Improving Corporate Governance Through Diversity Act of 2021

IB Union Calendar No. 164 117TH CONGRESS 2D SESSION H. R. 1277 [Report No. 117–230] To amend the Securities Exchange Act of 1934 to require the submission by issuers of data relating to diversity, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 24, 2021 Mr. MEEKS (for himself and Mrs. CAROLYN B. MALONEY of New York) intro- duced the following bill; which was referred to the Committee on Finan- cial Services JANUARY 20, 2022 Additional sponsors: Ms. ADAMS, Mr. CASTRO of Texas, Mr. GOTTHEIMER, Mrs. LEE of Nevada, Mrs. MCBATH, Ms. WILLIAMS of Georgia, Ms. HOULAHAN, Mr. SHERMAN, Mr. HUFFMAN, Mr. DELGADO, and Ms. SHERRILL JANUARY 20, 2022 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on February 24, 2021] VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1277 RH A BILL To amend the Securities Exchange Act of 1934 to require the submission by issuers of data relating to diversity, and for other purposes. VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1277 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Improving Corporate 4 Governance Through Diversity Act of 2021’’. 5 SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY 6 ISSUERS. 7 Section 13 of the Securities Exchange Act of 1934 (15 8 U.S.C. 78m) is amended by adding at the end the following: 9 ‘‘(s) SUBMISSION OF DATA RELATING TO DIVER- 10 SITY.— 11 ‘‘(1) DEFINITIONS.—In this subsection— 12 ‘‘(A) the term ‘executive officer’ has the 13 meaning given the term in section 230.501(f) of 14 title 17, Code of Federal Regulations, as in effect 15 on the date of enactment of this subsection; and 16 ‘‘(B) the term ‘veteran’ has the meaning 17 given the term in section 101 of title 38, United 18 States Code. 19 ‘‘(2) SUBMISSION OF DISCLOSURE.—Each issuer 20 required to file an annual report under subsection (a) 21 shall disclose in any proxy statement and any infor- 22 mation statement relating to the election of directors 23 filed with the Commission the following: 24 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1277 RH ‘‘(A) Data, based on voluntary self-identi- 1 fication, on the racial, ethnic, and gender com- 2 position of— 3 ‘‘(i) the board of directors of the issuer; 4 ‘‘(ii) nominees for the board of direc- 5 tors of the issuer; and 6 ‘‘(iii) the executive officers of the 7 issuer. 8 ‘‘(B) The status of any member of the board 9 of directors of the issuer, any nominee for the 10 board of directors of the issuer, or any executive 11 officer of the issuer, based on voluntary self-iden- 12 tification, as a veteran. 13 ‘‘(C) Whether the board of directors of the 14 issuer, or any committee of that board of direc- 15 tors, has, as of the date on which the issuer 16 makes a disclosure under this paragraph, adopt- 17 ed any policy, plan, or strategy to promote ra- 18 cial, ethnic, and gender diversity among— 19 ‘‘(i) the board of directors of the issuer; 20 ‘‘(ii) nominees for the board of direc- 21 tors of the issuer; or 22 ‘‘(iii) the executive officers of the 23 issuer. 24 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1277 RH ‘‘(3) ALTERNATIVE SUBMISSION.—In any 1-year 1 period in which an issuer required to file an annual 2 report under subsection (a) does not file with the 3 Commission a proxy statement or an information 4 statement relating to the election of directors, the 5 issuer shall disclose the information required under 6 paragraph (2) in the first annual report of issuer that 7 the issuer submits to the Commission after the end of 8 that 1-year period. 9 ‘‘(4) ANNUAL REPORT.—Not later than 18 10 months after the date of enactment of this subsection, 11 and annually thereafter, the Commission shall submit 12 to the Committee on Financial Services of the House 13 of Representatives and the Committee on Banking, 14 Housing, and Urban Affairs of the Senate, and pub- 15 lish on the website of the Commission, a report that 16 analyzes the information disclosed under paragraphs 17 (2) and (3) and identifies any trends with respect to 18 such information. 