HF 1564

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; providing enforcement authority 
  1.3             for the commissioner; regulating service of process; 
  1.4             regulating residential building contractors and 
  1.5             remodelers; providing criminal penalties; amending 
  1.6             Minnesota Statutes 1998, sections 45.027, subdivisions 
  1.7             6 and 7; 45.028, subdivision 2; 60B.04, by adding a 
  1.8             subdivision; 80A.15, subdivision 2; 326.83, 
  1.9             subdivision 18; 326.89, subdivision 3; 326.92, by 
  1.10            adding a subdivision; 326.94, subdivision 2; and 
  1.11            332.37; proposing coding for new law in Minnesota 
  1.12            Statutes, chapters 60B; and 82B; repealing Minnesota 
  1.13            Statutes 1998, section 326.89, subdivision 3a. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1998, section 45.027, 
  1.16  subdivision 6, is amended to read: 
  1.17     Subd. 6.  [VIOLATIONS AND PENALTIES.] The commissioner may 
  1.18  impose a civil penalty not to exceed $2,000 $10,000 per 
  1.19  violation upon a person who violates any law, rule, or order 
  1.20  related to the duties and responsibilities entrusted to the 
  1.21  commissioner unless a different penalty is specified.  
  1.22     Sec. 2.  Minnesota Statutes 1998, section 45.027, 
  1.23  subdivision 7, is amended to read: 
  1.24     Subd. 7.  [ACTIONS AGAINST LICENSEES.] (a) In addition to 
  1.25  any other actions authorized by this section, the commissioner 
  1.26  may, by order, deny, suspend, or revoke the authority or license 
  1.27  of a person subject to the duties and responsibilities entrusted 
  1.28  to the commissioner, as described under section 45.011, 
  1.29  subdivision 4, or censure that person if the commissioner finds 
  2.1   that: 
  2.2      (1) the order is in the public interest; and 
  2.3      (2) the person has violated any law, rule, or order related 
  2.4   to the duties and responsibilities entrusted to the 
  2.5   commissioner; or 
  2.6      (3) the person has provided false, misleading, or 
  2.7   incomplete information to the commissioner or has refused to 
  2.8   allow a reasonable inspection of records or premises; or 
  2.9      (4) the person has engaged in an act or practice, whether 
  2.10  or not the act or practice directly involves the business for 
  2.11  which the person is licensed or authorized, which demonstrates 
  2.12  that the applicant or licensee is untrustworthy, financially 
  2.13  irresponsible, or otherwise incompetent or unqualified to act 
  2.14  under the authority or license granted by the commissioner. 
  2.15     (b) The commissioner shall issue an order requiring a 
  2.16  licensee or applicant for a license to show cause why the 
  2.17  license should not be revoked or suspended, or the licensee 
  2.18  censured, or the application denied.  The order must be 
  2.19  calculated to give reasonable notice of the time and place for a 
  2.20  hearing on the action, and must state the reasons for the entry 
  2.21  of the order.  The commissioner may, by order, summarily suspend 
  2.22  a license pending final determination of an order to show cause. 
  2.23  If a license is suspended pending final determination of an 
  2.24  order to show cause, a hearing on the merits must be held within 
  2.25  30 days of the issuance of the order of suspension.  All 
  2.26  hearings must be conducted according to chapter 14.  After the 
  2.27  hearing, the commissioner shall enter an order disposing of the 
  2.28  matter as the facts require.  If the licensee or applicant fails 
  2.29  to appear at a hearing after having been duly notified of it, 
  2.30  the person is considered in default, and the proceeding may be 
  2.31  determined against the licensee or applicant upon consideration 
  2.32  of the order to show cause, the allegations of which may be 
  2.33  considered true.  The summary suspension or summary revocation 
  2.34  procedures does not apply to action by the commissioner against 
  2.35  the certificate of authority of an insurer authorized to do 
  2.36  business in Minnesota.  
  3.1      Except for information classified as confidential under 
  3.2   sections 60A.03, subdivision 9; 60A.031; 60A.93; and 60D.22, the 
  3.3   commissioner may make any data otherwise classified as private 
  3.4   or confidential pursuant to this section accessible to an 
  3.5   appropriate person or agency if the commissioner determines that 
  3.6   the access will aid the law enforcement process, promote public 
  3.7   health or safety, or dispel widespread rumor or unrest.  If the 
  3.8   commissioner determines that private or confidential information 
  3.9   should be disclosed, the commissioner shall notify the attorney 
  3.10  general as to the information to be disclosed, the purpose of 
  3.11  the disclosure, and the need for the disclosure.  The attorney 
  3.12  general shall review the commissioner's determination.  If the 
  3.13  attorney general believes that the commissioner's determination 
  3.14  does not satisfy the purpose and intent of this provision, the 
  3.15  attorney general shall advise the commissioner in writing that 
  3.16  the information may not be disclosed.  If the attorney general 
  3.17  believes the commissioner's determination satisfies the purpose 
  3.18  and intent of this provision, the attorney general shall advise 
  3.19  the commissioner in writing, accordingly. 
