What This Bill Does
This bill directs the Securities and Exchange Commission (a federal agency that regulates financial markets) to create rules allowing financial companies to send required investor documents electronically instead of on paper. The Commission must propose these rules within 180 days and finalize them within one year of the bill becoming law.
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Who It Affects
- Investment companies and business development companies
- Brokers and dealers (companies that buy and sell securities)
- Municipal securities dealers (companies that trade local government bonds)
- Government securities brokers and dealers
- Registered investment advisers (professionals who manage investment accounts)
- Transfer agents (companies that handle stock transfers)
- Funding portals (online platforms for raising capital)
- Investors who receive documents from these companies
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Key Provisions
- The Securities and Exchange Commission must create rules within 180 days allowing covered entities to deliver required regulatory documents electronically, with final rules completed within one year (Sec. 2(a))
- For investors not currently receiving all documents electronically, companies must send an initial paper notice about electronic delivery, allow a transition period of up to 180 days, and send annual paper reminders for up to 2 years about the right to opt out (Sec. 2(b)(1))
- Investors can opt out of electronic delivery at any time and request paper versions of regulatory documents (Sec. 2(b)(4))
- Companies must use measures reasonably designed to catch and fix failed electronic deliveries (Sec. 2(b)(5))
- Electronic documents must meet minimum standards for readability and the ability to save and retain the documents (Sec. 2(b)(6))
- For most covered entities, companies must protect personal information in electronically delivered documents (Sec. 2(b)(7))
- If the Commission fails to finalize rules by the deadline, companies may still deliver documents electronically under the bill's requirements and this will satisfy their legal obligation (Sec. 2(e))
- The Commission must review its existing rules within 180 days to identify any that require documents "in writing" and update those rules within one year to allow electronic delivery (Sec. 2(f)(1))
- Self-regulatory organizations (industry groups that enforce rules) must adopt or amend their rules to match the Commission's new rules (Sec. 2(f)(2))
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What Changes
If this bill becomes law, financial companies will be allowed to send investor documents like prospectuses (detailed investment information), account statements, annual reports, and privacy notices electronically instead of by mail. Investors will have a transition period before switching to electronic delivery and can always request paper documents instead. Companies must ensure electronic delivery actually reaches investors and that the documents are readable and can be saved.
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Important Definitions
- **Covered entity**: Investment companies, brokers, dealers, investment advisers, transfer agents, and funding portals regulated under federal securities laws
- **Electronic delivery**: Sending documents directly to an investor's email address, posting them on a website with electronic notice to the investor, or using any electronic method reasonably designed to ensure the investor receives the document
- **Regulatory documents**: Prospectuses, account statements, annual reports, confirmations, proxy statements, privacy notices, and all other documents that covered entities are required by law to give to investors
- **Self-regulatory organization**: Industry groups that make and enforce rules, including the Municipal Securities Rulemaking Board
- **Website**: An internet website, mobile application, or other digital platform that investors can reasonably access
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Effective Date
Not specified in bill text
IB
Union Calendar No. 239
118TH CONGRESS
1ST SESSION H. R. 1807
[Report No. 118–295]
To direct the Securities and Exchange Commission to promulgate rules with
respect to the electronic delivery of certain required disclosures, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 27, 2023
Mr. HUIZENGA (for himself, Mr. AUCHINCLOSS, Mr. STEIL, and Mr. NICKEL)
introduced the following bill; which was referred to the Committee on Fi-
nancial Services
DECEMBER 1, 2023
Additional sponsor: Mr. RUTHERFORD
DECEMBER 1, 2023
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 March 27, 2023]
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•HR 1807 RH
A BILL
To direct the Securities and Exchange Commission to pro-
mulgate rules with respect to the electronic delivery of
certain required disclosures, and for other purposes.
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•HR 1807 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 Disclosure
4
for Investors Act of 2023’’.
5
SEC. 2. ELECTRONIC DELIVERY.
6
(a) PROMULGATION OF RULES.—Not later than 180
7
days after the date of the enactment of this section, the Secu-
8
rities and Exchange Commission shall propose and, not
9
later than 1 year after the date of the enactment of this
10
section, the Commission shall finalize, rules, regulations,
11
amendments, or interpretations, as appropriate, to allow
12
a covered entity to satisfy the entity’s obligation to deliver
13
regulatory documents required under the securities laws to
14
investors using electronic delivery.