19 ‘‘(5) BEST PRACTICES.— 20 ‘‘(A) IN GENERAL.—The Director of the Of- 21 fice of Minority and Women Inclusion of the 22 Commission shall, not later than 3 years after 23 the date of enactment of this subsection, and 24 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1277 RH every 3 years thereafter, publish best practices 1 for compliance with this subsection. 2 ‘‘(B) COMMENTS.—The Director of the Of- 3 fice of Minority and Women Inclusion of the 4 Commission may, pursuant to subchapter II of 5 chapter 5 of title 5, United States Code, solicit 6 public comments related to the best practices 7 published under subparagraph (A).’’. 8 SEC. 3. DIVERSITY ADVISORY GROUP. 9 (a) DEFINITIONS.—For the purposes of this section: 10 (1) ADVISORY GROUP.—The term ‘‘Advisory 11 Group’’ means the Diversity Advisory Group estab- 12 lished under subsection (b). 13 (2) COMMISSION.—The term ‘‘Commission’’ 14 means the Securities and Exchange Commission. 15 (3) ISSUER.—The term ‘‘issuer’’ has the meaning 16 given the term in section 3(a) of the Securities Ex- 17 change Act of 1934 (15 U.S.C. 78c(a)). 18 (b) ESTABLISHMENT.—The Commission shall establish 19 a Diversity Advisory Group, which shall be composed of 20 representatives from— 21 (1) the Federal Government and State and local 22 governments; 23 (2) academia; and 24 (3) the private sector. 25 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1277 RH (c) STUDY AND RECOMMENDATIONS.—The Advisory 1 Group shall— 2 (1) carry out a study that identifies strategies 3 that can be used to increase gender, racial, and ethnic 4 diversity among members of boards of directors of 5 issuers; and 6 (2) not later than 270 days after the date on 7 which the Advisory Group is established, submit to 8 the Commission, the Committee on Financial Services 9 of the House of Representatives, and the Committee 10 on Banking, Housing, and Urban Affairs of the Sen- 11 ate a report that— 12 (A) describes any findings from the study 13 conducted under paragraph (1); and 14 (B) makes recommendations regarding 15 strategies that issuers could use to increase gen- 16 der, racial, and ethnic diversity among board 17 members. 18 (d) ANNUAL REPORT.—Not later than 1 year after the 19 date on which the Advisory Group submits the report re- 20 quired under subsection (c)(2), and annually thereafter, the 21 Commission shall submit to the Committee on Financial 22 Services of the House of Representatives and the Committee 23 on Banking, Housing, and Urban Affairs of the Senate a 24 report that describes the status of gender, racial, and ethnic 25 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1277 RH diversity among members of the boards of directors of 1 issuers. 2 (e) PUBLIC AVAILABILITY OF REPORTS.—The Com- 3 mission shall make all reports of the Advisory Group avail- 4 able to issuers and the public, including on the website of 5 the Commission. 6 (f) INAPPLICABILITY OF FEDERAL ADVISORY COM- 7 MITTEE ACT.—The Federal Advisory Committee Act (5 8 U.S.C. App.) shall not apply with respect to the Advisory 9 Group or the activities of the Advisory Group. 10 VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS Union Calendar No. 164 117TH CONGRESS 2D SESSION H. R. 1277 [Report No. 117–230] A BILL To amend the Securities Exchange Act of 1934 to require the submission by issuers of data relating to diversity, and for other purposes. JANUARY 20, 2022 Reported with an amendment, committed to the Com- mittee of the Whole House on the State of the Union, and ordered to be printed VerDate Sep 11 2014 21:39 Jan 20, 2022 Jkt 029200 PO 00000 Frm 00010 Fmt 6651 Sfmt 6651 E:\BILLS\H1277.RH H1277 kjohnson on DSK79L0C42PROD with BILLS