  3.20     After disclosing information pursuant to this provision, 
  3.21  the commissioner shall advise the chairs of the senate and house 
  3.22  of representatives judiciary committees of the disclosure and 
  3.23  the basis for it. 
  3.24     Sec. 3.  Minnesota Statutes 1998, section 45.028, 
  3.25  subdivision 2, is amended to read: 
  3.26     Subd. 2.  [HOW MADE.] Service of process under this section 
  3.27  may be made by leaving a copy of the process in the office of 
  3.28  the commissioner, or by sending a copy of the process to the 
  3.29  commissioner by certified mail, and is not effective unless:  (1)
  3.30  the plaintiff, who may be the commissioner in an action or 
  3.31  proceeding instituted by the commissioner, sends notice of the 
  3.32  service and a copy of the process by certified mail to the 
  3.33  defendant or respondent at the last known address; and (2) the 
  3.34  plaintiff's affidavit of compliance is filed in the action or 
  3.35  proceeding on or before the return day of the process, if any, 
  3.36  or within further time as the court allows.  
  4.1      Sec. 4.  Minnesota Statutes 1998, section 60B.04, is 
  4.2   amended by adding a subdivision to read: 
  4.3      Subd. 7.  [JURISDICTION.] If there is a delinquency 
  4.4   proceeding under this chapter, the provisions of this chapter 
  4.5   govern those proceedings, and all conflicting contractual 
  4.6   provisions contained in a contract between the insurer that is 
  4.7   subject to the delinquency proceeding and a third party, 
  4.8   including, but not limited to, the choice of law or arbitration 
  4.9   provisions, are subordinated to the provisions of this chapter. 
  4.10     Sec. 5.  [60B.085] [IMMUNITY AND INDEMNIFICATION OF THE 
  4.11  RECEIVER AND EMPLOYEES.] 
  4.12     Subdivision 1.  [SCOPE.] The persons entitled to protection 
  4.13  under this section are: 
  4.14     (1) all receivers responsible for the conduct of a 
  4.15  delinquency proceeding under this chapter, including present and 
  4.16  former receivers; and 
  4.17     (2) their employees, meaning all present and former special 
  4.18  deputies and assistant special deputies, and all persons whom 
  4.19  the commissioner, special deputies, or assistant special 
  4.20  deputies have employed to assist in a delinquency proceeding 
  4.21  under this chapter.  Attorneys, accountants, auditors, and other 
  4.22  professional persons or firms, who are retained by the receiver 
  4.23  as independent contractors and their employees shall not be 
  4.24  considered employees of the receiver for purposes of this 
  4.25  section. 
  4.26     Subd. 2.  [IMMUNITY FROM LIABILITY.] The receiver and the 
  4.27  receiver's employees shall have official immunity and shall be 
  4.28  immune from suit and liability, both personally and in their 
  4.29  official capacities, for a claim for damage to or loss of 
  4.30  property or personal injury or other civil liability caused by 
  4.31  or resulting from an alleged act, error, or omission of the 
  4.32  receiver or an employee arising out of or by reason of their 
  4.33  duties or employment.  Nothing in this subdivision shall be 
  4.34  construed to hold the receiver or an employee immune from suit 
  4.35  and liability for damage, loss, injury, or other civil liability 
  4.36  caused by the intentional or willful and wanton misconduct of 
  5.1   the receiver or an employee. 
  5.2      Subd. 3.  [INDEMNIFICATION.] If a legal action is commenced 
  5.3   against the receiver or any employee, whether against the 
  5.4   receiver or employee personally or in their official capacity, 
  5.5   alleging property damage, property loss, personal injury, or 
  5.6   other civil liability caused by or resulting from an alleged 
  5.7   act, error, or omission of the receiver or an employee arising 
  5.8   out of or by reason of their duties or employment, the receiver 
  5.9   and employee must be indemnified from the assets of the insurer 
  5.10  for all expenses, attorneys' fees, judgments, settlements, 
  5.11  decrees, or amounts due and owing or paid in satisfaction or 
  5.12  incurred in the defense of the legal action unless it is 
  5.13  determined upon a final adjudication on the merits that the 
  5.14  alleged act, error, or omission of the receiver or employee 
  5.15  giving rise to the claim did not arise out of or by reason of 
  5.16  the receiver's or employee's duties or employment, or was caused 
  5.17  by intentional or willful and wanton misconduct. 
  5.18     (a) Attorney's fees and related expenses incurred in 
  5.19  defending a legal action for which immunity or indemnity is 
  5.20  available under this section must be paid from the assets of the 
  5.21  insurer, as they are incurred, in advance of the final 
  5.22  disposition of the action upon receipt of an undertaking by or 
  5.23  on behalf of the receiver or employee to repay the attorneys' 
  5.24  fees and expenses if it is ultimately determined upon a final 
  5.25  adjudication on the merits that the receiver or employee is not 
  5.26  entitled to immunity or indemnity under this section. 