15
(b)
REQUIRED
PROVISIONS.—Rules,
regulations,
16
amendments, or interpretations the Commission promul-
17
gates pursuant to subsection (a) shall:
18
(1) With respect to investors that do not receive
19
all regulatory documents by electronic delivery, pro-
20
vide for—
21
(A) delivery of an initial communication in
22
paper form regarding electronic delivery;
23
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•HR 1807 RH
(B) a transition period not to exceed 180
1
days until such regulatory documents are deliv-
2
ered to such investors by electronic delivery; and
3
(C) during a period not to exceed 2 years
4
following the transition period set forth in sub-
5
paragraph (B), delivery of an annual notice in
6
paper form solely reminding such investors of the
7
ability to opt out of electronic delivery at any
8
time and receive paper versions of regulatory
9
documents.
10
(2) Set forth requirements for the content of the
11
initial communication described in paragraph (1)(A).
12
(3) Set forth requirements for the timing of de-
13
livery of a notice of website availability of regulatory
14
documents and the content of the appropriate notice
15
described in subsection (h)(3)(B).
16
(4) Provide a mechanism for investors to opt out
17
of electronic delivery at any time and receive paper
18
versions of regulatory documents.
19
(5) Require measures reasonably designed to
20
identify and remediate failed electronic deliveries of
21
regulatory documents.
22
(6) Set forth minimum requirements regarding
23
readability and retainability for regulatory docu-
24
ments that are delivered electronically.
25
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•HR 1807 RH
(7) For covered entities other than brokers, deal-
1
ers, investment advisers registered with the Commis-
2
sion, and investment companies, require measures
3
reasonably designed to ensure the confidentiality of
4
personal information in regulatory documents that
5
are delivered to investors electronically.
6
(c) EXEMPTION FROM CERTAIN REQUIREMENTS.—
7
Section 101(c) of the Electronic Signatures in Global and
8
National Commerce Act (15 U.S.C. 7001(c)) shall not apply
9
with respect to a regulatory document delivered in accord-
10
ance with this section.
11
(d) RULE OF CONSTRUCTION.—Nothing in this section
12
shall be construed as altering the substance or timing of
13
any regulatory document obligation under the securities
14
laws or regulations of a self-regulatory organization.
15
(e) TREATMENT OF REVISIONS NOT COMPLETED IN A
16
TIMELY MANNER.—If the Commission fails to finalize the
17
rules, regulations, amendments, or interpretations required
18
under subsection (a) before the date specified in such sub-
19
section—
20
(1) a covered entity may deliver regulatory docu-
21
ments using electronic delivery in accordance with
22
subsections (b) through (d); and
23
(2) such electronic delivery shall be deemed to
24
satisfy the obligation of the covered entity to deliver
25
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•HR 1807 RH
regulatory documents required under the securities
1
laws.
2
(f) OTHER REQUIRED ACTIONS.—
3
(1)
REVIEW
OF
RULES.—The
Commission
4
shall—
5
(A) within 180 days of the date of enact-
6
ment of this Act, conduct a review of the rules
7
and regulations of the Commission to determine
8
whether any such rules or regulations require de-
9
livery of written documents to investors; and
10
(B) within 1 year of the date of enactment
11
of this Act, promulgate amendments to such rules
12
or regulations to provide that any requirement
13
to deliver a regulatory document ‘‘in writing’’
14
may be satisfied by electronic delivery.
15
(2) ACTIONS BY SELF-REGULATORY ORGANIZA-
16
TIONS.—Each self-regulatory organization shall adopt
17
rules and regulations, or amend the rules and regula-
18
tions of the self-regulatory organization, consistent
19
with this Act and consistent with rules, regulations,
20
amendments, or interpretations finalized by the Com-
21
mission pursuant to subsection (a).
22
(3) RULE
OF
APPLICATION.—This subsection
23
shall not apply to a rule or regulation issued pursu-
24
ant to a Federal statute if that Federal statute spe-
25
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•HR 1807 RH
cifically requires delivery of written documents to in-
1
vestors.
2
(g) DEFINITIONS.—In this section:
3
(1)
COMMISSION.—The
term
‘‘Commission’’
4
means the Securities and Exchange Commission.
5
(2) COVERED ENTITY.—The term ‘‘covered enti-
6
ty’’ means—
7
(A) an investment company (as defined in
8
section 3(a)(1) of the Investment Company Act
9
of 1940 (15 U.S.C. 80a–3(a)(1))) that is reg-
10
istered under such Act;
11
(B) a business development company (as de-
12
fined in section 2(a) the Investment Company
13
Act of 1940 (15 U.S.C. 80a–2(a))) that has elect-
14
ed to be regulated as such under such Act;
15
(C) a registered broker or dealer (as defined
16
in section 3(a)(4) and section 3(a)(5) of the Se-
17
curities Exchange Act of 1934) (15 U.S.C.
