Us Congress 2023-2024 Regular Session

Us Congress House Bill HB499 Compare Versions

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11 I
22 118THCONGRESS
33 1
44 STSESSION H. R. 499
55 To amend the Securities Exchange Act of 1934 to require certain additional
66 annual disclosures by public companies and exchange-traded funds invest-
77 ing in companies with ties to the People’s Republic of China, and for
88 other purposes.
99 IN THE HOUSE OF REPRESENTATIVES
1010 JANUARY25, 2023
1111 Mr. F
1212 ALLON(for himself, Mr. ELLZEY, Mr. JACKSONof Texas, and Mr.
1313 A
1414 MODEI) introduced the following bill; which was referred to the Com-
1515 mittee on Financial Services
1616 A BILL
1717 To amend the Securities Exchange Act of 1934 to require
1818 certain additional annual disclosures by public companies
1919 and exchange-traded funds investing in companies with
2020 ties to the People’s Republic of China, and for other
2121 purposes.
2222 Be it enacted by the Senate and House of Representa-1
2323 tives of the United States of America in Congress assembled, 2
2424 SECTION 1. SHORT TITLE. 3
2525 This Act may be cited as the ‘‘Securing American 4
2626 Families and Enterprises from People’s Republic of China 5
2727 Investments Act’’ or the ‘‘SAFE from PRC Investments 6
2828 Act’’. 7
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3131 •HR 499 IH
3232 SEC. 2. ADDITIONAL DISCLOSURES TO PROTECT AMERICAN 1
3333 INVESTORS AND BUSINESSES. 2
3434 Section 13 of the Securities Exchange Act of 1934 3
3535 (15 U.S.C. 78m) is amended by adding at the end the 4
3636 following: 5
3737 ‘‘(s) A
3838 DDITIONALDISCLOSURESTOPROTECTAMER-6
3939 ICANINVESTORS ANDBUSINESSES.— 7
4040 ‘‘(1) I
4141 N GENERAL.—Each covered issuer that is 8
4242 required to file an annual report under section 13(a) 9
4343 or 15(d) shall disclose in that report the following: 10
4444 ‘‘(A) Whether a senior official of the 11
4545 national- or provincial-level governments of the 12
4646 People’s Republic of China (‘PRC’) sits on the 13
4747 board of directors of the issuer or any sub-14
4848 sidiary of the issuer. 15
4949 ‘‘(B) Whether executive-level employees, 16
5050 senior directors, and board members of the 17
5151 issuer are members of the Communist Party of 18
5252 China. 19
5353 ‘‘(C) Whether executive-level employees, 20
5454 senior directors, and board members of the 21
5555 issuer have immediate family members that are 22
5656 senior officials of the Communist Party of 23
5757 China or the Government of the People’s Re-24
5858 public of China. 25
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6161 •HR 499 IH
6262 ‘‘(D) Whether the issuer has a party 1
6363 branch or committee as part of the issuer’s cor-2
6464 porate structure. 3
6565 ‘‘(E) With respect to the operations of the 4
6666 issuer located in the PRC— 5
6767 ‘‘(i) the amount of cash held; 6
6868 ‘‘(ii) any limits imposed by the Com-7
6969 munist Party of China or the Government 8
7070 of the People’s Republic of China on the 9
7171 ability to take such cash out of the coun-10
7272 try; and 11
7373 ‘‘(iii) disclosure of investments, assets 12
7474 and liabilities, technology licensed or trans-13
7575 ferred, and financing or debt obligations 14
7676 involving PRC operations or from a PRC 15
7777 entity. 16
7878 ‘‘(F) The number of times executive-level 17
7979 employees of the issuer interact with senior offi-18
8080 cials of the Communist Party of China and the 19
8181 costs of those meetings and any transfer of 20
8282 goods, money, or services between issuer’s em-21
8383 ployees. 22
8484 ‘‘(G) The amount the issuer has expended 23
8585 on operations in the People’s Republic of China, 24
8686 both in total and for the prior fiscal year. 25
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8989 •HR 499 IH
9090 ‘‘(H) The amount the issuer has expended 1
9191 on operations in the United States, both in 2
9292 total and for the prior fiscal year. 3
9393 ‘‘(I) The amount (both in total and for the 4
9494 prior fiscal year) that the issuer has spent on 5
9595 lobbying in the United States, including— 6
