HF 379

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; regulating securities; 
  1.3             authorizing small corporate offering registrations; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 80A. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [80A.115] [SMALL CORPORATE OFFERING 
  1.8   REGISTRATION.] 
  1.9      Subdivision 1.  [FILING REQUIREMENTS.] A security meeting 
  1.10  the conditions set forth in this section may be registered by 
  1.11  filing a small corporate offering registration form otherwise 
  1.12  known as a form U-7 adopted by the National Association of 
  1.13  Securities Administrators as a uniform state securities 
  1.14  registration form. 
  1.15     Subd. 2.  [AVAILABILITY.] This section is available only to 
  1.16  the issuer of the securities and not to an affiliate of that 
  1.17  issuer or to any other person for resale of the issuer's 
  1.18  securities.  The issuer must be a corporation organized under 
  1.19  the laws of one of the states or possessions of the United 
  1.20  States.  This section is not available to any of the following 
  1.21  issuers: 
  1.22     (1) an issuer that engages in or proposes to engage in the 
  1.23  business of petroleum exploration or production or mining or 
  1.24  other extractive industries; 
  1.25     (2) an investment company, including a mutual fund; 
  2.1      (3) an issuer subject to the reporting requirements of 
  2.2   section 13 or 15(d) of the Securities Exchange Act of 1934; 
  2.3      (4) a direct participation program; and 
  2.4      (5) an issuer seeking to register a debt offering unless 
  2.5   the commissioner finds that the issuer has demonstrated a 
  2.6   reasonable ability to service the debt. 
  2.7      Subd. 3.  [NONAVAILABILITY.] Small corporate offering 
  2.8   registration is not available for securities of an issuer if 
  2.9   that issuer or any of its officers, directors, ten-percent 
  2.10  stockholders, promoters, or any selling agents of the securities 
  2.11  to be offered, or any officer, director, or partner of the 
  2.12  selling agent: 
  2.13     (1) has filed a registration statement that is the subject 
  2.14  of a currently effective registration stop order entered under a 
  2.15  federal or state securities law within five years before the 
  2.16  filing of the small corporate offering registration application; 
  2.17     (2) has been convicted within five years before the filing 
  2.18  of the small corporate offering registration application of a 
  2.19  felony or misdemeanor in connection with the offer, purchase, or 
  2.20  sale of a security of a felony involving fraud or deceit, 
  2.21  including, but not limited to, forgery, embezzlement, obtaining 
  2.22  money under false pretenses, larceny, or conspiracy to defraud; 
  2.23     (3) is currently subject to a state administrative 
  2.24  enforcement order or judgment entered by a state securities 
  2.25  administrator of the securities and exchange commission within 
  2.26  five years before the filing of the small corporate offering 
  2.27  registration application or is subject to a federal or state 
  2.28  administrative enforcement order or judgment in which fraud or 
  2.29  deceit, including, but not limited to, making untrue statements 
  2.30  of material facts and omitting to state material facts, was 
  2.31  found and the order or judgment was entered within five years 
  2.32  before the filing of the small corporate offering registration 
  2.33  application; 
  2.34     (4) is subject to a state's administrative enforcement, 
  2.35  order, or judgment that prohibits, denies, or revokes the use of 
  2.36  an exemption for registration in connection with this offer, 
  3.1   purchase, or sale of securities; or 
  3.2      (5) is currently subject to an order, judgment, or decree 
  3.3   of a court of competent jurisdiction temporarily or preliminary 
  3.4   restraining or enjoining, or is subject to an order, judgment, 
  3.5   or decree of a court of competent jurisdiction, permanently 
  3.6   restraining or enjoining the party from engaging in or 
  3.7   continuing any conduct or practice in connection with the 
  3.8   purchase or sale of any security or involving the making of a 
  3.9   false filing with a state or with the securities and exchange 
  3.10  commission entered with five years before the filing of the 
  3.11  small corporate offering registration application.  The 
  3.12  prohibition in this clause and clauses (1) to (3) do not apply 
  3.13  if the person subject to the disqualification is duly licensed 
  3.14  or registered to conduct securities-related business in the 
  3.15  state in which the administrative order or judgment was entered 
  3.16  against the person or if the dealer employing the party is 
  3.17  licensed or registered in this state and the form BD filed in 
  3.18  this state discloses the order, conviction, judgment, or decree 
  3.19  relating to the person.  No person disqualified under this 
  3.20  section may act in any capacity other than that for which the 
  3.21  person is licensed or registered.  A disqualification caused by 
  3.22  this subdivision is automatically waived if the state securities 
  3.23  administrator or their state or federal agency that created the 
  3.24  basis for disqualification determines upon a showing of good 
  3.25  cause that it is not necessary under the circumstances that the 
  3.26  exemption be denied. 
  3.27     Subd. 4.  [CONDITIONS.] In order to register under this 
  3.28  section, all of the following conditions must be satisfied: 
  3.29     (1) the offering price for common stock and the exercise 
  3.30  price, if the securities offered are options, warrants, or 
  3.31  rights for common stock, and the conversion price if the 
  3.32  securities are convertible into common stock must be equal to or 
  3.33  greater than $5 per share; and 
  3.34     (2) the aggregate offering price of the securities offered, 
  3.35  within or outside this state, may not exceed $1,000,000 less the 
  3.36  aggregate offering price of all securities sold within the 12 
  4.1   months before the start of and during the offering of the 
  4.2   securities under securities and exchange commission Rule 504 in 
  4.3   reliance on an exemption under section 3(b).  The issuer may not 
  4.4   split its common stock, or declare a stock dividend for two 
  4.5   years after effectiveness of the registration, except that in 
  4.6   connection with a subsequent public offering, the issuer may 
  4.7   upon application and consent of the administrator take this 
  4.8   action. 
  4.9      Subd. 5.  [CONTENTS OF REGISTRATION FORM.] The small 
  4.10  corporate offering registration form (form U-7) must comply with 
  4.11  and contain all exhibits required by the Instructions for Use of 
  4.12  Form U-7 as adopted by the North American Securities 
  4.13  Administrators Association. 
  4.14     Subd. 6.  [STOP ORDERS.] The commissioner may in the 
  4.15  commissioner's discretion issue a stop order for any of the 
  4.16  following additional reasons: 
  4.17     (1) the issuer's principal place of business is not in this 
  4.18  state; 
  4.19     (2) at least 50 percent of the issuer's full-time employees 
  4.20  are not located in this state; 
  4.21     (3) at least 80 percent of the net proceeds of the offering 
  4.22  are not going to be used in connection with the operations of 
  4.23  the issuer in this state; or 
  4.24     (4) if the issuer is a seed or venture capital fund, at 
  4.25  least 50 percent of the money received from the sale of the 
  4.26  securities will not be used to make seed or venture capital 
  4.27  investments in this state. 
  4.28     Subd. 7.  [EFFECTIVE DATE.] A registration statement under 
  4.29  this section becomes effective when the commissioner so orders.