[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 499 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 499
To amend the Securities Exchange Act of 1934 to require certain
additional annual disclosures by public companies and exchange-traded
funds investing in companies with ties to the People's Republic of
China, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 25, 2023
Mr. Fallon (for himself, Mr. Ellzey, Mr. Jackson of Texas, and Mr.
Amodei) 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 certain
additional annual disclosures by public companies and exchange-traded
funds investing in companies with ties to the People's Republic of
China, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securing American Families and
Enterprises from People's Republic of China Investments Act'' or the
``SAFE from PRC Investments Act''.
SEC. 2. ADDITIONAL DISCLOSURES TO PROTECT AMERICAN INVESTORS AND
BUSINESSES.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m)
is amended by adding at the end the following:
``(s) Additional Disclosures To Protect American Investors and
Businesses.--
``(1) In general.--Each covered issuer that is required to
file an annual report under section 13(a) or 15(d) shall
disclose in that report the following:
``(A) Whether a senior official of the national- or
provincial-level governments of the People's Republic
of China (`PRC') sits on the board of directors of the
issuer or any subsidiary of the issuer.
``(B) Whether executive-level employees, senior
directors, and board members of the issuer are members
of the Communist Party of China.
``(C) Whether executive-level employees, senior
directors, and board members of the issuer have
immediate family members that are senior officials of
the Communist Party of China or the Government of the
People's Republic of China.
``(D) Whether the issuer has a party branch or
committee as part of the issuer's corporate structure.
``(E) With respect to the operations of the issuer
located in the PRC--
``(i) the amount of cash held;
``(ii) any limits imposed by the Communist
Party of China or the Government of the
People's Republic of China on the ability to
take such cash out of the country; and
``(iii) disclosure of investments, assets
and liabilities, technology licensed or
transferred, and financing or debt obligations
involving PRC operations or from a PRC entity.
``(F) The number of times executive-level employees
of the issuer interact with senior officials of the
Communist Party of China and the costs of those
meetings and any transfer of goods, money, or services
between issuer's employees.
``(G) The amount the issuer has expended on
operations in the People's Republic of China, both in
total and for the prior fiscal year.
``(H) The amount the issuer has expended on
operations in the United States, both in total and for
the prior fiscal year.
``(I) The amount (both in total and for the prior
fiscal year) that the issuer has spent on lobbying in
the United States, including--
``(i) whether the issuer or any subsidiary
of the issuer has reported any sums under the
Foreign Agents Registration Act of 1938; and
``(ii) whether the issuer or any subsidiary
of the issuer has reported any sums under the
Lobbying Disclosure Act of 1995.
``(J) Whether the Public Company Accounting
Oversight Board is unable to inspect or investigate a
registered public accounting firm retained by the
issuer to prepare an audit report on the financial
statement of the issuer.
``(K) The amount of taxes and other fees the issuer
paid to the Government of the People's Republic of
China on an annual basis.
``(L) With respect to customer data--
``(i) who has access to such data;
``(ii) disclosure of instances when
information is requested, arrangements that may
allow passive or continuous access, efforts to
protect such data, instances of cyber-attack,
corporate or personnel disputes that involve
potential breaches, and notification of other
breaches; and
``(iii) whether such data is stored in the
United States and, if not, the country or
territory in which such data is stored.
``(M) For each subsidiary of the issuer located in
the PRC, the information described under subparagraphs
(A) through (L) with respect to such subsidiary.
``(N) If the issuer or any subsidiary of the issuer
located in the PRC produces goods or services that are
part of a military-civil fusion strategy, whether the
issuer has consulted with the People's Liberation Army
or the Ministry of State Security with regard to
industrial policy.
``(2) Definitions.--In this subsection:
``(A) Communist party of china.--The term
`Communist Party of China' means the ruling party of
the People's Republic of China, including--
``(i) party bodies at the national and sub-
national level; and
``(ii) any agency or instrumentality of the
Communist Party of China.
``(B) Covered issuer.--The term `covered issuer'
means an issuer--
``(i) that is--
``(I) headquartered in the PRC
(including the Hong Kong and Macau
Special Administrative Regions);
``(II) a branch or subsidiary of an
issuer headquartered in the PRC; or
``(III) a variable interest entity
or other type of firm structured
through a series of contracts or
overlapping personnel--
``(aa) that are tied to
core operations in the PRC; or
``(bb) controlled and owned
by an issuer headquartered in
the PRC; or
``(ii) that--
``(I) is domiciled in a tax haven
jurisdiction or self-governing
territories, including the Cayman
Islands, British Virgin Islands,
Bermuda, the Netherlands, Switzerland,
Luxembourg, Singapore, the United Arab
Emirates, the Bahamas, Cyprus, or
Mauritius; and
``(II) has the majority of the
issuer's business operations taking
place or the majority of the issuer's
revenue generated in mainland China.
``(C) Government of the people's republic of
china.--The term `Government of the People's Republic
of China' means any of the following:
``(i) Any national or sub-national
governmental unit of the People's Republic of
China.
``(ii) Any national or sub-national
legislature of the People's Republic of China.