  5.27     (b) Indemnification for expense payments, judgments, 
  5.28  settlements, decrees, attorneys' fees, surety bond premiums, or 
  5.29  other amounts paid or to be paid from the insurer's assets 
  5.30  according to this section is an administrative expense of the 
  5.31  insurer. 
  5.32     (c) In the event of an actual or threatened litigation 
  5.33  against a receiver or an employee for which immunity or 
  5.34  indemnity may be available under this section, a reasonable 
  5.35  amount of funds which in the judgment of the commissioner may be 
  5.36  needed to provide immunity or indemnity must be segregated and 
  6.1   reserved from the assets of the insurer as security for the 
  6.2   payment of indemnity until all applicable statutes of limitation 
  6.3   have run and all actual or threatened actions against the 
  6.4   receiver or an employee have been completely and finally 
  6.5   resolved, and all obligations of the insurer and the 
  6.6   commissioner under this section have been satisfied. 
  6.7      (d) In lieu of segregation and reserving of funds, the 
  6.8   commissioner may, in the commissioner's discretion, obtain a 
  6.9   surety bond or make other arrangements that will enable the 
  6.10  commissioner to fully secure the payment of all obligations 
  6.11  under this section. 
  6.12     Subd. 4.  [SETTLEMENT COVERAGE.] If a legal action against 
  6.13  an employee for which indemnity may be available under this 
  6.14  section is settled before final adjudication on the merits, the 
  6.15  insurer must pay the settlement amount on behalf of the 
  6.16  employee, or indemnify the employee for the settlement amount, 
  6.17  unless the commissioner determines: 
  6.18     (1) that the claim did not arise out of or by reason of the 
  6.19  employee's duties or employment; or 
  6.20     (2) that the claim was caused by the intentional or willful 
  6.21  and wanton misconduct of the employee. 
  6.22     Subd. 5.  [SETTLEMENT APPROVAL.] In a legal action in which 
  6.23  the receiver is a defendant, that portion of a settlement 
  6.24  relating to the alleged act, error, or omission of the receiver 
  6.25  is subject to the approval of the court before which the 
  6.26  delinquency proceeding is pending.  The court shall not approve 
  6.27  that portion of the settlement if it determines: 
  6.28     (1) that the claim did not arise out of or by reason of the 
  6.29  receiver's duties or employment; or 
  6.30     (2) that the claim was caused by the intentional or willful 
  6.31  and wanton misconduct of the receiver. 
  6.32     Subd. 6.  [CONSTRUCTION.] Nothing contained or implied in 
  6.33  this section operates, or shall be construed or applied, to 
  6.34  deprive the receiver or an employee of immunity, indemnity, 
  6.35  benefits of law, rights, or any defense otherwise available. 
  6.36     Sec. 6.  Minnesota Statutes 1998, section 80A.15, 
  7.1   subdivision 2, is amended to read: 
  7.2      Subd. 2.  The following transactions are exempted from 
  7.3   sections 80A.08 and 80A.16: 
  7.4      (a) Any sales, whether or not effected through a 
  7.5   broker-dealer, provided that: 
  7.6      (1) no person shall make more than ten sales of securities 
  7.7   of the same issuer pursuant to this exemption, exclusive of 
  7.8   sales according to clause (2), during any period of 12 
  7.9   consecutive months; provided further, that in the case of sales 
  7.10  by an issuer, except sales of securities registered under the 
  7.11  Securities Act of 1933 or exempted by section 3(b) of that act, 
  7.12  (i) the seller reasonably believes that all buyers are 
  7.13  purchasing for investment, and (ii) the securities are not 
  7.14  advertised for sale to the general public in newspapers or other 
  7.15  publications of general circulation or otherwise, or by radio, 
  7.16  television, electronic means or similar communications media, or 
  7.17  through a program of general solicitation by means of mail or 
  7.18  telephone; and 
  7.19     (2) no issuer shall make more than 25 sales of its 
  7.20  securities according to this exemption, exclusive of sales 
  7.21  pursuant to clause (1), during any period of 12 consecutive 
  7.22  months; provided further, that the issuer meets the conditions 
  7.23  in clause (1) and, in addition meets the following additional 
  7.24  conditions:  (i) files with the commissioner, ten days before a 
  7.25  sale according to this clause, a statement of issuer on a form 
  7.26  prescribed by the commissioner; and (ii) no commission or other 
  7.27  remuneration is paid or given directly or indirectly for 
  7.28  soliciting any prospective buyers in this state in connection 
  7.29  with a sale according to this clause except reasonable and 
  7.30  customary commissions paid by the issuer to a broker-dealer 
  7.31  licensed under this chapter. 
