Improving Corporate Governance Through Diversity Act of 2019

II 116TH CONGRESS 1ST SESSION S. 360 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 SENATE OF THE UNITED STATES FEBRUARY 6, 2019 Mr. MENENDEZ (for himself, Ms. HARRIS, and Mr. BOOKER) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 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. 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 2019’’. 5 VerDate Sep 11 2014 00:24 Feb 14, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S360.IS S360 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 360 IS SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY 1 ISSUERS. 2 Section 13 of the Securities Exchange Act of 1934 3 (15 U.S.C. 78m) is amended by adding at the end the 4 following: 5 ‘‘(s) SUBMISSION OF DATA RELATING TO DIVER- 6 SITY.— 7 ‘‘(1) DEFINITIONS.—In this subsection— 8 ‘‘(A) the term ‘executive officer’ has the 9 meaning given the term in section 230.501 of 10 title 17, Code of Federal Regulations, as in ef- 11 fect on the date of enactment of this subsection; 12 and 13 ‘‘(B) the term ‘veteran’ has the meaning 14 given the term in section 101 of title 38, United 15 States Code. 16 ‘‘(2) SUBMISSION OF DISCLOSURE.—Each 17 issuer required to file an annual report under sub- 18 section (a) shall disclose in any proxy statement re- 19 lating to the election of directors, and in any infor- 20 mation statement that so relates, that is filed with 21 the Commission the following: 22 ‘‘(A) Data, based on voluntary self-identi- 23 fication, on the racial, ethnic, and gender com- 24 position of— 25 VerDate Sep 11 2014 00:24 Feb 14, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S360.IS S360 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 360 IS ‘‘(i) the board of directors of the 1 issuer; 2 ‘‘(ii) nominees for the board of direc- 3 tors of the issuer; and 4 ‘‘(iii) the executive officers of the 5 issuer. 6 ‘‘(B) The status, based on voluntary self- 7 identification, of any member of the board of 8 directors of the issuer, any nominee for the 9 board of directors of the issuer, or any execu- 10 tive officer of the issuer as a veteran. 11 ‘‘(C) Whether the board of directors of the 12 issuer, or any committee of that board of direc- 13 tors, has, as of the date on which the issuer 14 makes a disclosure under this paragraph, 15 adopted any policy, plan, or strategy to promote 16 racial, ethnic, and gender diversity among— 17 ‘‘(i) the board of directors of the 18 issuer; 19 ‘‘(ii) nominees for the board of direc- 20 tors of the issuer; or 21 ‘‘(iii) the executive officers of the 22 issuer. 23 ‘‘(3) ALTERNATIVE SUBMISSION.—In any 1- 24 year period in which an issuer required to file an an- 25 VerDate Sep 11 2014 00:24 Feb 14, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S360.IS S360 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 360 IS nual report under subsection (a) does not file with 1 the Commission a proxy statement or information 2 statement described in paragraph (2), the issuer 3 shall disclose the information required under that 4 paragraph in the first annual report of the issuer 5 that the issuer submits to the Commission after the 6 end of that 1-year period. 7 ‘‘(4) BEST PRACTICES.— 8 ‘‘(A) IN GENERAL.—Not later than 3 years 9 after the date of enactment of this subsection, 10 and once every 3 years thereafter, the Director 11 of the Office of Minority and Women Inclusion 12 of the Commission (referred to in this para- 13 graph as the ‘Director’), in consultation with 14 the advisory council established under subpara- 15 graph (C), shall publish best practices with re- 16 spect to compliance with this subsection. 17 ‘‘(B) COMMENTS.—The Director may, pur- 18 suant to subchapter II of chapter 5 of title 5, 19 United States Code, solicit public comments re- 20 lating to the best practices published under sub- 21 paragraph (A). 22 ‘‘(C) ADVISORY COUNCIL.—The Director 23 shall, in accordance with the Federal Advisory 24 VerDate Sep 11 2014 00:24 Feb 14, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S360.IS S360 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 360 IS Committee Act (5 U.S.C. App.), establish an 1 advisory council that shall— 2 ‘‘(i) include issuers and investors; and 3 ‘‘(ii) advise the Director with respect 4 to the best practices published under sub- 5 paragraph (A).’’. 6 Æ VerDate Sep 11 2014 00:24 Feb 14, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S360.IS S360 pamtmann on DSKBFK8HB2PROD with BILLS