text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Small Business Mergers, 
  Acquisitions, Sales, and Brokerage Simplification Act of 2014''.
  
  SEC. 2. REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION BROKERS.
  
      Section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
  78o(b)) is amended by adding at the end the following:
              ``(13) Registration exemption for merger and acquisition 
          brokers.--
                      ``(A) In general.--Except as provided in 
                  subparagraph (B), an M&A broker shall be exempt from 
                  registration under this section.
                      ``(B) Excluded activities.--An M&A broker is not 
                  exempt from registration under this paragraph if such 
                  broker does any of the following:
                              ``(i) Directly or indirectly, in connection 
                          with the transfer of ownership of an eligible 
                          privately held company, receives, holds, 
                          transmits, or has custody of the funds or 
                          securities to be exchanged by the parties to 
                          the transaction.
                              ``(ii) Engages on behalf of an issuer in a 
                          public offering of any class of securities that 
                          is registered, or is required to be registered, 
                          with the Commission under section 12 or with 
                          respect to which the issuer files, or is 
                          required to file, periodic information, 
                          documents, and reports under subsection (d).
                      ``(C) Rule of construction.--Nothing in this 
                  paragraph shall be construed to limit any other 
                  authority of the Commission to exempt any person, or 
                  any class of persons, from any provision of this title, 
                  or from any provision of any rule or regulation 
                  thereunder.
                      ``(D) Definitions.--In this paragraph:
                              ``(i) Control.--The term `control' means 
                          the power, directly or indirectly, to direct 
                          the management or policies of a company, 
                          whether through ownership of securities, by 
                          contract, or otherwise. There is a presumption 
                          of control for any person who--
                                      ``(I) is a director, general 
                                  partner, member or manager of a limited 
                                  liability company, or officer 
                                  exercising executive responsibility (or 
                                  has similar status or functions);
                                      ``(II) has the right to vote 20 
                                  percent or more of a class of voting 
                                  securities or the power to sell or 
                                  direct the sale of 20 percent or more 
                                  of a class of voting securities; or
                                      ``(III) in the case of a 
                                  partnership or limited liability 
                                  company, has the right to receive upon 
                                  dissolution, or has contributed, 20 
                                  percent or more of the capital.
                              ``(ii) Eligible privately held company.--
                          The term `eligible privately held company' 
                          means a company that meets both of the 
                          following conditions:
                                      ``(I) The company does not have any 
                                  class of securities registered, or 
                                  required to be registered, with the 
                                  Commission under section 12 or with 
                                  respect to which the company files, or 
                                  is required to file, periodic 
                                  information, documents, and reports 
                                  under subsection (d).
                                      ``(II) In the fiscal year ending 
                                  immediately before the fiscal year in 
                                  which the services of the M&A broker 
                                  are initially engaged with respect to 
                                  the securities transaction, the company 
                                  meets either or both of the following 
                                  conditions (determined in accordance 
                                  with the historical financial 
                                  accounting records of the company):
                                              ``(aa) The earnings of the 
                                          company before interest, taxes, 
                                          depreciation, and amortization 
                                          are less than $25,000,000.
                                              ``(bb) The gross revenues 
                                          of the company are less than 
                                          $250,000,000.
                              ``(iii) M&A broker.--The term `M&A broker' 
                          means a broker, and any person associated with 
                          a broker, engaged in the business of effecting 
                          securities transactions solely in connection 
                          with the transfer of ownership of an eligible 
                          privately held company, regardless of whether 
                          the broker acts on behalf of a seller or buyer, 
                          through the purchase, sale, exchange, issuance, 
                          repurchase, or redemption of, or a business 
                          combination involving, securities or assets of 
                          the eligible privately held company, if the 
                          broker reasonably believes that--
                                      ``(I) upon consummation of the 
                                  transaction, any person acquiring 
                                  securities or assets of the eligible 
                                  privately held company, acting alone or 
                                  in concert, will control and, directly 
                                  or indirectly, will be active in the 
                                  management of the eligible privately 
                                  held company or the business conducted 
                                  with the assets of the eligible 
                                  privately held company; and
                                      ``(II) if any person is offered 
                                  securities in exchange for securities 
                                  or assets of the eligible privately 
                                  held company, such person will, prior 
                                  to becoming legally bound to consummate 
                                  the transaction, receive or have 
                                  reasonable access to the most recent 
                                  year-end balance sheet, income 
                                  statement, statement of changes in 
                                  financial position, and statement of 
                                  owner's equity of the issuer of the 
                                  securities offered in exchange, and, if 
                                  the financial statements of the issuer 
                                  are audited, the related report of the 
                                  independent auditor, a balance sheet 
                                  dated not more than 120 days before the 
                                  date of the offer, and information 
                                  pertaining to the management, business, 
                                  results of operations for the period 
                                  covered by the foregoing financial 
                                  statements, and material loss 
                                  contingencies of the issuer.
                      ``(E) Inflation adjustment.--
                              ``(i) In general.--On the date that is 5 
                          years after the date of the enactment of the 
                          Small Business Mergers, Acquisitions, Sales, 
                          and Brokerage Simplification Act of 2014, and 
                          every 5 years thereafter, each dollar amount in 
                          subparagraph (D)(ii)(II) shall be adjusted by--
                                      ``(I) dividing the annual value of 
                                  the Employment Cost Index For Wages and 
                                  Salaries, Private Industry Workers (or 
                                  any successor index), as published by 
                                  the Bureau of Labor Statistics, for the 
                                  calendar year preceding the calendar 
                                  year in which the adjustment is being 
                                  made by the annual value of such index 
                                  (or successor) for the calendar year 
                                  ending December 31, 2012; and
                                      ``(II) multiplying such dollar 
                                  amount by the quotient obtained under 
                                  subclause (I).
                              ``(ii) Rounding.--Each dollar amount 
                          determined under clause (i) shall be rounded to 
                          the nearest multiple of $100,000.''.
  
  SEC. 3. EFFECTIVE DATE.
  
      This Act and any amendment made by this Act shall take effect on 
  the date that is 90 days after the date of the enactment of this Act.
  
              Passed the House of Representatives January 14, 2014.
  
              Attest:
  
                                                   KAREN L. HAAS,
  
                                                                   Clerk.
target: Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2014 - Amends the Securities Exchange Act of 1934 to exempt from its registration requirements certain merger and acquisition (M&amp;A) brokers and associated persons. Denies such registration exemption, however, to brokers who: (1) receive, hold, transmit, or have custody of any funds or securities to be exchanged by parties to a transfer of ownership of an eligible privately held company; or (2) engage on behalf of an issuer in a public offering of securities that are either subject to mandatory registration, or with respect to which the issuer must file periodic information, documents, and reports.  Prohibits the construction of this Act to limit any other authority of the Securities and Exchange Commission (SEC) to exempt any person, or any class of persons, from any provision of this Act, including any related rule or regulation.
feat_title: Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2014