  7.32     (b) Any nonissuer distribution of an outstanding security 
  7.33  if (1) either Moody's, Fitch's, or Standard & Poor's Securities 
  7.34  Manuals, or other recognized manuals approved by the 
  7.35  commissioner contains the names of the issuer's officers and 
  7.36  directors, a balance sheet of the issuer as of a date not more 
  8.1   than 18 months prior to the date of the sale, and a profit and 
  8.2   loss statement for the fiscal year preceding the date of the 
  8.3   balance sheet, and (2) the issuer or its predecessor has been in 
  8.4   active, continuous business operation for the five-year period 
  8.5   next preceding the date of sale, and (3) if the security has a 
  8.6   fixed maturity or fixed interest or dividend provision, the 
  8.7   issuer has not, within the three preceding fiscal years, 
  8.8   defaulted in payment of principal, interest, or dividends on the 
  8.9   securities. 
  8.10     (c) The execution of any orders by a licensed broker-dealer 
  8.11  for the purchase or sale of any security, pursuant to an 
  8.12  unsolicited offer to purchase or sell; provided that the 
  8.13  broker-dealer acts as agent for the purchaser or seller, and has 
  8.14  no direct material interest in the sale or distribution of the 
  8.15  security, receives no commission, profit, or other compensation 
  8.16  from any source other than the purchaser and seller and delivers 
  8.17  to the purchaser and seller written confirmation of the 
  8.18  transaction which clearly itemizes the commission, or other 
  8.19  compensation. 
  8.20     (d) Any nonissuer sale of notes or bonds secured by a 
  8.21  mortgage lien if the entire mortgage, together with all notes or 
  8.22  bonds secured thereby, is sold to a single purchaser at a single 
  8.23  sale. 
  8.24     (e) Any judicial sale, exchange, or issuance of securities 
  8.25  made pursuant to an order of a court of competent jurisdiction. 
  8.26     (f) The sale, by a pledge holder, of a security pledged in 
  8.27  good faith as collateral for a bona fide debt. 
  8.28     (g) Any offer or sale to a bank, savings institution, trust 
  8.29  company, insurance company, investment company as defined in the 
  8.30  Investment Company Act of 1940, or other financial institution 
  8.31  or institutional buyer, or to a broker-dealer, whether the 
  8.32  purchaser is acting for itself or in some fiduciary capacity. 
  8.33     (h) An offer or sale of securities by an issuer made in 
  8.34  reliance on the exemptions provided by Rule 505 or 506 of 
  8.35  Regulation D promulgated by the Securities and Exchange 
  8.36  Commission, Code of Federal Regulations, title 17, sections 
  9.1   230.501 to 230.508, subject to the conditions and definitions 
  9.2   provided by Rules 501 to 503 of Regulation D, if the offer and 
  9.3   sale also satisfies the conditions and limitations in clauses 
  9.4   (1) to (10). 
  9.5      (1) The exemption under this paragraph is not available for 
  9.6   the securities of an issuer if any of the persons described in 
  9.7   Rule 252(c) to (f) of Regulation A promulgated by the Securities 
  9.8   and Exchange Commission, Code of Federal Regulations, title 17, 
  9.9   sections 230.251 to 230.263:  
  9.10     (i) has filed a registration statement that is the subject 
  9.11  of a currently effective order entered against the issuer, its 
  9.12  officers, directors, general partners, controlling persons, or 
  9.13  affiliates, according to any state's law within five years 
  9.14  before the filing of the notice required under clause (5), 
  9.15  denying effectiveness to, or suspending or revoking the 
  9.16  effectiveness of, the registration statement; 
  9.17     (ii) has been convicted, within five years before the 
  9.18  filing of the notice required under clause (5), of a felony or 
  9.19  misdemeanor in connection with the offer, sale, or purchase of a 
  9.20  security or franchise, or a felony involving fraud or deceit, 
  9.21  including but not limited to forgery, embezzlement, obtaining 
  9.22  money under false pretenses, larceny, or conspiracy to defraud; 
  9.23     (iii) is subject to an effective administrative order or 
  9.24  judgment entered by a state securities administrator within five 
  9.25  years before the filing of the notice required under clause (5), 
  9.26  that prohibits, denies, or revokes the use of an exemption from 
  9.27  securities registration, that prohibits the transaction of 
  9.28  business by the person as a broker-dealer or agent, or that is 
  9.29  based on fraud, deceit, an untrue statement of a material fact, 
  9.30  or an omission to state a material fact; or 
  9.31     (iv) is subject to an order, judgment, or decree of a court 
  9.32  entered within five years before the filing of the notice 
  9.33  required under clause (5), temporarily, preliminarily, or 
  9.34  permanently restraining or enjoining the person from engaging in 
  9.35  or continuing any conduct or practice in connection with the 
  9.36  offer, sale, or purchase of a security, or the making of a false 
 10.1   filing with a state. 
 10.2      A disqualification under paragraph (h) involving a 
 10.3   broker-dealer or agent is waived if the broker-dealer or agent 
 10.4   is or continues to be licensed in the state in which the 
 10.5   administrative order or judgment was entered against the person 
 10.6   or if the broker-dealer or agent is or continues to be licensed 
 10.7   in this state as a broker-dealer or agent after notifying the 
 10.8   commissioner of the act or event causing disqualification. 
