What This Bill Does
This bill requires companies that file annual reports with the Securities and Exchange Commission to disclose whether they have connections with the Chinese Communist Party. The bill also requires these companies to report if the Chinese Communist Party participates in their operations and to disclose information about their board of directors' duties and oversight rules.
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Who It Affects
Companies that file annual reports with the Securities and Exchange Commission (both U.S. and foreign companies). The Securities and Exchange Commission (the federal agency that oversees stock markets and investment companies).
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Key Provisions
• Companies must disclose in their annual reports whether they or their subsidiaries (smaller companies they own) or joint venture partners (companies they work with in shared business arrangements) have established or maintained an organization of the Chinese Communist Party during the reporting period (Sec. 2(b)(1))
• Companies must summarize any participation by the Chinese Communist Party in their operations, or the operations of their subsidiaries or joint venture partners, during the reporting period (Sec. 2(b)(2))
• Companies must disclose whether their board of directors owes a fiduciary duty (a legal responsibility to act in the best interest of shareholders) to the company and its shareholders and whether they are subject to heightened scrutiny regarding conflicted controller transactions (situations where someone with power over the company may have competing interests) (Sec. 2(b)(3))
• The Securities and Exchange Commission must update its rules within one year of this law taking effect to address any necessary changes from this requirement (Sec. 2(c))
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What Changes
Beginning with the second annual report filed after this law takes effect, companies filing annual reports with the Securities and Exchange Commission must provide disclosures about Chinese Communist Party connections that they do not currently have to provide.
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Important Definitions
• "Covered issuer" means any company required to file annual reports with the Securities and Exchange Commission
• "Joint venture partner" means a joint venture involving a covered issuer or its subsidiary, or any other company that is part of such a joint venture
• "Subsidiary" means a company that is wholly or partially owned by the covered issuer
• "Issuer" means a company that issues securities (investment documents like stocks or bonds)
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Effective Date
Beginning with the second annual report filed after the date this Act becomes law. Not specified in bill text when that date would be.
II
118TH CONGRESS
1ST SESSION
S. 144
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 SENATE OF THE UNITED STATES
JANUARY 30, 2023
Mr. RUBIO (for himself and Mrs. BLACKBURN) introduced the following bill;
which was read twice and referred to the Committee on Banking, Hous-
ing, and Urban Affairs
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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•S 144 IS
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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•S 144 IS
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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•S 144 IS
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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