HF 574

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to securities; expediting the process for the 
  1.3             effectiveness of securities registration; making 
  1.4             certain conforming changes to federal regulations; 
  1.5             amending Minnesota Statutes 1994, sections 80A.10, 
  1.6             subdivision 3; 80A.13, subdivision 1; and 80A.15, 
  1.7             subdivision 2. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1994, section 80A.10, 
  1.10  subdivision 3, is amended to read: 
  1.11     Subd. 3.  (a) A registration statement under this section 
  1.12  automatically becomes effective at the moment the federal 
  1.13  registration statement becomes effective if all the following 
  1.14  conditions are satisfied:  (a) no stop order is in effect and no 
  1.15  proceeding is pending under section 80A.13; (b) the registration 
  1.16  statement has been on file with the commissioner for at least 20 
  1.17  days; and (c) a statement of the maximum proposed offering 
  1.18  prices and the maximum underwriting discounts and commissions 
  1.19  has been on file for two full business days or such shorter 
  1.20  period as the commissioner permits by rule or otherwise and the 
  1.21  offering is made within those limitations.  The registrant shall 
  1.22  promptly notify the commissioner by telephone or telegram or 
  1.23  similar electronic means of communication of the date and time 
  1.24  when the federal registration statement became effective and the 
  1.25  content of the price amendment, if any, and shall promptly file 
  1.26  an amendment containing the information and documents in the 
  2.1   price amendment.  "Price amendment" means the final federal 
  2.2   amendment which includes a statement of the offering price, 
  2.3   underwriting and selling discounts or commissions, amount of 
  2.4   proceeds, conversion rates, call prices and other matters 
  2.5   dependent upon the offering price.  Upon failure to receive the 
  2.6   required notification with respect to the price amendment, the 
  2.7   commissioner may enter a stop order, without notice or hearing, 
  2.8   retroactively denying effectiveness to the registration 
  2.9   statement or suspending its effectiveness until compliance with 
  2.10  this subsection, if the commissioner promptly notifies the 
  2.11  registrant by telephone or telegram or similar electronic means 
  2.12  of communication (and promptly confirms by letter or telegram 
  2.13  when the commissioner notifies by telephone) of the issuance of 
  2.14  the order.  If the registrant proves compliance with the 
  2.15  requirements of this subdivision as to notice and price 
  2.16  amendment, the stop order is void as of the time of its entry.  
  2.17  The commissioner may by rule or otherwise waive either or both 
  2.18  of the conditions specified in clauses (b) and (c).  If the 
  2.19  federal registration statement becomes effective before all the 
  2.20  conditions in this subdivision are satisfied and they are not 
  2.21  waived, the registration statement automatically becomes 
  2.22  effective as soon as all the conditions are satisfied.  If the 
  2.23  registrant advises the commissioner of the date when the federal 
  2.24  registration statement is expected to become effective, the 
  2.25  commissioner shall promptly advise the registrant by telephone 
  2.26  or telegram or similar electronic means of communication, at the 
  2.27  registrant's expense, whether all the conditions are satisfied 
  2.28  and whether the commissioner then contemplates the institution 
  2.29  of a proceeding under section 80A.13; but this advice by the 
  2.30  commissioner does not preclude the institution of such a 
  2.31  proceeding at any time. 
  2.32     (b) The commissioner shall not require an applicant to 
  2.33  waive statutory effectiveness of a registration under this 
  2.34  section as a condition for reviewing the application.  Nothing 
  2.35  in this paragraph shall prevent the commissioner from 
  2.36  instituting a stop order or commencing a proceeding under 
  3.1   section 80A.13.  
