SF 1712

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; face-amount certificate 
  1.3             companies, open-end management companies, and unit 
  1.4             investment trusts; providing for the calculation of 
  1.5             registration fees and uniform expiration, renewal, and 
  1.6             reporting provisions; exempting qualified investment 
  1.7             companies from registration; amending Minnesota 
  1.8             Statutes 1994, sections 80A.12, subdivisions 2, 9, 10, 
  1.9             and by adding a subdivision; 80A.13, subdivision 1; 
  1.10            80A.15, subdivision 1; and 80A.28, subdivisions 1, 3, 
  1.11            and by adding a subdivision; repealing Minnesota 
  1.12            Statutes 1994, sections 80A.12, subdivision 9. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 1994, section 80A.12, 
  1.15  subdivision 2, is amended to read: 
  1.16     Subd. 2.  Every registration statement shall specify (a) 
  1.17  the amount of securities to be offered in this state; (b) the 
  1.18  states in which a registration statement or similar document in 
  1.19  connection with the offering has been or is to be filed; and (c) 
  1.20  any adverse order, judgment or decree entered in connection with 
  1.21  the offering by the regulatory authorities in each state or by 
  1.22  any court or the securities and exchange commission.  The 
  1.23  requirement of clause (a) does not apply to an open-end 
  1.24  investment company or unit investment trust, as defined in the 
  1.25  Investment Company Act of 1940.  
  1.26     Sec. 2.  Minnesota Statutes 1994, section 80A.12, 
  1.27  subdivision 9, is amended to read: 
  1.28     Subd. 9.  A registration statement relating to a security 
  1.29  issued by a face amount certificate company or a redeemable 
  2.1   security issued by an open end management company or unit 
  2.2   investment trust, as those terms are that term is defined in the 
  2.3   Investment Company Act of 1940, may be amended after its 
  2.4   effective date so as to increase the securities specified as 
  2.5   proposed to be offered.  Such an amendment becomes effective 
  2.6   when the commissioner so orders.  Every person filing such an 
  2.7   amendment shall pay a filing fee, calculated in the manner 
  2.8   specified in section 80A.28 with respect to the additional 
  2.9   securities proposed to be offered.  
  2.10     Sec. 3.  Minnesota Statutes 1994, section 80A.12, 
  2.11  subdivision 10, is amended to read: 
  2.12     Subd. 10.  So long as a registration statement is effective 
  2.13  the issuer shall file an annual report in such form as the 
  2.14  commissioner by rule prescribes.  Every annual report shall be 
  2.15  due on the 90th day following the end of the issuer's fiscal 
  2.16  year, unless extended in writing for good cause by the 
  2.17  commissioner.  If the fiscal year end of an open-end investment 
  2.18  company fails within 30 days after the issuers' effective date, 
  2.19  the first annual report shall not be due until 90 days after the 
  2.20  following fiscal year end.  Failure to file the annual report 
  2.21  within 30 days after its due date shall be deemed a request for 
  2.22  withdrawal.  
  2.23     Sec. 4.  Minnesota Statutes 1994, section 80A.12, is 
  2.24  amended by adding a subdivision to read: 
  2.25     Subd. 10a.  In addition to the annual report required by 
  2.26  subdivision 10, an open-end investment company or unit 
  2.27  investment trust, as defined in the Investment Company Act of 
  2.28  1940, shall file a sales report with the commissioner in a form 
  2.29  the commissioner by rule prescribes.  The sales report must 
  2.30  specify sales of the registered securities, including the 
  2.31  aggregate offering price, to persons of this state since the 
  2.32  later of:  (1) the effective date of the registration; or (2) 
  2.33  the last fiscal year end for which a sales report was filed for 
  2.34  an open-end investment company or the last federal effectiveness 
  2.35  anniversary date for which a sales report was filed for a unit 
  2.36  investment trust.  Every sales report of an open-end investment 
  3.1   company is due on the 90th day following the end of the issuer's 
  3.2   fiscal year.  If the fiscal year end of an open-end investment 
  3.3   company falls within 30 days after the effective date, the first 
  3.4   sales report is not due until 90 days after the following fiscal 
  3.5   year end.  Every sales report of a unit investment trust is due 
  3.6   90 days following the anniversary of the issuer's federal 
  3.7   effectiveness date.  Failure to file the sales report within 30 
  3.8   days after its due date may result in the imposition of a civil 
  3.9   penalty. 