18
78c(a)(4) & 78c(a)(5));
19
(D) a registered municipal securities dealer
20
(as defined in section 3(a)(30) of the Securities
21
Exchange Act of 1934) (15 U.S.C. 78c(a)(30));
22
(E) a registered government securities
23
broker or government securities dealer (as de-
24
fined in section 3(a)(43) and section 3(a)(44) of
25
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•HR 1807 RH
the Securities Exchange Act of 1934) (15 U.S.C.
1
78c(a)(43) & 78c(a)(44));
2
(F) a registered investment adviser (as de-
3
fined in section 202(a)(11) of the Investment Ad-
4
visers Act of 1940) (15 U.S.C. 80b–1(a)(11));
5
(G) a registered transfer agent (as defined
6
in section 3(a)(25) of the Securities Exchange
7
Act of 1934) (15 U.S.C. 78c(a)(25)); or
8
(H) a registered funding portal (as defined
9
in the second paragraph (80) of section 3(a) of
10
the Securities Exchange Act of 1934) (15 U.S.C.
11
78c(a)(80)).
12
(3) ELECTRONIC
DELIVERY.—The term ‘‘elec-
13
tronic delivery’’, with respect to regulatory docu-
14
ments, includes—
15
(A) the direct delivery of such regulatory
16
document to an electronic address of an investor;
17
(B) the posting of such regulatory document
18
to a website and direct electronic delivery of an
19
appropriate notice of the availability of the regu-
20
latory document to the investor; and
21
(C) an electronic method reasonably de-
22
signed to ensure receipt of such regulatory docu-
23
ment by the investor.
24
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•HR 1807 RH
(4) REGULATORY DOCUMENTS.—The term ‘‘regu-
1
latory documents’’ includes—
2
(A) prospectuses meeting the requirements
3
of section 10(a) of the Securities Act of 1933 (15
4
U.S.C. 77j(a));
5
(B) summary prospectuses meeting the re-
6
quirements of—
7
(i) section 230.498 of title 17, Code of
8
Federal Regulations; or
9
(ii) section 230.498A of title 17, Code
10
of Federal Regulations;
11
(C) statements of additional information, as
12
described under section 270.30e–3(h)(3) of title
13
17, Code of Federal Regulations;
14
(D) annual and semi-annual reports to in-
15
vestors meeting the requirements of section 30(e)
16
of the Investment Company Act of 1940 (15
17
U.S.C. 80a–29(e));
18
(E) notices meeting the requirements under
19
section 270.19a–1 of title 17, Code of Federal
20
Regulations;
21
(F) confirmations and account statements
22
meeting the requirements under section 240.10b–
23
10 of title 17, Code of Federal Regulations;
24
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•HR 1807 RH
(G) proxy statements meeting the require-
1
ments under section 240.14a–3 of title 17, Code
2
of Federal Regulations;
3
(H) privacy notices meeting the require-
4
ments of Regulation S–P under subpart A of
5
part 248 of title 17, Code of Federal Regulations;
6
(I) affiliate marketing notices meeting the
7
requirements of Regulation S–AM under subpart
8
B of part 248 of title 17, Code of Federal Regu-
9
lations; and
10
(J) all other regulatory documents required
11
to be delivered by covered entities to investors
12
under the securities laws and the rules and regu-
13
lations of the Commission and the self-regulatory
14
organizations.
15
(5) SECURITIES
LAWS.—The term ‘‘securities
16
laws’’ has the meaning given the term in section 3(a)
17
of the Securities Exchange Act of 1934 (15 U.S.C.
18
78c(a)).
19
(6)
SELF-REGULATORY
ORGANIZATION.—The
20
term ‘‘self-regulatory organization’’ means—
21
(A) a self-regulatory organization, as de-
22
fined in section 2(a)(26) of the Securities Ex-
23
change Act of 1934 (15 U.S.C. 78c(a)(26)); and
24
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•HR 1807 RH
(B) the Municipal Securities Rulemaking
1
Board.
2
(7) WEBSITE.—The term ‘‘website’’ means an
3
internet website or other digital, internet, or elec-
4
tronic-based information repository, such as a mobile
5
application, to which an investor of a covered entity
6
has been provided reasonable access.
7
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Union Calendar No. 239
118TH CONGRESS
1ST SESSION
H. R. 1807
[Report No. 118–295]
A BILL
To direct the Securities and Exchange Commission
to promulgate rules with respect to the electronic
delivery of certain required disclosures, and for
other purposes.
DECEMBER 1, 2023
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed
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