  3.2      Sec. 2.  Minnesota Statutes 1994, section 80A.13, 
  3.3   subdivision 1, is amended to read: 
  3.4      Subdivision 1.  The commissioner may issue a stop order 
  3.5   denying effectiveness to, or suspending or revoking the 
  3.6   effectiveness of, any registration statement if the commissioner 
  3.7   finds (a) that the order is in the public interest and (b) that 
  3.8      (1) the registration statement as of its effective date or 
  3.9   as of any earlier date in the case of an order denying 
  3.10  effectiveness, or any amendment under section 80A.12, 
  3.11  subdivision 9, as of its effective date, or any report under 
  3.12  section 80A.12, subdivision 8, is incomplete in any material 
  3.13  respect or contains any statement which was, in the light of the 
  3.14  circumstances under which it was made, false or misleading with 
  3.15  respect to any material fact; 
  3.16     (2) any provision of sections 80A.01 to 80A.31 or any rule, 
  3.17  order, or condition lawfully imposed under sections 80A.01 to 
  3.18  80A.31 has been willfully violated in connection with the 
  3.19  offering, by (i) the person filing the registration statement, 
  3.20  (ii) the issuer, any partner, officer, or director of the 
  3.21  issuer, any person occupying a similar status or performing 
  3.22  similar functions, or any person directly or indirectly 
  3.23  controlling or controlled by the issuer, but only if the person 
  3.24  filing the registration statement is directly or indirectly 
  3.25  controlled by or acting for the issuer, or (iii) any 
  3.26  underwriter; 
  3.27     (3) the security registered or sought to be registered is 
  3.28  the subject of an administrative stop order or similar order or 
  3.29  a permanent or temporary injunction of any court of competent 
  3.30  jurisdiction entered under any other federal or state act 
  3.31  applicable to the offering; but (i) the commissioner may not 
  3.32  institute a proceeding against an effective registration 
  3.33  statement under this clause more than one year from the date of 
  3.34  the order or injunction relied on, and (ii) may not enter an 
  3.35  order under this clause on the basis of an order or injunction 
  3.36  entered under any other state act unless that order or 
  4.1   injunction was based on facts which would currently constitute a 
  4.2   ground for a stop order under this section; 
  4.3      (4) the issuer's enterprise or method of business includes 
  4.4   or would include activities which are illegal where performed; 
  4.5      (5) the offering has worked or tended to work a fraud upon 
  4.6   purchasers or would so operate; 
  4.7      (6) except with respect to securities which are being 
  4.8   registered by notification, the terms of the securities are 
  4.9   unfair and inequitable; provided, however, that the commissioner 
  4.10  may not determine that an offering is unfair and inequitable, (i)
  4.11  solely on the grounds that the securities are to be sold at an 
  4.12  excessive price where the offering price has been determined by 
  4.13  arms length negotiation between nonaffiliated parties. The 
  4.14  selling price of any security being sold by a broker-dealer 
  4.15  licensed in this state shall be presumed to have been determined 
  4.16  by arms length negotiation;, or (ii) where the application 
  4.17  satisfies all of the following conditions: 
  4.18     (a) the applicant or its predecessor has been in continuous 
  4.19  business for at least two years; 
  4.20     (b) the offering is underwritten on a firm commitment basis 
  4.21  by a member in good standing of the National Association of 
  4.22  Securities Dealers, Incorporated; and 
  4.23     (c) the security is designated or approved for designation 
  4.24  upon notice of issuance on the NASDAQ stock market, including 
  4.25  the NASDAQ Small-Cap market. 
  4.26     The selling price of any security being sold by a 
  4.27  broker-dealer licensed in this state is presumed to have been 
  4.28  determined by arms length negotiation; 
  4.29     (7) when a security is sought to be registered by 
  4.30  coordination there has been a failure to comply with the 
  4.31  undertaking required by section 80A.10, subdivision 2, clause 
  4.32  (d); 
  4.33     (8) the applicant or registrant has failed to pay the 
  4.34  proper filing fee; but the commissioner may enter only a denial 
  4.35  order under this clause and shall vacate any such order when the 
  4.36  deficiency has been corrected; or 
  5.1      (9) the offering of securities sought to be registered is 
  5.2   not firmly underwritten and (i) the minimum amount of proceeds 
  5.3   from the sale of the securities is not more than $500,000, and 
  5.4   (ii) the maximum amount of proceeds is more than 200 percent of 
  5.5   the minimum amount of proceeds required to go forward with the 
  5.6   offering. 
  5.7      The commissioner may not institute a stop order proceeding 
  5.8   against an effective registration statement solely on the basis 
  5.9   of a fact or transaction known to the commissioner when the 
  5.10  registration statement became effective unless the proceeding is 
  5.11  instituted within the next 30 days. 
  5.12     Sec. 3.  Minnesota Statutes 1994, section 80A.15, 
  5.13  subdivision 2, is amended to read: 
  5.14     Subd. 2.  The following transactions are exempted from 
  5.15  sections 80A.08 and 80A.16: 
  5.16     (a) Any sales, whether or not effected through a 
  5.17  broker-dealer, provided that no person shall make more than ten 
  5.18  sales of securities of the same issuer pursuant to this 
  5.19  exemption during any period of 12 consecutive months; provided 
  5.20  further, that in the case of sales by an issuer, except sales of 
  5.21  securities registered under the Securities Act of 1933 or 
  5.22  exempted by section 3(b) of that act, (1) the seller reasonably 
  5.23  believes that all buyers are purchasing for investment, and (2) 
  5.24  the securities are not advertised for sale to the general public 
  5.25  in newspapers or other publications of general circulation or 
  5.26  otherwise, or by radio, television, electronic means or similar 
  5.27  communications media, or through a program of general 
  5.28  solicitation by means of mail or telephone. 