  3.10     Sec. 5.  Minnesota Statutes 1994, section 80A.13, 
  3.11  subdivision 1, is amended to read: 
  3.12     Subdivision 1.  The commissioner may issue a stop order 
  3.13  denying effectiveness to, or suspending or revoking the 
  3.14  effectiveness of, any registration statement if the commissioner 
  3.15  finds (a) that the order is in the public interest and (b) that 
  3.16     (1) the registration statement as of its effective date or 
  3.17  as of any earlier date in the case of an order denying 
  3.18  effectiveness, or any amendment under section 80A.12, 
  3.19  subdivision 9, as of its effective date, or any report under 
  3.20  section 80A.12, subdivision 8, is incomplete in any material 
  3.21  respect or contains any statement which was, in the light of the 
  3.22  circumstances under which it was made, false or misleading with 
  3.23  respect to any material fact; 
  3.24     (2) any provision of sections 80A.01 to 80A.31 or any rule, 
  3.25  order, or condition lawfully imposed under sections 80A.01 to 
  3.26  80A.31 has been willfully violated in connection with the 
  3.27  offering, by (i) the person filing the registration statement, 
  3.28  (ii) the issuer, any partner, officer, or director of the 
  3.29  issuer, any person occupying a similar status or performing 
  3.30  similar functions, or any person directly or indirectly 
  3.31  controlling or controlled by the issuer, but only if the person 
  3.32  filing the registration statement is directly or indirectly 
  3.33  controlled by or acting for the issuer, or (iii) any 
  3.34  underwriter; 
  3.35     (3) the security registered or sought to be registered is 
  3.36  the subject of an administrative stop order or similar order or 
  4.1   a permanent or temporary injunction of any court of competent 
  4.2   jurisdiction entered under any other federal or state act 
  4.3   applicable to the offering; but (i) the commissioner may not 
  4.4   institute a proceeding against an effective registration 
  4.5   statement under this clause more than one year from the date of 
  4.6   the order or injunction relied on, and (ii) may not enter an 
  4.7   order under this clause on the basis of an order or injunction 
  4.8   entered under any other state act unless that order or 
  4.9   injunction was based on facts which would currently constitute a 
  4.10  ground for a stop order under this section; 
  4.11     (4) the issuer's enterprise or method of business includes 
  4.12  or would include activities which are illegal where performed; 
  4.13     (5) the offering has worked or tended to work a fraud upon 
  4.14  purchasers or would so operate; 
  4.15     (6) except with respect to securities which are being 
  4.16  registered by notification, the terms of the securities are 
  4.17  unfair and inequitable; provided, however, that the commissioner 
  4.18  may not determine that an offering is unfair and inequitable 
  4.19  solely on the grounds that the securities are to be sold at an 
  4.20  excessive price where the offering price has been determined by 
  4.21  arms length negotiation between nonaffiliated parties.  The 
  4.22  selling price of any security being sold by a broker-dealer 
  4.23  licensed in this state shall be presumed to have been determined 
  4.24  by arms length negotiation; 
  4.25     (7) when a security is sought to be registered by 
  4.26  coordination there has been a failure to comply with the 
  4.27  undertaking required by section 80A.10, subdivision 2, clause 
  4.28  (d); 
  4.29     (8) the applicant or registrant has failed to pay the 
  4.30  proper filing fee; but the commissioner may enter only a denial 
  4.31  order under this clause and shall vacate any such order when the 
  4.32  deficiency has been corrected; or 
  4.33     (9) the offering of securities sought to be registered is 
  4.34  not firmly underwritten and (i) the minimum amount of proceeds 
  4.35  from the sale of the securities is not more than $500,000, and 
  4.36  (ii) the maximum amount of proceeds is more than 200 percent of 
  5.1   the minimum amount of proceeds required to go forward with the 
  5.2   offering. 
  5.3      The commissioner may not institute a stop order proceeding 
  5.4   against an effective registration statement solely on the basis 
  5.5   of a fact or transaction known to the commissioner when the 
  5.6   registration statement became effective unless the proceeding is 
  5.7   instituted within the next 30 days.  