 10.9      The commissioner may waive a disqualification under 
 10.10  paragraph (h) upon a showing of good cause that it is not 
 10.11  necessary under the circumstances that use of the exemption be 
 10.12  denied. 
 10.13     A disqualification under paragraph (h) may be waived if the 
 10.14  state securities administrator or agency of the state that 
 10.15  created the basis for disqualification has determined, upon a 
 10.16  showing of good cause, that it is not necessary under the 
 10.17  circumstances that an exemption from registration of securities 
 10.18  under the state's laws be denied. 
 10.19     It is a defense to a violation of paragraph (h) based upon 
 10.20  a disqualification if the issuer sustains the burden of proof to 
 10.21  establish that the issuer did not know, and in the exercise of 
 10.22  reasonable care could not have known, that a disqualification 
 10.23  under paragraph (h) existed. 
 10.24     (2) This exemption must not be available to an issuer with 
 10.25  respect to a transaction that, although in technical compliance 
 10.26  with this exemption, is part of a plan or scheme to evade 
 10.27  registration or the conditions or limitations explicitly stated 
 10.28  in paragraph (h). 
 10.29     (3) No commission, finder's fee, or other remuneration 
 10.30  shall be paid or given, directly or indirectly, for soliciting a 
 10.31  prospective purchaser, unless the recipient is appropriately 
 10.32  licensed, or exempt from licensure, in this state as a 
 10.33  broker-dealer. 
 10.34     (4) Nothing in this exemption is intended to or should be 
 10.35  in any way construed as relieving issuers or persons acting on 
 10.36  behalf of issuers from providing disclosure to prospective 
 11.1   investors adequate to satisfy the antifraud provisions of the 
 11.2   securities law of Minnesota.  
 11.3      (5) The issuer shall file with the commissioner a notice on 
 11.4   form D as adopted by the Securities and Exchange Commission 
 11.5   according to Regulation D, Code of Federal Regulations, title 
 11.6   17, section 230.502.  The notice must be filed not later than 15 
 11.7   days after the first sale in this state of securities in an 
 11.8   offering under this exemption.  Every notice on form D must be 
 11.9   manually signed by a person duly authorized by the issuer and 
 11.10  must be accompanied by a consent to service of process on a form 
 11.11  prescribed by the commissioner.  
 11.12     (6) A failure to comply with a term, condition, or 
 11.13  requirement of paragraph (h) will not result in loss of the 
 11.14  exemption for an offer or sale to a particular individual or 
 11.15  entity if the person relying on the exemption shows that:  (i) 
 11.16  the failure to comply did not pertain to a term, condition, or 
 11.17  requirement directly intended to protect that particular 
 11.18  individual or entity, and the failure to comply was 
 11.19  insignificant with respect to the offering as a whole; and (ii) 
 11.20  a good faith and reasonable attempt was made to comply with all 
 11.21  applicable terms, conditions, and requirements of paragraph (h), 
 11.22  except that, where an exemption is established only through 
 11.23  reliance upon this provision, the failure to comply shall 
 11.24  nonetheless constitute a violation of section 80A.08 and be 
 11.25  actionable by the commissioner.  
 11.26     (7) The issuer, upon request by the commissioner, shall, 
 11.27  within ten days of the request, furnish to the commissioner a 
 11.28  copy of any and all information, documents, or materials 
 11.29  furnished to investors or offerees in connection with the offer 
 11.30  and sale according to paragraph (h).  
 11.31     (8) Neither compliance nor attempted compliance with the 
 11.32  exemption provided by paragraph (h), nor the absence of an 
 11.33  objection or order by the commissioner with respect to an offer 
 11.34  or sale of securities undertaken according to this exemption, 
 11.35  shall be considered to be a waiver of a condition of the 
 11.36  exemption or considered to be a confirmation by the commissioner 
 12.1   of the availability of this exemption.  
 12.2      (9) The commissioner may, by rule or order, increase the 
 12.3   number of purchasers or waive any other condition of this 
 12.4   exemption.  
 12.5      (10) The determination whether offers and sales made in 
 12.6   reliance on the exemption set forth in paragraph (h) shall be 
 12.7   integrated with offers and sales according to other paragraphs 
 12.8   of this subdivision shall be made according to the integration 
 12.9   standard set forth in Rule 502 of Regulation D promulgated by 
 12.10  the Securities and Exchange Commission, Code of Federal 
 12.11  Regulations, title 17, section 230.502.  If not subject to 
 12.12  integration according to that rule, offers and sales according 
 12.13  to paragraph (h) shall not otherwise be integrated with offers 
 12.14  and sales according to other exemptions set forth in this 
 12.15  subdivision. 
 12.16     (i) Any offer (but not a sale) of a security for which a 
 12.17  registration statement has been filed under sections 80A.01 to 
 12.18  80A.31, if no stop order or refusal order is in effect and no 
 12.19  public proceeding or examination looking toward an order is 
 12.20  pending; and any offer of a security if the sale of the security 
 12.21  is or would be exempt under this section.  The commissioner may 
 12.22  by rule exempt offers (but not sales) of securities for which a 
 12.23  registration statement has been filed as the commissioner deems 
 12.24  appropriate, consistent with the purposes of sections 80A.01 to 
 12.25  80A.31. 