  5.29     (b) Any nonissuer distribution of an outstanding security 
  5.30  if (1) either Moody's, Fitch's, or Standard & Poor's Securities 
  5.31  Manuals, or other recognized manuals approved by the 
  5.32  commissioner contains the names of the issuer's officers and 
  5.33  directors, a balance sheet of the issuer as of a date not more 
  5.34  than 18 months prior to the date of the sale, and a profit and 
  5.35  loss statement for the fiscal year preceding the date of the 
  5.36  balance sheet, and (2) the issuer or its predecessor has been in 
  6.1   active, continuous business operation for the five-year period 
  6.2   next preceding the date of sale, and (3) if the security has a 
  6.3   fixed maturity or fixed interest or dividend provision, the 
  6.4   issuer has not, within the three preceding fiscal years, 
  6.5   defaulted in payment of principal, interest, or dividends on the 
  6.6   securities. 
  6.7      (c) The execution of any orders by a licensed broker-dealer 
  6.8   for the purchase or sale of any security, pursuant to an 
  6.9   unsolicited offer to purchase or sell; provided that the 
  6.10  broker-dealer acts as agent for the purchaser or seller, and has 
  6.11  no direct material interest in the sale or distribution of the 
  6.12  security, receives no commission, profit, or other compensation 
  6.13  from any source other than the purchaser and seller and delivers 
  6.14  to the purchaser and seller written confirmation of the 
  6.15  transaction which clearly itemizes the commission, or other 
  6.16  compensation. 
  6.17     (d) Any nonissuer sale of notes or bonds secured by a 
  6.18  mortgage lien if the entire mortgage, together with all notes or 
  6.19  bonds secured thereby, is sold to a single purchaser at a single 
  6.20  sale. 
  6.21     (e) Any judicial sale, exchange, or issuance of securities 
  6.22  made pursuant to an order of a court of competent jurisdiction. 
  6.23     (f) The sale, by a pledge holder, of a security pledged in 
  6.24  good faith as collateral for a bona fide debt. 
  6.25     (g) Any offer or sale to a bank, savings institution, trust 
  6.26  company, insurance company, investment company as defined in the 
  6.27  Investment Company Act of 1940, pension or profit sharing trust, 
  6.28  or other financial institution or institutional buyer, or to a 
  6.29  broker-dealer, whether the purchaser is acting for itself or in 
  6.30  some fiduciary capacity. 
  6.31     (h) Any sales by an issuer to the number of persons that 
  6.32  shall not exceed 25 persons in this state, or 35 persons if the 
  6.33  sales are made in compliance with Regulation D promulgated by 
  6.34  the Securities and Exchange Commission, Code of Federal 
  6.35  Regulations, title 17, sections 230.501 to 230.506, (other than 
  6.36  those designated in paragraph (a) or (g)), whether or not any of 
  7.1   the purchasers is then present in this state, if (1) the issuer 
  7.2   reasonably believes that all of the buyers in this state (other 
  7.3   than those designated in clause (g)) are purchasing for 
  7.4   investment, and (2) no commission or other remuneration is paid 
  7.5   or given directly or indirectly for soliciting any prospective 
  7.6   buyer in this state (other than those designated in clause (g)), 
  7.7   except reasonable and customary commissions paid by the issuer 
  7.8   to a broker-dealer licensed under this chapter, and (3) the 
  7.9   issuer has, ten days prior to any sale pursuant to this 
  7.10  paragraph, supplied the commissioner with a statement of issuer 
  7.11  on forms prescribed by the commissioner, containing the 
  7.12  following information:  (i) the name and address of the issuer, 
  7.13  and the date and state of its organization; (ii) the number of 
  7.14  units, price per unit, and a description of the securities to be 
  7.15  sold; (iii) the amount of commissions to be paid and the persons 
  7.16  to whom they will be paid; (iv) the names of all officers, 
  7.17  directors and persons owning five percent or more of the equity 
  7.18  of the issuer; (v) a brief description of the intended use of 
  7.19  proceeds; (vi) a description of all sales of securities made by 
  7.20  the issuer within the six-month period next preceding the date 
  7.21  of filing; and (vii) a copy of the investment letter, if any, 
  7.22  intended to be used in connection with any sale.  Sales that are 
  7.23  made more than six months before the start of an offering made 
  7.24  pursuant to this exemption or are made more than six months 
  7.25  after completion of an offering made pursuant to this exemption 
  7.26  will not be considered part of the offering, so long as during 
  7.27  those six-month periods there are no sales of unregistered 
  7.28  securities (other than those made pursuant to paragraph (a) or 
  7.29  (g)) by or for the issuer that are of the same or similar class 
  7.30  as those sold under this exemption.  The commissioner may by 
  7.31  rule or order as to any security or transaction or any type of 
  7.32  security or transaction, withdraw or further condition this 
  7.33  exemption, or increase the number of offers and sales permitted, 
  7.34  or waive the conditions in clause (1), (2), or (3) with or 
  7.35  without the substitution of a limitation or remuneration. 
