What This Bill Does
This bill requires companies that file yearly reports with the Securities and Exchange Commission (a federal agency that oversees stock markets and investments) to disclose whether they have connections to the Chinese Communist Party. The bill also requires these companies to describe any participation by Chinese Communist Party organizations in their operations and to report on whether their board of directors owes legal duties to shareholders.
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Who It Affects
- Companies that file annual reports with the Securities and Exchange Commission
- Foreign companies that file annual reports with the Securities and Exchange Commission
- Shareholders of these companies
- The Securities and Exchange Commission
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Key Provisions
- Companies must disclose whether they or their subsidiaries (companies they own) or joint venture partners (companies they partner with) have established or maintained a Chinese Communist Party organization during the reporting period (Sec. 2(b)(1))
- Companies must summarize any participation by Chinese Communist Party organizations in their operations during the reporting period (Sec. 2(b)(2))
- Companies must disclose whether their board of directors owes legal duties to the company and its shareholders and whether the board faces heightened scrutiny for conflicted transactions (Sec. 2(b)(3))
- The Securities and Exchange Commission must update its rules as needed within one year of the bill becoming law (Sec. 2(c))
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What Changes
Companies will be required to include new disclosures about Chinese Communist Party connections in their annual reports starting with the second annual report filed after this law takes effect. The Securities and Exchange Commission will update its reporting rules to include these requirements.
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Important Definitions
- "Covered issuer": A company required to file annual reports with the Securities and Exchange Commission
- "Joint venture partner": A company or organization that partners with a covered issuer in a joint venture (a business partnership)
- "Subsidiary": A company that is fully or partially owned by another company
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Effective Date
Not specified in bill text
I
118TH CONGRESS
1ST SESSION
H. R. 747
To require issuers filing annual reports with the Securities and Exchange
Commission to disclose whether the issuers have connections with the
Chinese Communist Party, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 2, 2023
Ms. TENNEY (for herself and Mr. MILLER of Ohio) introduced the following
bill; which was referred to the Committee on Financial Services
A BILL
To require issuers filing annual reports with the Securities
and Exchange Commission to disclose whether the
issuers have connections with the Chinese Communist
Party, and for other purposes.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘No Chinese Com-
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munist Subterfuge via Unregistered Regime Presence
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Rendered Invisible to Shareholders and Equivalent Parties
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Act’’ or the ‘‘No Chinese Communist SURPRISE Parties
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Act’’.
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•HR 747 IH
SEC. 2. REPORTING REQUIREMENT.
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(a) DEFINITIONS.—In this section—
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(1) the term ‘‘Commission’’ means the Securi-
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ties and Exchange Commission;
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(2) the term ‘‘covered issuer’’ means an issuer,
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including a foreign private issuer, that is required to
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file annual reports with the Commission under sec-
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tion 13(a) of the Securities Exchange Act of 1934
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(15 U.S.C. 78m(a));
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(3) the term ‘‘issuer’’ has the meaning given
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the term in section 3(a) of the Securities Exchange
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Act of 1934 (15 U.S.C. 78c(a));
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(4) the term ‘‘joint venture partner’’, with re-
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spect to a covered issuer, means—
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(A) a joint venture in which the covered
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issuer, or a subsidiary with respect to the cov-
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ered issuer, is a party; or
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(B) any other person that is a party in a
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joint venture described in subparagraph (A);
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and
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(5) the term ‘‘subsidiary’’, with respect to a
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covered issuer, means a wholly or partially owned
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subsidiary of the covered issuer.
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(b) REQUIREMENT.—Each covered issuer, in each an-
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nual report that the covered issuer files with the Commis-
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sion (beginning with the second annual report that the
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•HR 747 IH
covered issuer files with the Commission after the date
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of enactment of this Act), shall—
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(1) disclose whether the covered issuer, or any
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subsidiary or joint venture partner with respect to
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the covered issuer, has established or maintained an
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organization of the Chinese Communist Party dur-
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ing the period covered by the report;
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(2) if an organization of the Chinese Com-
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munist Party has participated in the operations of
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the covered issuer, or of any subsidiary or joint ven-
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ture partner with respect to the covered issuer, dur-
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ing the period covered by the report, summarize that
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participation; and
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(3) disclose whether the board of directors of
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the covered issuer (or the equivalent body with re-
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spect to the covered issuer), under the laws of the
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jurisdiction in which the covered issuer is incor-
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porated or otherwise organized—
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(A) owes a fiduciary duty to the covered
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issuer and shareholders of the covered issuer;
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and
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(B) is subject to heightened scrutiny with
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respect to conflicted controller transactions.
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(c) UPDATES TO RULES.—Not later than 1 year after
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the date of enactment of this Act, the Commission shall
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•HR 747 IH
make any updates to the rules of the Commission that
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are necessary as a result of this section.
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Æ
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