eligible privately held company4 7v7 ,assists any party to obtain financing from an unaffiliated third party without-- 7,i7 complying with all other applicable laws in connection with such assistance1 including1 if applicable1 part #bbj of title #ab1 ,code of ,federal ,regulations1 or any successor regulations2 and 7,,ii7 disclosing any compensation in writing to the party4 7vi7 ,represents both the buyer and the seller in the same transaction without-- 7,i7 providing clear written disclosure with respect to the parties the broker represents2 and 7,,ii7 obtaining written consent from both parties to the joint representation4 7vii7 ,facilitates a transaction with a group of buyers formed with the assistance of the ,m,a broker to acquire the eligible privately held company4 7viii7 ,engages in a transaction involving the transfer of ownership of an eligible privately held company to a passive buyer or group of passive buyers4 7ix7 ,binds a party to a transfer of ownership of an eligible privately held company4 7,d7 ,disqualification ,an ,m,a broker is not exempt from registration under this paragraph if the ,m,a broker 7and1 as applicable1 any officer1 director1 member1 manager1 partner1 or employee of the ,m,a broker7-- 7i7 has been barred from association with a broker or dealer by the ,commission1 any ,state1 or any self-regulatory organization2 or 7ii7 is suspended from association with a broker or dealer4 7,e7 ,rule of construction ,nothing in this paragraph may be construed to limit any other authority of the ,commission to exempt any person1 or any class of persons1 from any provision of this title1 or from any provision of any rule or regulation thereunder4 7,f7 ,inflation adjustment 7i7 ,in general ,on the date that is #e years after the date of enactment of this paragraph1 and every #e years thereafter1 each dollar amount in subparagraph 7,a77iii77,,ii77aa7 shall be adjusted by-- 7,i7 dividing the annual value of the ,employment ,cost ,index ,for ,wages and ,salaries1 ,private ,industry ,workers 7or any successor index71 as published by the ,bureau of ,labor ,statistics1 for the calendar year preceding the calendar year in which the adjustment is being made by the annual value of such index 7or successor7 for the calendar year ending ,december #ca1 #bjbj2 and 7,,ii7 multiplying such dollar amount by the quotient obtained under subclause 7,i74 7ii7 ,rounding ,each dollar amount determined under clause 7i7 shall be rounded to the nearest multiple of #ajj1jjj4 4 7b7 ,effective date ,the amendments made by subsection 7a7 shall take effect on the date that is #ij days after the date of enactment of this ,act4