[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3248 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 3248
To establish a domestic ownership succession investment facility, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 7, 2025
Mr. Moore of Utah (for himself, Mrs. Trahan, Mr. Johnson of South
Dakota, and Mr. Foster) introduced the following bill; which was
referred to the Committee on Financial Services, and in addition to the
Committee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To establish a domestic ownership succession investment facility, 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 ``American Ownership and Resilience
Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) 1940 act company.--The term ``1940 Act Company'' means
an investment company subject to registration under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(2) 1980 act company.--The term ``1980 Act Company'' means
an investment company subject to registration under the Small
Business Investment Incentive Act of 1980 (15 U.S.C. 80a-51 et
seq.).
(3) Articles.--The term ``articles'' means--
(A) articles of incorporation for an incorporated
body; or
(B) the functional equivalent or other similar
documents specified by the Secretary for other business
entities.
(4) Capital interest.--The term ``capital interest'' means
an interest in a subsidiary LLC determined at the time of
receipt that gives the holder of the interest a share of the
proceeds in a complete liquidation of the subsidiary LLC if the
assets of the subsidiary LLC are sold at fair market value.
(5) Covered business concern.--The term ``covered business
concern'' means an enterprise, regardless of any size standard,
that is independently owned and operated, except that an
investment by a venture capital firm, investment company,
employee welfare benefit plan or pension plan, or trust,
foundation, or endowment that is exempt from Federal income
taxation shall not cause a business concern to be deemed not
independently owned and operated regardless of the allocation
of control during the investment period under any investment
agreement between the business concern and the entity making
the investment.
(6) Covered investment.--The term ``covered investment''
means, with respect to an investment in a covered business
concern--
(A) the provision of capital to finance the sale of
an ownership interest of a covered business concern,
including a covered business concern created as a
result of a corporate divestiture, to an employee stock
ownership plan or eligible worker-owned cooperative if
such sale results in--
(i) the employee stock ownership plan or
eligible worker-owned cooperative,
respectively, holding a majority interest of
the outstanding stock of the covered business
concern; and
(ii) with respect to such a sale to an
employee stock ownership plan, the appointment
of an independent trustee for the transaction;
or
(B) the provision of capital to finance a covered
business concern if--
(i) an employee stock ownership plan or
eligible worker-owned cooperative holds a
majority interest of the outstanding stock of
the covered business concern, prior to and
immediately following the provision of capital;
and
(ii) the provision of capital does not
reduce the percentage of stock of the covered
business concern held by the employee stock
ownership plan or eligible worker-owned
cooperative (as applicable), excluding any
synthetic equity.
(7) Department.--The term ``Department'' means the
Department of Commerce.
(8) Eligible worker-owned cooperative.--The term ``eligible
worker-owned cooperative'' has the meaning given that term in
section 1042(c) of the Internal Revenue Code of 1986.
(9) Employee stock ownership plan.--The term ``employee
stock ownership plan'' has the meaning given that term in
section 4975(e) of the Internal Revenue Code of 1986.
(10) Employee welfare benefit plan; pension plan.--The
terms ``employee welfare benefit plan'' and ``pension plan''--
(A) have the meanings given those terms in section
3 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002); and
(B) include--
(i) public and private pension or
retirement plans subject to such Act; and
(ii) similar plans not covered by such Act
that have been established and that are
maintained by the Federal Government or any
State or political subdivision, or any agency
or instrumentality thereof, for the benefit of
employees.
(11) Independent financial advisor.--The term ``independent
financial advisor'' means a financial or valuation advisor
that--
(A) is in the profession of serving as a financial
or valuation advisor for transactions involving
employee stock ownership plans;
(B) has never--
(i) performed services, including a
preliminary valuation, for or on behalf of--
(I) any party selling an ownership
interest in the covered business
concern to the employee stock ownership
plan involved in the transaction that
the advisor is evaluating; or
(II) the covered business concern,
unless the services were provided
solely to an existing employee stock
ownership plan sponsored by the covered
business concern; or
(ii) been a director, officer, or employee
of the covered business concern;
(C) has not performed services related to the
transaction the advisor is evaluating, including a
preliminary valuation, for or on behalf of--
(i) the ownership investment company that
is preparing to or has already allocated
capital to the covered business concern; or
(ii) any other entity that is structuring
or financing the transaction for any party
other than the employee stock ownership plan;
and
(D) does not have a familial or corporate
relationship (such as a parent-subsidiary relationship)
to any of person or entity described in subparagraph
(B) or (C).
(12) Independent trustee.--The term ``independent trustee''
means a trustee that--
(A) is in the profession of serving as a fiduciary
for employee stock ownership plans;
(B) has never--
(i) performed services for or on behalf of
any party selling an ownership interest in the
covered business concern to the employee stock
ownership plan involved in the transaction that
the trustee is considering; or
(ii) been a director, officer, or employee
of the covered business concern;
(C) has not performed services for or on behalf of
the covered business concern at any time during the 5-
year period ending on the date of execution of the
transaction the trustee is considering, unless such
services solely consisted of acting as a fiduciary of
an employee benefit plan (including an employee stock
ownership plan) under the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1001 et seq.);
(D) has not performed services related to the
transaction the trustee is considering, for or on
behalf of--
(i) the ownership investment company that
is preparing to or has already allocated
capital to the covered business concern; or
(ii) any other entity that is structuring
or financing the transaction for any party
other than the employee stock ownership plan;
and
(E) does not have a familial or corporate
relationship (such as a parent-subsidiary relationship)
to any person or entity described in subparagraph (B),
(C), or (D).
