RESTRICTIONS ON BLANK CHECK OFFERINGS.

SEC. 508. RESTRICTIONS ON BLANK CHECK OFFERINGS. Section 7 of the Securities Act of 1933 (15 U.S.C. 77g) is amended— (1) by inserting “(a)” after “Sec. 7.”; and (2) by adding at the end thereof the following new subsection: “(b) (1) The Commission shall prescribe special rules with respect to registration statements filed by any issuer that is a blank check company. Such rules may, as the Commission determines necessary or appropriate in the public interest or for the protection of investors— “(A) require such issuers to provide timely disclosure, prior to or after such statement becomes effective under section 8, of (i) information regarding the company to be acquired and the specific application of the proceeds of the offering, or (ii) addi-104 STAT. 957tional information necessary to prevent such statement from being misleading; “(B) place limitations on the use of such proceeds and the distribution of securities by such issuer until the disclosures required under subparagraph (A) have been made; and “(C) provide a right of rescission to shareholders of such securities. “(2) The Commission may, as it determines consistent with the public interest and the protection of investors, by rule or order exempt any issuer or class of issuers from the rules prescribed under paragraph (1). “(3) For purposes of paragraph (1) of this subsection, the term ‘blank check company’ means any development stage company that is issuing a penny stock (within the meaning of section 3(a)(51) of the Securities Exchange Act of 1934) and that— “(A) has no specific business plan or purpose; or “(B) has indicated that its business plan is to merge with an unidentified company or companies.”.