9696 ‘‘(i) whether the issuer or any sub-7
9797 sidiary of the issuer has reported any sums 8
9898 under the Foreign Agents Registration Act 9
9999 of 1938; and 10
100100 ‘‘(ii) whether the issuer or any sub-11
101101 sidiary of the issuer has reported any sums 12
102102 under the Lobbying Disclosure Act of 13
103103 1995. 14
104104 ‘‘(J) Whether the Public Company Ac-15
105105 counting Oversight Board is unable to inspect 16
106106 or investigate a registered public accounting 17
107107 firm retained by the issuer to prepare an audit 18
108108 report on the financial statement of the issuer. 19
109109 ‘‘(K) The amount of taxes and other fees 20
110110 the issuer paid to the Government of the Peo-21
111111 ple’s Republic of China on an annual basis. 22
112112 ‘‘(L) With respect to customer data— 23
113113 ‘‘(i) who has access to such data; 24
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116116 •HR 499 IH
117117 ‘‘(ii) disclosure of instances when in-1
118118 formation is requested, arrangements that 2
119119 may allow passive or continuous access, ef-3
120120 forts to protect such data, instances of 4
121121 cyber-attack, corporate or personnel dis-5
122122 putes that involve potential breaches, and 6
123123 notification of other breaches; and 7
124124 ‘‘(iii) whether such data is stored in 8
125125 the United States and, if not, the country 9
126126 or territory in which such data is stored. 10
127127 ‘‘(M) For each subsidiary of the issuer lo-11
128128 cated in the PRC, the information described 12
129129 under subparagraphs (A) through (L) with re-13
130130 spect to such subsidiary. 14
131131 ‘‘(N) If the issuer or any subsidiary of the 15
132132 issuer located in the PRC produces goods or 16
133133 services that are part of a military-civil fusion 17
134134 strategy, whether the issuer has consulted with 18
135135 the People’s Liberation Army or the Ministry of 19
136136 State Security with regard to industrial policy. 20
137137 ‘‘(2) D
138138 EFINITIONS.—In this subsection: 21
139139 ‘‘(A) C
140140 OMMUNIST PARTY OF CHINA .—The 22
141141 term ‘Communist Party of China’ means the 23
142142 ruling party of the People’s Republic of China, 24
143143 including— 25
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146146 •HR 499 IH
147147 ‘‘(i) party bodies at the national and 1
148148 sub-national level; and 2
149149 ‘‘(ii) any agency or instrumentality of 3
150150 the Communist Party of China. 4
151151 ‘‘(B) C
152152 OVERED ISSUER.—The term ‘cov-5
153153 ered issuer’ means an issuer— 6
154154 ‘‘(i) that is— 7
155155 ‘‘(I) headquartered in the PRC 8
156156 (including the Hong Kong and Macau 9
157157 Special Administrative Regions); 10
158158 ‘‘(II) a branch or subsidiary of 11
159159 an issuer headquartered in the PRC; 12
160160 or 13
161161 ‘‘(III) a variable interest entity 14
162162 or other type of firm structured 15
163163 through a series of contracts or over-16
164164 lapping personnel— 17
165165 ‘‘(aa) that are tied to core 18
166166 operations in the PRC; or 19
167167 ‘‘(bb) controlled and owned 20
168168 by an issuer headquartered in the 21
169169 PRC; or 22
170170 ‘‘(ii) that— 23
171171 ‘‘(I) is domiciled in a tax haven 24
172172 jurisdiction or self-governing terri-25
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175175 •HR 499 IH
176176 tories, including the Cayman Islands, 1
177177 British Virgin Islands, Bermuda, the 2
178178 Netherlands, Switzerland, Luxem-3
179179 bourg, Singapore, the United Arab 4
180180 Emirates, the Bahamas, Cyprus, or 5
181181 Mauritius; and 6
182182 ‘‘(II) has the majority of the 7
183183 issuer’s business operations taking 8
184184 place or the majority of the issuer’s 9
185185 revenue generated in mainland China. 10
186186 ‘‘(C) G
187187 OVERNMENT OF THE PEOPLE ’SRE-11
188188 PUBLIC OF CHINA.—The term ‘Government of 12
189189 the People’s Republic of China’ means any of 13
190190 the following: 14
191191 ‘‘(i) Any national or sub-national gov-15
192192 ernmental unit of the People’s Republic of 16
193193 China. 17
194194 ‘‘(ii) Any national or sub-national leg-18
195195 islature of the People’s Republic of China. 19