 12.26     (j) The offer and sale by a cooperative organized under 
 12.27  chapter 308A or under the laws of another state, of its 
 12.28  securities when the securities are offered and sold only to its 
 12.29  members, or when the purchase of the securities is necessary or 
 12.30  incidental to establishing membership in the cooperative, or 
 12.31  when such securities are issued as patronage dividends.  This 
 12.32  paragraph applies to a cooperative organized under the laws of 
 12.33  another state only if the cooperative has filed with the 
 12.34  commissioner a consent to service of process under section 
 12.35  80A.27, subdivision 7, and has, not less than ten days prior to 
 12.36  the issuance or delivery, furnished the commissioner with a 
 13.1   written general description of the transaction and any other 
 13.2   information that the commissioner requires by rule or otherwise. 
 13.3   This exemption only applies when the issuing cooperative is 
 13.4   seeking to raise up to $1,000,000. 
 13.5      (l) The issuance and delivery of any securities of one 
 13.6   corporation to another corporation or its security holders in 
 13.7   connection with a merger, exchange of shares, or transfer of 
 13.8   assets whereby the approval of stockholders of the other 
 13.9   corporation is required to be obtained, provided, that the 
 13.10  commissioner has been furnished with a general description of 
 13.11  the transaction and with other information as the commissioner 
 13.12  by rule prescribes not less than ten days prior to the issuance 
 13.13  and delivery. 
 13.14     (m) Any transaction between the issuer or other person on 
 13.15  whose behalf the offering is made and an underwriter or among 
 13.16  underwriters. 
 13.17     (n) The distribution by a corporation of its or other 
 13.18  securities to its own security holders as a stock dividend or as 
 13.19  a dividend from earnings or surplus or as a liquidating 
 13.20  distribution; or upon conversion of an outstanding convertible 
 13.21  security; or pursuant to a stock split or reverse stock split. 
 13.22     (o) Any offer or sale of securities by an affiliate of the 
 13.23  issuer thereof if:  (1) a registration statement is in effect 
 13.24  with respect to securities of the same class of the issuer and 
 13.25  (2) the offer or sale has been exempted from registration by 
 13.26  rule or order of the commissioner.  
 13.27     (p) Any transaction pursuant to an offer to existing 
 13.28  security holders of the issuer, including persons who at the 
 13.29  time of the transaction are holders of convertible securities, 
 13.30  nontransferable warrants, or transferable warrants exercisable 
 13.31  within not more than 90 days of their issuance, if:  (1) no 
 13.32  commission or other remuneration (other than a standby 
 13.33  commission) is paid or given directly or indirectly for 
 13.34  soliciting any security holder in this state; and (2) the 
 13.35  commissioner has been furnished with a general description of 
 13.36  the transaction and with other information as the commissioner 
 14.1   may by rule prescribe no less than ten days prior to the 
 14.2   transaction. 
 14.3      (q) Any nonissuer sales of any security, including a 
 14.4   revenue obligation, issued by the state of Minnesota or any of 
 14.5   its political or governmental subdivisions, municipalities, 
 14.6   governmental agencies, or instrumentalities. 
 14.7      (r) Any transaction as to which the commissioner by rule or 
 14.8   order finds that registration is not necessary in the public 
 14.9   interest and for the protection of investors. 
 14.10     (s) An offer or sale of a security issued in connection 
 14.11  with an employee's stock purchase, savings, option, profit 
 14.12  sharing, pension, or similar employee benefit plan, if the 
 14.13  following conditions are met:  
 14.14     (1) the issuer, its parent corporation or any of its 
 14.15  majority-owned subsidiaries offers or sells the security 
 14.16  according to a written benefit plan or written contract relating 
 14.17  to the compensation of the purchaser; and 
 14.18     (2) the class of securities offered according to the plan 
 14.19  or contract, or if an option or right to purchase a security, 
 14.20  the class of securities to be issued upon the exercise of the 
 14.21  option or right, is registered under section 12 of the 
 14.22  Securities Exchange Act of 1934, or is a class of securities 
 14.23  with respect to which the issuer files reports according to 
 14.24  section 15(d) of the Securities Exchange Act of 1934; or 
 14.25     (3) the issuer fully complies with the provisions of Rule 
 14.26  701 as adopted by the Securities and Exchange Commission, Code 
 14.27  of Federal Regulations, title 12, section 230.701. 
 14.28     The issuer shall file not less than ten days before the 
 14.29  transaction, a general description of the transaction and any 
 14.30  other information that the commissioner requires by rule or 
 14.31  otherwise or, if applicable, a Securities and Exchange Form S-8. 
 14.32  Annually, within 90 days after the end of the issuer's fiscal 
 14.33  year, the issuer shall file a notice as provided with the 
 14.34  commissioner. 
