Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 284--H.F.No. 973
           An act relating to commerce; securities and real 
          estate; modifying the definition of "investment 
          adviser"; clarifying the definitions of "trust 
          account" and investment metal contract; defining and 
          regulating investment adviser representatives; 
          expanding the regulation of investment advisers; 
          exempting certain persons from the definition of real 
          estate broker; modifying real estate education 
          requirements; providing for the suspension of a 
          broker's or salesperson's license pending a hearing; 
          clarifying the intent of certain language relating to 
          the real estate education, research, and recovery fund;
          modifying an exemption from the registration and 
          annual report requirements for social and charitable 
          organizations; amending Minnesota Statutes 1982, 
          sections 80A.02; 80A.04, subdivisions 2 and 3; 80A.07, 
          subdivisions 1 and 3, and by adding a subdivision; 
          80A.09, subdivision 1; 80A.14, subdivisions 9, 12, and 
          by adding a subdivision; 82.17, subdivisions 4 and 6; 
          82.18; 82.22, subdivision 6; 82.27, subdivision 3; 
          82.34, subdivision 7; 309.515, subdivision 1; 309.53, 
          subdivision 2, and by adding a subdivision. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 80A.02, is 
amended to read: 
    80A.02 [ADVISORY PROHIBITED ACTIVITIES.] 
    Subdivision 1.  [ADVISORY ACTIVITIES.] It is unlawful for 
any person who receives, directly or indirectly, any 
consideration from another person primarily for advising the 
other person as to the value of securities or their purchase or 
sale, whether through the issuance of analyses or reports or 
otherwise: 
    (a) to employ any device, scheme, or artifice to defraud 
the other person; or 
    (b) to engage in any act, practice, or course of business 
which operates or would operate as a fraud or deceit upon the 
other person; or 
    (c) to knowingly sell any security to or purchase any 
security from a client while acting as principal for his or her 
own account or knowingly effect any sale or purchase of any 
security for the account of a client while acting as broker for 
a person other than the client, unless that person discloses to 
the client in writing before the execution of the transaction 
the capacity in which he or she is acting and obtains the 
consent of the client to the transaction.  
    Subd. 1a.  [SOLICITATION ACTIVITIES.] In the solicitation 
of advisory clients, it is unlawful for any person to make any 
untrue statements of material facts, or, in light of the 
circumstances under which they are made, to omit to state 
material facts necessary in order to make the statements made 
not misleading.  
    Subd. 2.  [CONTRACT ACTIVITIES.] It is unlawful for any 
investment adviser to enter into, extend, or renew any 
investment advisory contract the terms of which are in 
contravention of such rules and regulations as the commissioner 
may prescribe prescribes as necessary or appropriate in the 
public interest or for the protection of investors.  
    Subd. 3.  [ACTIVITIES AS CUSTODIAN OF CERTAIN FUNDS.] It is 
unlawful for any investment adviser to take or have custody of 
any securities or funds of any client in contravention of such 
rules and regulations as the commissioner may prescribe 
prescribes as necessary or appropriate in the public interest or 
for the protection of investors.  
    Sec. 2.  Minnesota Statutes 1982, section 80A.04, 
subdivision 2, is amended to read: 
    Subd. 2.  It is unlawful for any broker-dealer or issuer to 
employ an agent to represent him or her in this state unless the 
agent is licensed.  The licensing of an agent is not effective 
during any period when he or she is not associated with a 
specified broker-dealer licensed under this chapter or a 
specified issuer.  No agent shall at any time represent more 
than one broker-dealer or issuer, except that where 
broker-dealers affiliated by direct common control are licensed 
under this chapter, an agent may represent any such the 
broker-dealer.  When an agent begins or terminates his or her 
employment with a broker-dealer or issuer, or begins or 
terminates those activities which make him that person an agent, 
the agent as well as the broker-dealer or issuer shall promptly 
notify the commissioner or his or her designated representative. 
     Sec. 3.  Minnesota Statutes 1982, section 80A.04, 
subdivision 3, is amended to read: 
    Subd. 3.  It is unlawful for any person to transact 
business in this state as an investment adviser unless he that 
person is so licensed or licensed as a broker-dealer under this 
chapter or unless his or her only clients in this state are 
persons to whom sales are exempted under section 80A.15, 
subdivision 2, clause (g) investment companies as defined in the 
Investment Company Act of 1940, other investment advisers, 
broker-dealers, banks, trust companies, savings and loan 
associations, insurance companies, employee benefit plans, 
corporations with a class of equity securities registered under 
section 12(g) of the Securities Exchange Act of 1934, small 
business investment companies, and government agencies or 
instrumentalities, whether acting for themselves or as trustees 
with investment control, or other institutional investors as are 
designated by rule or order of the commissioner. 
