S.Amdt. 2661

SA 2661. Mr. BAYH submitted an amendment intended to be proposed by him to the bill S. 1637, to amend the Internal Revenue Code of 1986 to comply with the World Trade Organization rulings on the FSC/ETI benefit in a manner that preserves jobs and production activities in the United States, to reform and simplify the international taxation rules of the United States, and for other purposes; which was ordered to lie on the table; as follows:

On page 89, between lines 2 and 3 of Amendment No. 2645, as agreed to, insert the following:

(e) Disclosure of Corporate Expatriation Transactions.--

(1) In general.--Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n) is amended by adding at the end the following new subsection:

“(i) Proxy Solicitations in Connection With Corporate Expatriation Transactions.--

“(1) Disclosure to shareholders of effects of corporate expatriation transaction.--The Commission shall, by rule, require that each domestic issuer shall prominently disclose, not later than 5 business days before any shareholder vote relating to a corporate expatriation transaction, as a separate and distinct document accompanying each proxy statement relating to the transaction--

“(A) the number of employees of the domestic issuer that would be located in the new foreign jurisdiction of incorporation or organization of that issuer upon completion of the corporate expatriation transaction;

“(B) how the rights of holders of the securities of the domestic issuer would be impacted by a completed corporate expatriation transaction, and any differences in such rights before and after a completed corporate expatriation transaction; and

“(C) that, as a result of a completed corporate expatriation transaction, any taxable holder of the securities of the domestic issuer shall be subject to the taxation of any capital gains realized with respect to such securities, and the amount of any such capital gains tax that would apply as a result of the transaction.

“(2) Definitions.--In this subsection, the following definitions shall apply:

“(A) Corporate expatriation transaction.--The term ‘corporate expatriation transaction' means any transaction, or series of related transactions, in which an entity organized under the laws of a foreign country acquires, directly or indirectly, substantially all of the voting securities in, or substantially all of the assets of, a domestic issuer, and--

“(i) immediately after completion of the transaction, more than 80 percent of the securities (by vote or value) of the acquiring foreign entity will be held by persons that were security holders of the domestic issuer immediately prior to the transaction; or

“(ii) immediately after completion of the transaction, more than 50 percent of the securities (by vote or value) of the acquiring foreign entity will be held by persons that were security holders of the domestic issuer immediately prior to the transaction, and--

“(I) such foreign entity will not have substantial business activities in the foreign country in which it is organized; and

“(II) the securities of the foreign entity will be publicly traded, and the principal market for the public trading of such securities will be in the United States.

“(B) Domestic issuer.--The term ‘domestic issuer' means an issuer created or organized in the United States or under the law of the United States or of any State.”.

(2) Effective date.--Section 14(i) of the Securities Exchange Act of 1934 (as added by this subsection) shall apply with respect to corporate expatriation transactions (as defined in that section 14(i)) proposed on and after the date of enactment of this Act.