 14.35     (t) Any sale of a security of an issuer that is a pooled 
 14.36  income fund, a charitable remainder trust, or a charitable lead 
 15.1   trust that has a qualified charity as the only charitable 
 15.2   beneficiary. 
 15.3      (u) Any sale by a qualified charity of a security that is a 
 15.4   charitable gift annuity if the issuer has a net worth, otherwise 
 15.5   defined as unrestricted fund balance, of not less than $300,000 
 15.6   and either:  (1) has been in continuous operation for not less 
 15.7   than three years; or (2) is a successor or affiliate of a 
 15.8   qualified charity that has been in continuous operation for not 
 15.9   less than three years. 
 15.10     Sec. 7.  [82B.201] [CRIMINAL PENALTY.] 
 15.11     Any person who violates any provision of this chapter, or 
 15.12  any rule or order of the commissioner, is guilty of a gross 
 15.13  misdemeanor. 
 15.14     Sec. 8.  Minnesota Statutes 1998, section 326.83, 
 15.15  subdivision 18, is amended to read: 
 15.16     Subd. 18.  [ROOFER.] "Roofer" means a person engaged in the 
 15.17  business of doing contracting, or offering to contract with an 
 15.18  owner, to complete work on residential real estate in roof 
 15.19  coverings, roof sheathing, roof weatherproofing and insulation, 
 15.20  and repair of roof systems, but not construction of new roof 
 15.21  systems. 
 15.22     Sec. 9.  Minnesota Statutes 1998, section 326.89, 
 15.23  subdivision 3, is amended to read: 
 15.24     Subd. 3.  [EXAMINATION.] (a) Each qualifying person must 
 15.25  satisfactorily complete a written examination for the type of 
 15.26  license requested.  The commissioner may establish the 
 15.27  examination qualifications, including related education 
 15.28  experience and education, the examination procedure, and the 
 15.29  examination for each licensing group.  The examination must 
 15.30  include at a minimum the following areas: 
 15.31     (1) appropriate knowledge of technical terms commonly used 
 15.32  and the knowledge of reference materials and code books to be 
 15.33  used for technical information; and 
 15.34     (2) understanding of the general principles of business 
 15.35  management and other pertinent state laws. 
 15.36     (b) Each examination must be designed for the specified 
 16.1   type of license requested.  The council shall advise the 
 16.2   commissioner on the grading, monitoring, and updating of 
 16.3   examinations. 
 16.4      (c) A person's passing examination results expire two years 
 16.5   from the examination date.  A person who passes the examination 
 16.6   but does not choose to apply to act as a qualifying person for a 
 16.7   licensee within two years from the examination date, must, upon 
 16.8   application provide: 
 16.9      (1) passing examination results within two years from the 
 16.10  date of application; or 
 16.11     (2) proof that the person has fulfilled the continuing 
 16.12  education requirements in section 326.87 in the manner required 
 16.13  for a qualifying person of a licensee for each license period 
 16.14  after the expiration of the examination results. 
 16.15     Sec. 10.  Minnesota Statutes 1998, section 326.92, is 
 16.16  amended by adding a subdivision to read: 
 16.17     Subd. 1a.  [GROSS MISDEMEANOR.] A person required to be 
 16.18  licensed under sections 326.84 to 326.991 who violates an order 
 16.19  under subdivision 3 is guilty of a gross misdemeanor. 
 16.20     Sec. 11.  Minnesota Statutes 1998, section 326.94, 
 16.21  subdivision 2, is amended to read: 
 16.22     Subd. 2.  [INSURANCE.] Licensees must have public liability 
 16.23  insurance with limits of at least $100,000 per occurrence, which 
 16.24  must include at least $10,000 property damage coverage.  The 
 16.25  insurance must be written by an insurer licensed to do business 
 16.26  in this state.  The commissioner may increase the minimum amount 
 16.27  of insurance required for any licensee or class of licensees if 
 16.28  the commissioner considers it to be in the public interest and 
 16.29  necessary to protect the interests of Minnesota consumers. 
 16.30     Sec. 12.  Minnesota Statutes 1998, section 332.37, is 
 16.31  amended to read: 
 16.32     332.37 [PROHIBITED PRACTICES.] 