  5.8      Sec. 6.  Minnesota Statutes 1994, section 80A.15, 
  5.9   subdivision 1, is amended to read: 
  5.10     Subdivision 1.  The following securities are exempted from 
  5.11  sections 80A.08 and 80A.16: 
  5.12     (a) Any security, including a revenue obligation, 
  5.13  guaranteed by the United States, any state, any political 
  5.14  subdivision of a state or any corporate or other instrumentality 
  5.15  of one or more of the foregoing; but this exemption shall not 
  5.16  include any industrial revenue bond.  Pursuant to section 106(c) 
  5.17  of the Secondary Mortgage Market Enhancement Act of 1984, Public 
  5.18  Law Number 98-440, this exemption does not apply to a security 
  5.19  that is offered or sold pursuant to section 106(a)(1) or (2) of 
  5.20  that act. 
  5.21     (b) Any security issued or guaranteed by Canada, any 
  5.22  Canadian province, any political subdivision of any province, 
  5.23  any agency or corporate or other instrumentality of one or more 
  5.24  of the foregoing, if the security is recognized as a valid 
  5.25  obligation by the issuer or guarantor; but this exemption shall 
  5.26  not include any revenue obligation payable solely from payments 
  5.27  to be made in respect of property or money used under a lease, 
  5.28  sale or loan arrangement by or for a nongovernmental industrial 
  5.29  or commercial enterprise. 
  5.30     (c) Any security issued by and representing an interest in 
  5.31  or a debt of, or guaranteed by, any bank organized under the 
  5.32  laws of the United States, or any bank, savings institution or 
  5.33  trust company organized under the laws of any state and subject 
  5.34  to regulation in respect of the issuance or guarantee of its 
  5.35  securities by a governmental authority of that state. 
  5.36     (d) Any security issued by and representing an interest in 
  6.1   or a debt of, or guaranteed by, any federal savings and loan 
  6.2   association, or any building and loan or similar association 
  6.3   organized under the laws of any state and authorized to do 
  6.4   business in this state. 
  6.5      (e) Any security issued or guaranteed by any federal credit 
  6.6   union or any credit union, or similar association organized and 
  6.7   supervised under the laws of this state. 
  6.8      (f) Any security listed or approved for listing upon notice 
  6.9   of issuance on the New York Stock Exchange, the American Stock 
  6.10  Exchange, the Midwest Stock Exchange, the Pacific Stock 
  6.11  Exchange, or the Chicago Board Options Exchange; any other 
  6.12  security of the same issuer which is of senior or substantially 
  6.13  equal rank; any security called for by subscription rights or 
  6.14  warrants so listed or approved; or any warrant or right to 
  6.15  purchase or subscribe to any of the foregoing. 
  6.16     (g) Any commercial paper which arises out of a current 
  6.17  transaction or the proceeds of which have been or are to be used 
  6.18  for current transactions, and which evidences an obligation to 
  6.19  pay cash within nine months of the date of issuance, exclusive 
  6.20  of days of grace, or any renewal of the paper which is likewise 
  6.21  limited, or any guarantee of the paper or of any renewal which 
  6.22  are not advertised for sale to the general public in newspapers 
  6.23  or other publications of general circulation or otherwise, or by 
  6.24  radio, television or direct mailing. 
  6.25     (h) Any interest in any employee's savings, stock purchase, 
  6.26  pension, profit sharing or similar benefit plan, or a 
  6.27  self-employed person's retirement plan. 
  6.28     (i) Any security issued or guaranteed by any railroad, 
  6.29  other common carrier or public utility which is subject to 
  6.30  regulation in respect to the issuance or guarantee of its 
  6.31  securities by a governmental authority of the United States. 
  6.32     (j) Any interest in a common trust fund or similar fund 
  6.33  maintained by a state bank or trust company organized and 
  6.34  operating under the laws of Minnesota, or a national bank 
  6.35  wherever located, for the collective investment and reinvestment 
  6.36  of funds contributed thereto by the bank or trust company in its 
  7.1   capacity as trustee, executor, administrator, or guardian; and 
  7.2   any interest in a collective investment fund or similar fund 
  7.3   maintained by the bank or trust company, or in a separate 
  7.4   account maintained by an insurance company, for the collective 
  7.5   investment and reinvestment of funds contributed thereto by the 
  7.6   bank, trust company or insurance company in its capacity as 
  7.7   trustee or agent, which interest is issued in connection with an 
  7.8   employee's savings, pension, profit sharing or similar benefit 
  7.9   plan, or a self-employed person's retirement plan. 