(13) Leverage.--The term ``leverage'' means debentures
guaranteed by the Department.
(14) License.--The term ``license'' means a license issued
by the Department as provided in section 4(c).
(15) Licensee.--The term ``licensee'' means a company
approved by the Secretary to operate under the provisions of
this Act and issued a license provided in section 4(c).
(16) Limited liability company.--The term ``limited
liability company'' means a business entity that is organized
and operating in accordance with a State limited liability
company statute approved by the Department.
(17) Member.--The term ``member'' means, with respect to a
licensee that is a limited liability company, a holder of an
ownership interest or a person otherwise admitted to membership
in the limited liability company.
(18) Non-leveraged licensee.--The term ``non-leveraged
licensee'' means a licensee that--
(A) has no outstanding leverage or leverage
commitment; and
(B) certifies to the Department in writing that the
licensee will not seek leverage in the future.
(19) Outstanding stock.--The term ``outstanding stock''
means shares of stock, including synthetic equity.
(20) Ownership investment company.--The term ``ownership
investment company'' means--
(A) a company approved by the Secretary to operate
under the provisions of this Act and issued a license
as provided in section 4(c); and
(B) for which--
(i) 100 percent of the total capital
managed by the investment firm shall be
invested in covered investments;
(ii) not less than 50 percent of the total
capital managed by the investment firm shall be
invested in covered investments described in
paragraph (6)(A); and
(iii) covered investment returns are
obtained from debt, synthetic equity, preferred
stock, equity, or a combination thereof,
including returns obtained from cash interest,
payment-in-kind interest, and stock warrants.
(21) Preferred stock.--The term ``preferred stock'' has the
meaning given that term in section 351(g)(3) of the Internal
Revenue Code of 1986.
(22) Private capital.--The term ``private capital''--
(A) means the sum of--
(i) the paid-in capital and paid-in surplus
of a corporate licensee, the contributed
capital of the partners of a partnership
licensee, or the equity investment of the
members of a limited liability company
licensee; and
(ii) unfunded binding commitments, from
investors that meet criteria established by the
Secretary, to contribute capital to the
licensee, provided that such unfunded
commitments may be counted as private capital
for purposes of approval by the Secretary of
any request for leverage, but leverage shall
not be funded based on such commitments; and
(B) does not include any--
(i) funds borrowed by a licensee from any
source;
(ii) funds obtained through the issuance of
leverage; or
(iii) funds obtained directly or indirectly
from any Federal, State, or local government,
or any government agency or instrumentality,
except for--
(I) funds obtained from the
business revenues (excluding any
governmental appropriation) of any
federally chartered or government-
sponsored corporation established
before October 1, 1987;
(II) funds invested by an employee
welfare benefit plan or pension plan;
and
(III) any qualified nonprivate
funds (if the investors of the
qualified nonprivate funds do not
control, directly or indirectly, the
management, board of directors, general
partners, or members of the licensee).
(23) Profits interest.--The term ``profits interests''
means an interest in a subsidiary LLC other than a capital
interest.
(24) Protege oic.--The term ``Protege OIC'' means an entity
licensed under section 4(c) as an ownership investment company
and selected in accordance with section 6--
(A) for which the managers of the firm have a
documented record of successful business experience;
and
(B) that has an investment track record that does
not meet the requirements under section 4(c)(3)(B)(i).
(25) Secretary.--The term ``Secretary'' means the Secretary
of Commerce.
(26) State.--The term ``State'' includes the several
States, the territories and possessions of the United States,
the Commonwealth of Puerto Rico, and the District of Columbia.
(27) Subsidiary llc.--The term ``subsidiary LLC'' means a
limited liability company owned by a corporation through equity
ownership of the subsidiary with a common parent corporation,
as described in section 1563 of the Internal Revenue Code of
1986, in which--
(A) the equity of the subsidiary LLC owned by the
corporation possesses not less than 80 percent of the
total combined voting power of all classes of equity of
the subsidiary LLC entitled to vote; and
(B) the equity value of the subsidiary LLC owned by
the corporation that represents--
(i) not less than 51 percent of the total
value of all classes of equity of the
subsidiary LLC; and
(ii) not less than 51 percent equity
ownership of the subsidiary LLC.
(28) Synthetic equity.--The term ``synthetic equity''
includes--
(A) synthetic equity, as defined in section
409(p)(6) of the Internal Revenue Code of 1986;
(B) a profits interest of a subsidiary LLC granted
to, purchased by, or otherwise obtained directly or
indirectly by employees and directors of the subsidiary
LLC; and
(C) nonqualified deferred compensation plans and
arrangements subject to section 409A of the Internal
Revenue Code of 1986.
(29) Third-party debt.--The term ``third-party debt'' means
any indebtedness for borrowed money, other than indebtedness
owed to the Department.
SEC. 3. OWNERSHIP INVESTMENT FACILITY.
(a) Definition of Facility.--In this section, the term ``facility''
means the facility established under subsection (b).
(b) Establishment.--The Secretary shall establish and carry out a
facility to provide leverage to licensed ownership investment companies
for the purpose of encouraging covered investments.
(c) Combined Leverage.--The Secretary may not provide leverage to
ownership investment companies under the facility in a total amount
that is greater than $5,000,000,000 for a fiscal year. Not more than 20
percent of such total amount may be provided to Protege OIC companies
for a fiscal year.
(d) Transaction Requirements.--
(1) In general.--With respect to a covered investment
described in section 2(6)(A) involving a sale to an employee
stock ownership plan, an independent trustee for the employee
stock ownership plan shall be appointed by the covered business
concern before the execution of the covered investment for a
period of time