 16.33     No collection agency or collectors shall:  
 16.34     (1) in collection letters or publications, or in any 
 16.35  communication, oral or written threaten wage garnishment or 
 16.36  legal suit by a particular lawyer, unless it has actually 
 17.1   retained the lawyer; 
 17.2      (2) use or employ constables, sheriffs or any other officer 
 17.3   authorized to serve legal papers in connection with the 
 17.4   collection of a claim, except when performing their legally 
 17.5   authorized duties; 
 17.6      (3) use or threaten to use methods of collection which 
 17.7   violate Minnesota law; 
 17.8      (4) furnish legal advice or otherwise engage in the 
 17.9   practice of law or represent that it is competent to do so; 
 17.10     (5) communicate with debtors in a misleading or deceptive 
 17.11  manner by using the stationery of a lawyer, forms or instruments 
 17.12  which only lawyers are authorized to prepare, or instruments 
 17.13  which simulate the form and appearance of judicial process; 
 17.14     (6) exercise authority on behalf of a creditor to employ 
 17.15  the services of lawyers unless the creditor has specifically 
 17.16  authorized the agency in writing to do so and the agency's 
 17.17  course of conduct is at all times consistent with a true 
 17.18  relationship of attorney and client between the lawyer and the 
 17.19  creditor; 
 17.20     (7) publish or cause to be published any list of debtors 
 17.21  except for credit reporting purposes, use shame cards or shame 
 17.22  automobiles, advertise or threaten to advertise for sale any 
 17.23  claim as a means of forcing payment thereof, or use similar 
 17.24  devices or methods of intimidation; 
 17.25     (8) refuse to return any claim or claims and all valuable 
 17.26  papers deposited with a claim or claims upon written request of 
 17.27  the creditor, claimant or forwarder after tender of the amounts 
 17.28  due and owing to the agency within 30 days after the request; 
 17.29  refuse or intentionally fail to account to its clients for all 
 17.30  money collected within 30 days from the last day of the month in 
 17.31  which the same is collected; or, refuse or fail to furnish at 
 17.32  intervals of not less than 90 days upon written request of the 
 17.33  claimant or forwarder, a written report upon claims received 
 17.34  from the claimant or forwarder; 
 17.35     (9) operate under a name or in a manner which implies that 
 17.36  the agency is a branch of or associated with any department of 
 18.1   federal, state, county or local government or an agency thereof; 
 18.2      (10) commingle money collected for a customer with the 
 18.3   agency's operating funds or use any part of a customer's money 
 18.4   in the conduct of the agency's business; 
 18.5      (11) transact business or hold itself out as a debt 
 18.6   prorater, debt adjuster, or any person who settles, adjusts, 
 18.7   prorates, pools, liquidates or pays the indebtedness of a 
 18.8   debtor, unless there is no charge to the debtor, or the pooling 
 18.9   or liquidation is done pursuant to court order or under the 
 18.10  supervision of a creditor's committee; 
 18.11     (12) violate any of the provisions of the Fair Debt 
 18.12  Collection Practices Act of 1977 while attempting to collect on 
 18.13  any account, bill or other indebtedness; 
 18.14     (13) communicate with a debtor by use of a recorded message 
 18.15  utilizing an automatic dialing announcing device unless the 
 18.16  recorded message is immediately preceded by a live operator who 
 18.17  discloses prior to the message the name of the collection agency 
 18.18  and the fact the message intends to solicit payment and the 
 18.19  operator obtains the consent of the debtor to hearing the 
 18.20  message; 
 18.21     (14) in collection letters or publications, or in any 
 18.22  communication, oral or written, imply or suggest that health 
 18.23  care services will be withheld in an emergency situation; 
 18.24     (15) when a debtor has a listed telephone number, enlist 
 18.25  the aid of a neighbor or third party to request that the debtor 
 18.26  contact the licensee, except a person who resides with the 
 18.27  debtor or a third party with whom the debtor has authorized the 
 18.28  licensee to place the request.  This clause does not apply to a 
 18.29  call back message left at the debtor's place of employment which 
 18.30  is limited to the licensee's telephone and the collector's name; 
 18.31     (16) when attempting to collect a debt, fail to provide the 
 18.32  debtor with the full name of the collection agency as it appears 
 18.33  on its license; 
 18.34     (17) collect any money from a debtor that is not reported 
 18.35  to a creditor or fail to return any amount of overpayment from a 
 18.36  debtor to the debtor or to the state of Minnesota pursuant to 
 19.1   the requirements of chapter 345; 
 19.2      (18) accept currency or coin as payment for a debt without 
 19.3   issuing an original receipt to the debtor and maintain a 
 19.4   duplicate receipt in the debtor's payment records; or 
 19.5      (19) attempt to collect any amount of money from a debtor 
 19.6   or charge a fee to a creditor that is not authorized by 
 19.7   agreement with the client; 
 19.8      (20) falsify any collection agency documents with the 
 19.9   intent to deceive a debtor, creditor, or governmental agency; or 
 19.10     (19) (21) when initially contacting a Minnesota debtor by 
 19.11  mail, fail to include a disclosure on the contact notice, in a 
 19.12  type size or font which is equal to or larger than the largest 
 19.13  other type of type size or font used in the text of the notice.  
 19.14  The disclosure must state:  "This collection agency is licensed 
 19.15  by the Minnesota Department of Commerce." 
 19.16     Sec. 13.  [REPEALER.] 
 19.17     Minnesota Statutes 1998, section 326.89, subdivision 3a, is 
 19.18  repealed. 
 19.19     Sec. 14.  [EFFECTIVE DATES.] 
 19.20     Sections 1 to 5, 7 to 10, 12, and 13 are effective the day 
 19.21  following final enactment.  Sections 6 and 11 are effective 
 19.22  August 1, 1999.