  7.10     (k) Any security which meets all of the following 
  7.11  conditions: 
  7.12     (1) If the issuer is not organized under the laws of the 
  7.13  United States or a state, it has appointed a duly authorized 
  7.14  agent in the United States for service of process and has set 
  7.15  forth the name and address of the agent in its prospectus; 
  7.16     (2) A class of the issuer's securities is required to be 
  7.17  and is registered under section 12 of the Securities Exchange 
  7.18  Act of 1934, and has been so registered for the three years 
  7.19  immediately preceding the offering date; 
  7.20     (3) Neither the issuer nor a significant subsidiary has had 
  7.21  a material default during the last seven years, or for the 
  7.22  period of the issuer's existence if less than seven years, in 
  7.23  the payment of (i) principal, interest, dividend, or sinking 
  7.24  fund installment on preferred stock or indebtedness for borrowed 
  7.25  money, or (ii) rentals under leases with terms of three years or 
  7.26  more; 
  7.27     (4) The issuer has had consolidated net income, before 
  7.28  extraordinary items and the cumulative effect of accounting 
  7.29  changes, of at least $1,000,000 in four of its last five fiscal 
  7.30  years including its last fiscal year; and if the offering is of 
  7.31  interest bearing securities, has had for its last fiscal year, 
  7.32  net income, before deduction for income taxes and depreciation, 
  7.33  of at least 1-1/2 times the issuer's annual interest expense, 
  7.34  giving effect to the proposed offering and the intended use of 
  7.35  the proceeds.  For the purposes of this clause "last fiscal 
  7.36  year" means the most recent year for which audited financial 
  8.1   statements are available, provided that such statements cover a 
  8.2   fiscal period ended not more than 15 months from the 
  8.3   commencement of the offering; 
  8.4      (5) If the offering is of stock or shares other than 
  8.5   preferred stock or shares, the securities have voting rights and 
  8.6   the rights include (i) the right to have at least as many votes 
  8.7   per share, and (ii) the right to vote on at least as many 
  8.8   general corporate decisions, as each of the issuer's outstanding 
  8.9   classes of stock or shares, except as otherwise required by law; 
  8.10  and 
  8.11     (6) If the offering is of stock or shares, other than 
  8.12  preferred stock or shares, the securities are owned beneficially 
  8.13  or of record, on any date within six months prior to the 
  8.14  commencement of the offering, by at least 1,200 persons, and on 
  8.15  that date there are at least 750,000 such shares outstanding 
  8.16  with an aggregate market value, based on the average bid price 
  8.17  for that day, of at least $3,750,000.  In connection with the 
  8.18  determination of the number of persons who are beneficial owners 
  8.19  of the stock or shares of an issuer, the issuer or broker-dealer 
  8.20  may rely in good faith for the purposes of this clause upon 
  8.21  written information furnished by the record owners. 
  8.22     (l) Any certificate of indebtedness sold or issued for 
  8.23  investment, other than a certificate of indebtedness pledged as 
  8.24  a security for a loan made contemporaneously therewith, and any 
  8.25  savings account or savings deposit issued, by an industrial loan 
  8.26  and thrift company. 
  8.27     (m) Any security designated or approved for designation 
  8.28  upon notice of issuance on the NASDAQ/National Market System; 
  8.29  any other security of the same issuer that is of senior or 
  8.30  substantially equal rank; any security called for by 
  8.31  subscription rights or warrants so designated or approved; or 
  8.32  any warrant or right to purchase or subscribe to any of the 
  8.33  securities referred to in this paragraph; provided that the 
  8.34  National Market System provides the commissioner with notice of 
  8.35  any material change in its designation requirements.  The 
  8.36  commissioner may revoke this exemption if the commissioner 
  9.1   determines that the designation requirements are not enforced or 
  9.2   are amended in a manner that lessens protection to investors. 