196196 ‘‘(iii) Any national or sub-national 20
197197 People’s Political Consultative Conference 21
198198 of the People’s Republic of China. 22
199199 ‘‘(iv) Any national or sub-national ju-23
200200 dicial or prosecutorial body of the People’s 24
201201 Republic of China. 25
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204204 •HR 499 IH
205205 ‘‘(v) Any national or sub-national su-1
206206 pervision commission of the People’s Re-2
207207 public of China. 3
208208 ‘‘(vi) Any agency or instrumentality of 4
209209 the People’s Republic of China. 5
210210 ‘‘(D) I
211211 MMEDIATE FAMILY MEMBER .—The 6
212212 term ‘immediate family member’ shall include a 7
213213 spouse, domestic partner, mother, father, aunt, 8
214214 uncle, sibling, or child. 9
215215 ‘‘(E) M
216216 ILITARY-CIVIL FUSION STRAT -10
217217 EGY.—The term ‘military-civil fusion strategy’ 11
218218 means the strategy of the Communist Party of 12
219219 China aiming to mobilize non-military resources 13
220220 and expertise for military application, includ-14
221221 ing— 15
222222 ‘‘(i) the development of technology, 16
223223 improvements in logistics, and other uses 17
224224 by the People’s Liberation Army; and 18
225225 ‘‘(ii) firms which develop and acquire 19
226226 advanced dual-use technology for military 20
227227 purposes. 21
228228 ‘‘(F) PRC.—The term ‘PRC’ means the 22
229229 People’s Republic of China. 23
230230 ‘‘(G) S
231231 ENIOR OFFICIAL.—The term ‘senior 24
232232 official’, when used in connection with the Gov-25
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235235 •HR 499 IH
236236 ernment of the People’s Republic of China or 1
237237 the Communist Party of China, means— 2
238238 ‘‘(i) an official with the rank of a dep-3
239239 uty at the provincial or ministerial level 4
240240 (shengbu ji fu zhi) or higher; or 5
241241 ‘‘(ii) a chief at the bureau level (tingju 6
242242 ji zheng zhi) or higher. 7
243243 ‘‘(H) V
244244 ARIABLE INTEREST ENTITY .—The 8
245245 term ‘variable interest entity’ means an entity 9
246246 where an investor has a controlling interest that 10
247247 is not based on holding the majority of voting 11
248248 rights.’’. 12
249249 SEC. 3. DISCLOSURES BY EXCHANGE TRADED FUNDS IN-13
250250 VESTING IN CHINESE COMPANIES. 14
251251 Section 13 of the Securities Exchange Act of 1934 15
252252 (15 U.S.C. 78m), as amended by section 2, is further 16
253253 amended by adding at the end the following: 17
254254 ‘‘(t) D
255255 ISCLOSURES BYEXCHANGETRADEDFUNDS 18
256256 I
257257 NVESTING INCHINESECOMPANIES.— 19
258258 ‘‘(1) I
259259 N GENERAL.—Each exchange traded fund 20
260260 required to file an annual report under section 13(a) 21
261261 or 15(d) shall, if the fund invested in the securities 22
262262 of any PRC company during the reporting period, 23
263263 include in such report the following, with respect to 24
264264 each such PRC company: 25
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267267 •HR 499 IH
268268 ‘‘(A) Who owns the company, including 1
269269 whether the company is owned by the Govern-2
270270 ment of the People’s Republic of China or a 3
271271 PRC state-controlled entity. 4
272272 ‘‘(B) Whether the company operates a 5
273273 Communist Party of China branch or com-6
274274 mittee within the company’s corporate struc-7
275275 ture. 8
276276 ‘‘(C) Whether the company has any con-9
277277 tractual agreements with the Government of the 10
278278 People’s Republic of China or the Communist 11
279279 Party of China or any agency or instrumen-12
280280 tality of either. 13
281281 ‘‘(D) Whether the company has partici-14
282282 pated in the PRC’s industrial policies or has 15
283283 military or public security contracts. 16
284284 ‘‘(E) Whether any funding, direction, or 17
285285 other forms of control over the company are ex-18
286286 ercised by the Government of the People’s Re-19
287287 public of China or the Communist Party of 20
288288 China. 21
289289 ‘‘(F) Whether executive-level employees 22
290290 and board members of the company have imme-23
291291 diate family members who are senior officials of 24