    Sec. 4.  Minnesota Statutes 1982, section 80A.07, 
subdivision 1, is amended to read: 
    Subdivision 1.  The commissioner may by order deny, suspend
, or revoke any license or may censure the licensee, if he or 
she finds (a) that the order is in the public interest and (b) 
that the applicant or licensee or, in the case of a 
broker-dealer or investment adviser, any partner, officer, or 
director, any person occupying a similar status or performing 
similar functions, or any person directly or indirectly 
controlling the broker-dealer or investment adviser: 
    (1) has filed an application for license which as of its 
effective date, or as of any date after filing in the case of an 
order denying effectiveness, was incomplete in any material 
respect or contained any statement which was, in light of the 
circumstances under which it was made, false or misleading with 
respect to any material fact; 
    (2) has willfully violated or failed to comply with any 
provision of this chapter or a predecessor law or any provision 
of the Securities Act of 1933, the Securities Exchange Act of 
1934, the Investment Advisers Act of 1940, the Investment 
Company Act of 1940, the Commodity Exchange Act, or any rule 
under any of these statutes, or any order thereunder of which he 
or she has notice and to which he or she is subject; 
    (3) has been convicted, within the past ten years, of any 
misdemeanor involving a security or any aspect of the securities 
business, or any felony; 
    (4) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the securities 
business; 
    (5) is the subject of an order of the commissioner denying, 
suspending, or revoking a license as a broker-dealer, agent or 
investment adviser; 
    (6) is the subject of an order entered within the past five 
years by the securities administrator of any other state or by 
the securities and exchange commission denying or revoking 
registration or license as a broker-dealer, agent, or investment 
adviser, or is the subject of an order of the securities and 
exchange commission suspending or expelling him that person from 
a national securities exchange or association registered under 
the Securities Exchange Act of 1934, or is the subject of a 
United States post office fraud order; but.  The commissioner 
may not institute a revocation or suspension proceeding under 
this clause more than one year from the date of the order relied 
on, and may not enter an order under this clause on the basis of 
an order under another state law unless the order was based on 
facts which would currently constitute a ground for an order 
under this section; 
    (7) has engaged in dishonest or fraudulent practices in the 
securities business; 
    (8) has failed to maintain the minimum net capital or to 
comply with the limitation on aggregate indebtedness which the 
commissioner by rule prescribes; 
    (9) is not qualified on the basis of such factors as 
training, experience, and knowledge of the securities business; 
    (10) has failed reasonably to supervise his agents if he is 
a broker-dealer, investment adviser representatives, or his 
employees if he is an investment adviser to assure their 
compliance with this chapter; 
    (11) has failed to pay the proper filing fee, but the 
commissioner shall vacate the order when the deficiency has been 
corrected; 
    (12) has offered or sold securities in this state through 
any unlicensed agent; 
    (13) has made any material misrepresentation to the 
commissioner, or upon request reasonably made by the 
commissioner, has withheld or concealed information from, or 
refused to furnish information to, the commissioner; or 
    (14) has failed to reasonably supervise the agents of a 
broker-dealer, investment adviser representatives, or the 
employees of an investment adviser if he or she has assumed or 
has been designated to carry out the supervisory procedures of 
the broker-dealer or investment adviser.  
    Sec. 5.  Minnesota Statutes 1982, section 80A.07, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [INVESTMENT ADVISER REPRESENTATIVES.] The 
commissioner, by order, shall censure or place limitations on 
the activities of any investment adviser representative or 
person seeking to become an investment adviser representative, 
or suspend or bar any person from being an investment adviser 
representative, if the commissioner finds, after notice and 
opportunity for hearing, that the censure, placing of 
limitations, suspension, or bar is in the public interest and 
that the person has committed or omitted any act or omission 
enumerated in subdivision 1.  It shall be unlawful for any 
person as to whom an order suspending or barring him from being 
an investment adviser representative is in effect willfully to 
become, or to be, associated with an investment adviser without 
the consent of the commissioner, and it shall be unlawful for 
any investment adviser to permit this person to become, or 
remain, an investment adviser representative without the consent 
of the commissioner, if the investment adviser knew, or in the 
exercise of reasonable care, should have known of the order.  