  9.3      (n) A security issued by an issuer registered as an 
  9.4   open-end management investment company or unit investment trust 
  9.5   under section 8 of the Investment Company Act of 1940 if: 
  9.6      (1) the issuer (i) is advised by an investment adviser that 
  9.7   it is a depository institution exempt from registration under 
  9.8   the Investment Company Act of 1940 or that is currently 
  9.9   registered as an investment adviser, and has been registered, or 
  9.10  is affiliated with an adviser that has been registered, as an 
  9.11  investment adviser under the Investment Advisers Act of 1940 for 
  9.12  at least three years next preceding an offer or sale of a 
  9.13  security claimed to be exempt under this paragraph; and the 
  9.14  adviser has acted, or is affiliated with an investment adviser 
  9.15  that has acted, as investment adviser to one or more registered 
  9.16  investment companies for at least three years next preceding an 
  9.17  offer or sale of a security claimed to be exempt under this 
  9.18  paragraph; or (ii) has a sponsor that has at all times 
  9.19  throughout the three years before an offer or sale of a security 
  9.20  claimed to be exempt under this paragraph sponsored one or more 
  9.21  registered investment companies or unit investment trusts the 
  9.22  aggregate total assets of which have exceeded $100,000,000; 
  9.23     (2) the division has received prior to any sale exempted 
  9.24  herein: 
  9.25     (i) a notice of intention to sell which has been executed 
  9.26  by the issuer which sets forth the name and address of the 
  9.27  issuer and the title of the securities to be offered in this 
  9.28  state; and 
  9.29     (ii) a filing fee of $....... for open-end management 
  9.30  companies; or 
  9.31     (iii) a filing fee of $....... for unit investment trusts; 
  9.32  and 
  9.33     (3) for the purpose of this exemption, an investment 
  9.34  adviser is affiliated with another investment adviser if it 
  9.35  controls, is controlled by, or is under common control with the 
  9.36  other investment adviser. 
 10.1      Sec. 7.  Minnesota Statutes 1994, section 80A.28, 
 10.2   subdivision 1, is amended to read: 
 10.3      Subdivision 1.  (a) There shall be a filing fee of $100 for 
 10.4   every application for registration.  There shall be an 
 10.5   additional fee of one-tenth of one percent of the maximum 
 10.6   aggregate offering price at which the registered securities are 
 10.7   to be offered in this state, and the maximum combined fees shall 
 10.8   not exceed $300.  
 10.9      (b) If the registration statement relates to redeemable 
 10.10  securities issued by an open end management company or unit 
 10.11  investment trust, as defined in the Investment Company Act of 
 10.12  1940, there shall be a filing fee of $100 for every application 
 10.13  for registration.  There shall be an additional fee of 1/20 of 
 10.14  one percent of the maximum aggregate offering price at which the 
 10.15  registered securities are to be offered in this state.  There 
 10.16  shall be no maximum fee for securities registered pursuant to 
 10.17  this clause.  
 10.18     (c) When an application for registration is withdrawn 
 10.19  before the effective date or a preeffective stop order is 
 10.20  entered under section 80A.13, subdivision 1, all but the $100 
 10.21  filing fee shall be returned.  If an application to register 
 10.22  securities is denied, the total of all fees received shall be 
 10.23  retained.  
 10.24     Sec. 8.  Minnesota Statutes 1994, section 80A.28, 
 10.25  subdivision 3, is amended to read: 
 10.26     Subd. 3.  Any amendment to an existing license or 
 10.27  registration requiring an order of the commissioner shall 
 10.28  require payment of an amendment fee of $25.  If the amendment 
 10.29  increases the aggregate amount of securities to be registered, 
 10.30  there shall be an additional fee calculated in accordance with 
 10.31  subdivision 1, provided the maximum additional fees, if 
 10.32  applicable under subdivision 1, paragraph (a), have not 
 10.33  previously been paid.  Additional fees for every amendment to 
 10.34  registrations filed in accordance with subdivision 1, paragraph 
 10.35  (b) shall be separately subject to the maximum fee stated in 
 10.36  that clause.  The commissioner shall by rule designate those 
 11.1   amendments which require an order of the commissioner.  
 11.2      Sec. 9.  Minnesota Statutes 1994, section 80A.28, is 
 11.3   amended by adding a subdivision to read: 
 11.4      Subd. 4a.  Every sales report required by section 80A.12, 
 11.5   subdivision 10a, must be accompanied by a fee of $50.  There is 
 11.6   imposed an additional fee of 1/20th of one percent of the 
 11.7   aggregate offering price of the registered securities sold to 
 11.8   persons in this state as reported in the sales report.  There is 
 11.9   no maximum fee for securities registered pursuant to this 
 11.10  subdivision. 
 11.11     Sec. 10.  [REPEALER.] 
 11.12     Minnesota Statutes 1994, section 80A.12, subdivision 9, is 
 11.13  repealed.