292292 the Communist Party of China or the Govern-25
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295295 •HR 499 IH
296296 ment of the People’s Republic of China or are 1
297297 themselves senior officials of the Communist 2
298298 Party of China or the Government of the Peo-3
299299 ple’s Republic of China. 4
300300 ‘‘(G) Whether the company is part of (in-5
301301 cluding by reason of being a branch or sub-6
302302 sidiary) or tied to (through a series of contracts 7
303303 or parallel corporate incorporations) firms or 8
304304 individuals sanctioned, restricted, or identified 9
305305 as tied to the People’s Liberation Army by the 10
306306 United States Government, including under— 11
307307 ‘‘(i) the Military End User List main-12
308308 tained by the Bureau of Industry and Se-13
309309 curity of the Department of Commerce; 14
310310 ‘‘(ii) the Non-SDN Chinese Military- 15
311311 Industrial Complex Companies List; 16
312312 ‘‘(iii) the Unverified List maintained 17
313313 by the Secretary of Commerce; 18
314314 ‘‘(iv) the List maintained by the Fed-19
315315 eral Communications Commission of equip-20
316316 ment and services covered by section 2 of 21
317317 the Secure and Trusted Communications 22
318318 Networks Act of 2019 (47 U.S.C. 1601); 23
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321321 •HR 499 IH
322322 ‘‘(v) the Uyghur Forced Labor Pre-1
323323 vention Act Entity List maintained by the 2
324324 Department of Homeland Security; 3
325325 ‘‘(vi) the list of covered issuers subject 4
326326 to a prohibition under section 104 of the 5
327327 Sarbanes-Oxley Act of 2002 (15 U.S.C. 6
328328 7214) maintained by the Securities and 7
329329 Exchange Commission; and 8
330330 ‘‘(vii) the Withhold Release Orders 9
331331 and Findings List maintained by the Com-10
332332 missioner of U.S. Customs and Border 11
333333 Protection. 12
334334 ‘‘(H) The types of products and services 13
335335 offered by the company. 14
336336 ‘‘(I) Whether the company has a contract 15
337337 with the United States Department of Defense. 16
338338 ‘‘(J) Whether the company produces a 17
339339 product or service that is used in the produc-18
340340 tion of aircraft, spacecraft, semiconductor chips 19
341341 and equipment, batteries or battery compo-20
342342 nents, facial recognition technology, artificial 21
343343 intelligence, telecommunications technology, en-22
344344 ergy production equipment, advanced medical 23
345345 devices, or pharmaceuticals or any such prod-24
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348348 •HR 499 IH
349349 ucts related to the national technology and in-1
350350 dustrial base in the United States. 2
351351 ‘‘(K) Whether the company produces goods 3
352352 that would violate U.S. environmental law or 4
353353 U.S. civil liberties law if the goods were pro-5
354354 duced or used in the United States. 6
355355 ‘‘(L) Any business activities conducted by 7
356356 the company— 8
357357 ‘‘(i) with a privately held firm involved 9
358358 in China’s industrial, technology, and mili-10
359359 tary modernization efforts based in the 11
360360 People’s Republic of China; or 12
361361 ‘‘(ii) with a Chinese state-controlled 13
362362 entity. 14
363363 ‘‘(M) Whether the company has ever had 15
364364 an audit of the same type and quality as typi-16
365365 cally used by an issuer of publicly traded securi-17
366366 ties. 18
367367 ‘‘(2) D
368368 EFINITIONS.—In this subsection: 19
369369 ‘‘(A) E
370370 XCHANGE TRADED FUND .—The 20
371371 term ‘exchange traded fund’ has the meaning 21
372372 given that term under section 270.6c–11 of title 22
373373 17, Code of Federal Regulations. 23
374374 ‘‘(B) O
375375 THER DEFINITIONS .—The terms 24
376376 ‘Communist Party of China’, ‘Government of 25
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379379 •HR 499 IH
380380 the People’s Republic of China’, ‘immediate 1
381381 family member’, and ‘PRC’ have the meaning 2
382382 given those terms, respectively, under sub-3
383383 section (s)(2).’’. 4
384384 Æ
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