  7.36     (i) Any offer (but not a sale) of a security for which a 
  8.1   registration statement has been filed under sections 80A.01 to 
  8.2   80A.31, if no stop order or refusal order is in effect and no 
  8.3   public proceeding or examination looking toward an order is 
  8.4   pending; and any offer of a security if the sale of the security 
  8.5   is or would be exempt under this section.  The commissioner may 
  8.6   by rule exempt offers (but not sales) of securities for which a 
  8.7   registration statement has been filed as the commissioner deems 
  8.8   appropriate, consistent with the purposes of sections 80A.01 to 
  8.9   80A.31. 
  8.10     (j) The offer and sale by a cooperative organized under 
  8.11  chapter 308A or under the laws of another state, of its 
  8.12  securities when the securities are offered and sold only to its 
  8.13  members, or when the purchase of the securities is necessary or 
  8.14  incidental to establishing membership in the cooperative, or 
  8.15  when such securities are issued as patronage dividends.  This 
  8.16  paragraph applies to a cooperative organized under the laws of 
  8.17  another state only if the cooperative has filed with the 
  8.18  commissioner a consent to service of process under section 
  8.19  80A.27, subdivision 7, and has, not less than ten days prior to 
  8.20  the issuance or delivery, furnished the commissioner with a 
  8.21  written general description of the transaction and any other 
  8.22  information that the commissioner requires by rule or otherwise. 
  8.23     (l) The issuance and delivery of any securities of one 
  8.24  corporation to another corporation or its security holders in 
  8.25  connection with a merger, exchange of shares, or transfer of 
  8.26  assets whereby the approval of stockholders of the other 
  8.27  corporation is required to be obtained, provided, that the 
  8.28  commissioner has been furnished with a general description of 
  8.29  the transaction and with other information as the commissioner 
  8.30  by rule prescribes not less than ten days prior to the issuance 
  8.31  and delivery. 
  8.32     (m) Any transaction between the issuer or other person on 
  8.33  whose behalf the offering is made and an underwriter or among 
  8.34  underwriters. 
  8.35     (n) The distribution by a corporation of its or other 
  8.36  securities to its own security holders as a stock dividend or as 
  9.1   a dividend from earnings or surplus or as a liquidating 
  9.2   distribution; or upon conversion of an outstanding convertible 
  9.3   security; or pursuant to a stock split or reverse stock split. 
  9.4      (o) Any offer or sale of securities by an affiliate of the 
  9.5   issuer thereof if:  (1) a registration statement is in effect 
  9.6   with respect to securities of the same class of the issuer and 
  9.7   (2) the offer or sale has been exempted from registration by 
  9.8   rule or order of the commissioner.  
  9.9      (p) Any transaction pursuant to an offer to existing 
  9.10  security holders of the issuer, including persons who at the 
  9.11  time of the transaction are holders of convertible securities, 
  9.12  nontransferable warrants, or transferable warrants exercisable 
  9.13  within not more than 90 days of their issuance, if:  (1) no 
  9.14  commission or other remuneration (other than a standby 
  9.15  commission) is paid or given directly or indirectly for 
  9.16  soliciting any security holder in this state; and (2) the 
  9.17  commissioner has been furnished with a general description of 
  9.18  the transaction and with other information as the commissioner 
  9.19  may by rule prescribe no less than ten days prior to the 
  9.20  transaction. 
  9.21     (q)  Any nonissuer sales of any security, including a 
  9.22  revenue obligation, issued by the state of Minnesota or any of 
  9.23  its political or governmental subdivisions, municipalities, 
  9.24  governmental agencies, or instrumentalities. 
  9.25     (r) Any offers or sales by an issuer pursuant to 
  9.26  compensatory benefits plans and contracts relating to 
  9.27  compensation if the offer and sales meet the requirements of 
  9.28  Rule 701, Code of Federal Regulations, title 17, section 239.701.
  9.29  Offers and sales exempt under this paragraph are considered to 
  9.30  be a part of a single, discrete offering and are not subject to 
  9.31  integration with any other offering or sale, whether registered 
  9.32  under sections 80A.01 to 80A.31, or otherwise exempt from the 
  9.33  registration requirements of chapter 80A. 
  9.34     Sec. 4.  [EFFECTIVE DATE.] 
  9.35     This act is effective the day after final enactment.