``(iii) Any national or sub-national
People's Political Consultative Conference of
the People's Republic of China.
``(iv) Any national or sub-national
judicial or prosecutorial body of the People's
Republic of China.
``(v) Any national or sub-national
supervision commission of the People's Republic
of China.
``(vi) Any agency or instrumentality of the
People's Republic of China.
``(D) Immediate family member.--The term `immediate
family member' shall include a spouse, domestic
partner, mother, father, aunt, uncle, sibling, or
child.
``(E) Military-civil fusion strategy.--The term
`military-civil fusion strategy' means the strategy of
the Communist Party of China aiming to mobilize non-
military resources and expertise for military
application, including--
``(i) the development of technology,
improvements in logistics, and other uses by
the People's Liberation Army; and
``(ii) firms which develop and acquire
advanced dual-use technology for military
purposes.
``(F) PRC.--The term `PRC' means the People's
Republic of China.
``(G) Senior official.--The term `senior official',
when used in connection with the Government of the
People's Republic of China or the Communist Party of
China, means--
``(i) an official with the rank of a deputy
at the provincial or ministerial level (shengbu
ji fu zhi) or higher; or
``(ii) a chief at the bureau level (tingju
ji zheng zhi) or higher.
``(H) Variable interest entity.--The term `variable
interest entity' means an entity where an investor has
a controlling interest that is not based on holding the
majority of voting rights.''.
SEC. 3. DISCLOSURES BY EXCHANGE TRADED FUNDS INVESTING IN CHINESE
COMPANIES.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m),
as amended by section 2, is further amended by adding at the end the
following:
``(t) Disclosures by Exchange Traded Funds Investing in Chinese
Companies.--
``(1) In general.--Each exchange traded fund required to
file an annual report under section 13(a) or 15(d) shall, if
the fund invested in the securities of any PRC company during
the reporting period, include in such report the following,
with respect to each such PRC company:
``(A) Who owns the company, including whether the
company is owned by the Government of the People's
Republic of China or a PRC state-controlled entity.
``(B) Whether the company operates a Communist
Party of China branch or committee within the company's
corporate structure.
``(C) Whether the company has any contractual
agreements with the Government of the People's Republic
of China or the Communist Party of China or any agency
or instrumentality of either.
``(D) Whether the company has participated in the
PRC's industrial policies or has military or public
security contracts.
``(E) Whether any funding, direction, or other
forms of control over the company are exercised by the
Government of the People's Republic of China or the
Communist Party of China.
``(F) Whether executive-level employees and board
members of the company have immediate family members
who are senior officials of the Communist Party of
China or the Government of the People's Republic of
China or are themselves senior officials of the
Communist Party of China or the Government of the
People's Republic of China.
``(G) Whether the company is part of (including by
reason of being a branch or subsidiary) or tied to
(through a series of contracts or parallel corporate
incorporations) firms or individuals sanctioned,
restricted, or identified as tied to the People's
Liberation Army by the United States Government,
including under--
``(i) the Military End User List maintained
by the Bureau of Industry and Security of the
Department of Commerce;
``(ii) the Non-SDN Chinese Military-
Industrial Complex Companies List;
``(iii) the Unverified List maintained by
the Secretary of Commerce;
``(iv) the List maintained by the Federal
Communications Commission of equipment and
services covered by section 2 of the Secure and
Trusted Communications Networks Act of 2019 (47
U.S.C. 1601);
``(v) the Uyghur Forced Labor Prevention
Act Entity List maintained by the Department of
Homeland Security;
``(vi) the list of covered issuers subject
to a prohibition under section 104 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214)
maintained by the Securities and Exchange
Commission; and
``(vii) the Withhold Release Orders and
Findings List maintained by the Commissioner of
U.S. Customs and Border Protection.
``(H) The types of products and services offered by
the company.
``(I) Whether the company has a contract with the
United States Department of Defense.
``(J) Whether the company produces a product or
service that is used in the production of aircraft,
spacecraft, semiconductor chips and equipment,
batteries or battery components, facial recognition
technology, artificial intelligence, telecommunications
technology, energy production equipment, advanced
medical devices, or pharmaceuticals or any such
products related to the national technology and
industrial base in the United States.
``(K) Whether the company produces goods that would
violate U.S. environmental law or U.S. civil liberties
law if the goods were produced or used in the United
States.
``(L) Any business activities conducted by the
company--
``(i) with a privately held firm involved
in China's industrial, technology, and military
modernization efforts based in the People's
Republic of China; or
``(ii) with a Chinese state-controlled
entity.
``(M) Whether the company has ever had an audit of
the same type and quality as typically used by an
issuer of publicly traded securities.
``(2) Definitions.--In this subsection:
``(A) Exchange traded fund.--The term `exchange
traded fund' has the meaning given that term under
section 270.6c-11 of title 17, Code of Federal
Regulations.
``(B) Other definitions.--The terms `Communist
Party of China', `Government of the People's Republic
of China', `immediate family member', and `PRC' have
the meaning given those terms, respectively, under
subsection (s)(2).''.
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