Improving Corporate Governance Through Diversity Act of 2023

I 118TH CONGRESS 1ST SESSION H. R. 4177 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 JUNE 15, 2023 Mr. MEEKS introduced the following bill; which was referred to the Committee on Financial Services 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 2023’’. 5 SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY 6 ISSUERS. 7 Section 13 of the Securities Exchange Act of 1934 8 (15 U.S.C. 78m) is amended by adding at the end the 9 following: 10 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 4177 IH ‘‘(s) SUBMISSION OF DATA RELATING TO DIVER- 1 SITY.— 2 ‘‘(1) DEFINITIONS.—In this subsection— 3 ‘‘(A) the term ‘executive officer’ has the 4 meaning given the term in section 230.501(f) of 5 title 17, Code of Federal Regulations, as in ef- 6 fect on the date of enactment of this subsection; 7 and 8 ‘‘(B) the term ‘veteran’ has the meaning 9 given the term in section 101 of title 38, United 10 States Code. 11 ‘‘(2) SUBMISSION OF DISCLOSURE.—Each 12 issuer required to file an annual report under sub- 13 section (a) shall disclose in any proxy statement and 14 any information statement relating to the election of 15 directors filed with the Commission the following: 16 ‘‘(A) Data, based on voluntary self-identi- 17 fication, on the racial, ethnic, and gender com- 18 position of— 19 ‘‘(i) the board of directors of the 20 issuer; 21 ‘‘(ii) nominees for the board of direc- 22 tors of the issuer; and 23 ‘‘(iii) the executive officers of the 24 issuer. 25 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 4177 IH ‘‘(B) The status of any member of the 1 board of directors of the issuer, any nominee 2 for the board of directors of the issuer, or any 3 executive officer of the issuer, based on vol- 4 untary self-identification, as a veteran. 5 ‘‘(C) Whether the board of directors of the 6 issuer, or any committee of that board of direc- 7 tors, has, as of the date on which the issuer 8 makes a disclosure under this paragraph, 9 adopted any policy, plan, or strategy to promote 10 racial, ethnic, and gender diversity among— 11 ‘‘(i) the board of directors of the 12 issuer; 13 ‘‘(ii) nominees for the board of direc- 14 tors of the issuer; or 15 ‘‘(iii) the executive officers of the 16 issuer. 17 ‘‘(3) ALTERNATIVE SUBMISSION.—In any 1- 18 year period in which an issuer required to file an an- 19 nual report under subsection (a) does not file with 20 the Commission a proxy statement or an information 21 statement relating to the election of directors, the 22 issuer shall disclose the information required under 23 paragraph (2) in the first annual report of issuer 24 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 4177 IH that the issuer submits to the Commission after the 1 end of that 1-year period. 2 ‘‘(4) ANNUAL REPORT.—Not later than 18 3 months after the date of enactment of this sub- 4 section, and annually thereafter, the Commission 5 shall submit to the Committee on Financial Services 6 of the House of Representatives and the Committee 7 on Banking, Housing, and Urban Affairs of the Sen- 8 ate, and publish on the website of the Commission, 9 a report that analyzes the information disclosed 10 under paragraphs (2) and (3) and identifies any 11 trends with respect to such information. 12 ‘‘(5) BEST PRACTICES.— 13 ‘‘(A) IN GENERAL.—The Director of the 14 Office of Minority and Women Inclusion of the 15 Commission shall, not later than 3 years after 16 the date of enactment of this subsection, and 17 every 3 years thereafter, publish best practices 18 for compliance with this subsection. 19 ‘‘(B) COMMENTS.—The Director of the Of- 20 fice of Minority and Women Inclusion of the 21 Commission may, pursuant to subchapter II of 22 chapter 5 of title 5, United States Code, solicit 23 public comments related to the best practices 24 published under subparagraph (A).’’. 25 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 4177 IH SEC. 3. DIVERSITY ADVISORY GROUP. 1 (a) DEFINITIONS.—For the purposes of this section: 2 (1) ADVISORY GROUP.—The term ‘‘Advisory 3 Group’’ means the Diversity Advisory Group estab- 4 lished under subsection (b). 5 (2) COMMISSION.—The term ‘‘Commission’’ 6 means the Securities and Exchange Commission. 7 (3) ISSUER.—The term ‘‘issuer’’ has the mean- 8 ing given the term in section 3(a) of the Securities 9 Exchange Act of 1934 (15 U.S.C. 78c(a)). 10 (b) ESTABLISHMENT.—The Commission shall estab- 11 lish a Diversity Advisory Group, which shall be composed 12 of representatives from— 13 (1) the Federal Government and State and local 14 governments; 15 (2) academia; and 16 (3) the private sector. 17 (c) STUDY AND RECOMMENDATIONS.—The Advisory 18 Group shall— 19 (1) carry out a study that identifies strategies 20 that can be used to increase gender, racial, and eth- 21 nic diversity among members of boards of directors 22 of issuers; and 23 (2) not later than 270 days after the date on 24 which the Advisory Group is established, submit to 25 the Commission, the Committee on Financial Serv- 26 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 4177 IH ices of the House of Representatives, and the Com- 1 mittee on Banking, Housing, and Urban Affairs of 2 the Senate a report that— 3 (A) describes any findings from the study 4 conducted under paragraph (1); and 5 (B) makes recommendations regarding 6 strategies that issuers could use to increase 7 gender, racial, and ethnic diversity among 8 board members. 9 (d) ANNUAL REPORT.—Not later than 1 year after 10 the date on which the Advisory Group submits the report 11 required under subsection (c)(2), and annually thereafter, 12 the Commission shall submit to the Committee on Finan- 13 cial Services of the House of Representatives and the 14 Committee on Banking, Housing, and Urban Affairs of 15 the Senate a report that describes the status of gender, 16 racial, and ethnic diversity among members of the boards 17 of directors of issuers. 18 (e) PUBLIC AVAILABILITY OF REPORTS.—The Com- 19 mission shall make all reports of the Advisory Group avail- 20 able to issuers and the public, including on the website 21 of the Commission. 22 (f) INAPPLICABILITY OF FEDERAL ADVISORY COM- 23 MITTEE ACT.—The Federal Advisory Committee Act (5 24 VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 4177 IH U.S.C. App.) shall not apply with respect to the Advisory 1 Group or the activities of the Advisory Group. 2 Æ VerDate Sep 11 2014 02:34 Jul 09, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H4177.IH H4177 kjohnson on DSK79L0C42PROD with BILLS