New York S 5636: Establishes the diversity in investment act requiring certain venture capital companies to report diversity information about its funding determinations

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S05636 Summary:

BILL NOS05636 

&nbsp

SAME ASSAME AS A00758

&nbsp

SPONSORHOYLMAN-SIGAL

&nbsp

COSPNSR

&nbsp

MLTSPNSR

&nbsp

Add §113, BC L

&nbsp

Establishes the diversity in investment act requiring certain venture capital companies to report diversity information about its funding determinations; requires reports to be published on the venture capital companies' websites; establishes penalties for failure to complete and publish such reports.

Go to top S05636 Actions:

BILL NOS05636 

&nbsp

02/26/2025REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS

Go to topS05636 Committee&nbspVotes:

Go to topS05636 Floor&nbspVotes:

There are no Assembly votes for this bill in this legislative session.

Go to topS05636 Text:

 STATE OF NEW YORK
 ________________________________________________________________________

 5636

 2025-2026 Regular Sessions

 IN SENATE

 February 26, 2025
 ___________

 Introduced by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
 when printed to be committed to the Committee on Corporations, Author-
 ities and Commissions

 AN ACT to amend the business corporation law, in relation to requiring
 certain venture capital companies to report diversity information
 about its funding determinations

 The People of the State of New York, represented in Senate and Assem-
 bly, do enact as follows:

 1 Section 1. This act shall be known and may be cited as the "diversity
 2 in investment act".
 3 § 2. The business corporation law is amended by adding a new section
 4 113 to read as follows:
 5 § 113. Diversity in investment practices by venture capital companies.
 6 (a) For the purposes of this section, unless the context clearly has a
 7 different meaning:
 8 (1) "Venture capital company" means an entity that meets at least one
 9 of the following criteria:
 10 (i) is a venture capital fund;
 11 (ii) is a venture capital operating company; or
 12 (iii) on at least one occasion during the annual period commencing
 13 with the date of its initial capitalization, and on at least one occa-
 14 sion during each annual period thereafter, at least fifty percent of its
 15 assets (other than short-term investments pending long-term commitment
 16 or distribution to investors), valued at cost, are venture capital
 17 investments or derivative investments.
 18 (2) "Venture capital fund" means an entity as defined in rule 203(l)-1
 19 adopted by the securities and exchange commission under the investment
 20 advisers act of 1940.
 21 (3) "Venture capital operating company" means an entity as defined in
 22 rule 2510.3-101(d) adopted by the United States department of labor
 23 under the employee retirement income security act of 1974.

 EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD01362-02-5

 S. 5636 2

 1 (4) "Venture capital investment" means an acquisition of securities in
 2 an operating company as to which the investment adviser, the entity
 3 advised by the investment adviser, or an affiliated person of either has
 4 or obtains management rights.
 5 (5) "Management rights" means the right, obtained contractually or
 6 through ownership of securities, either through one person alone or in
 7 conjunction with one or more persons acting together or through an
 8 affiliated person, to substantially participate in, to substantially
 9 influence the conduct of, or to provide or to offer to provide signif-
 10 icant guidance and counsel concerning, the management, operations or
 11 business objectives of the operating company in which the venture capi-
 12 tal investment is made.
 13 (6) "Derivative investment" means an acquisition of securities by a
 14 venture capital company in the ordinary course of its business in
 15 exchange for an existing venture capital investment either: upon the
 16 exercise or conversion of the existing venture capital investment; or in
 17 connection with a public offering of securities or the merger or reor-
 18 ganization of the operating company to which the existing venture capi-
 19 tal investment relates.
 20 (7) "Covered entity" means a venture capital company that meets both
 21 of the following criteria:
 22 (i) The venture capital company meets either of the following crite-
 23 ria:
 24 (A) T