    Sec. 6.  Minnesota Statutes 1982, section 80A.07, 
subdivision 3, is amended to read: 
    Subd. 3.  The commissioner may issue an order requiring a 
licensee or an applicant for a license to show cause why the 
license should not be revoked or the application denied.  The 
order shall be calculated to give reasonable notice of the time 
and place for hearing thereon, and shall state the reasons for 
the entry of the order.  The commissioner may by order summarily 
suspend a license, or in the case of an investment adviser 
representative or person seeking to become an investment adviser 
representative, summarily suspend or bar that person from acting 
in that capacity, pending final determination of any order to 
show cause.  If a license is suspended pending final 
determination of an order to show cause, a hearing on the merits 
shall be held within 30 days of the issuance of the order of 
suspension.  All hearings shall be conducted in accordance with 
the provisions of chapter 14.  After the hearing, the 
commissioner shall enter an order making such a disposition of 
the matter as the facts require.  If the licensee or applicant 
fails to appear at a hearing of which he or she has been duly 
notified, such the person shall be deemed in default and the 
proceeding may be determined against him upon consideration of 
the order to show cause, the allegations of which may be deemed 
to be true.  The commissioner may adopt rules of procedure 
concerning all proceedings conducted pursuant to this 
subdivision. 
    Sec. 7.  Minnesota Statutes 1982, section 80A.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  The following securities may be registered 
by notification: 
    (a) any industrial revenue bond, the interest on which is 
exempt from tax under section 290.08, subdivision 7 chapter 290; 
and 
    (b) any securities issued by a person organized exclusively 
for social, religious, educational, benevolent, fraternal, 
charitable, reformatory, athletic, chamber of commerce, trade, 
industrial development, or professional association purposes and 
not for pecuniary gain, and no part of the net earnings of which 
inures to the benefit of any private stockholder or individual; 
provided that no securities issued by any person offering and 
furnishing a burial service or funeral benefit, directly or 
indirectly for financial consideration, may be registered under 
this section.  
    Sec. 8.  Minnesota Statutes 1982, section 80A.14, 
subdivision 9, is amended to read: 
    Subd. 9.  [INVESTMENT ADVISER.] "Investment adviser" means 
any person who, for compensation, engages in the business of 
advising others, either directly or through publications or, 
writings or electronic means, as to the value of securities or 
as to the advisability of investing in, purchasing, or selling 
securities, or who, for compensation and as a part of a regular 
business, issues or promulgates analyses or reports concerning 
securities.  "Investment adviser" does not include: 
    (1) a bank, savings institution, or trust company; 
    (2) a lawyer, accountant, engineer, or teacher whose 
performance of these services is solely incidental to the 
practice of his profession; 
    (3) a broker-dealer whose performance of these services is 
solely incidental to the conduct of his or her business as a 
broker-dealer and who receives no special compensation for them; 
    (4) a publisher of any bona fide newspaper, news column, 
newsletter, news magazine, or business or financial publication 
of general, regular and paid circulation; or service, whether 
communicated in hard copy form, or by electronic means, or 
otherwise, that does not consist of the rendering of advice on 
the basis of the specific investment situation of each client; 
or 
    (5) a person whose advice, analyses or reports relate only 
to securities exempted by section 80A.15, subdivision 1, clause 
(a);  
    (6) a person whose only clients in this state are other 
investment advisers or persons to whom sales are exempted under 
section 80A.15, subdivision 2, clause (g); or 
    (7) such other persons not within the intent of this 
subdivision as the commissioner may by rule or order designate. 
    Sec. 9.  Minnesota Statutes 1982, section 80A.14, is 
amended by adding a subdivision to read: 
    Subd. 9a.  [INVESTMENT ADVISER REPRESENTATIVE.] "Investment 
adviser representative" means any partner, officer, or director 
of an investment adviser, or any person performing similar 
functions, or any person, directly or indirectly, controlling or 
controlled by an investment adviser, including any employee of 
an investment adviser who provides investment advice to clients. 
    Sec. 10.  Minnesota Statutes 1982, section 80A.14, 
subdivision 12, is amended to read: 
    Subd. 12.  [INVESTMENT METAL CONTRACT.] "Investment metal 
contract" or "investment gem contract" means: 
     (i) a sale of an investment metal or investment gem in 
which the seller or an affiliate of the seller retains 
possession of the investment metal or investment gem; or 
     (ii) a contract of purchase or sale which provides for the 
future delivery of an investment metal or investment gem, or any 
option to purchase or option to sell such a contract; or 
     (iii) a sale of an investment metal or investment gem 
pursuant to a contract known to the trade as a margin account, 
margin contract, leverage account, or leverage contract. 
     "Investment metal contract" or "investment gem contract" 
shall not include: 
     (i) the sale of an investment metal or investment gem where 
the seller has reasonable grounds to believe that the investment 
metal or investment gem is being acquired for manufacturing, 
commercial or industrial purposes; or 
     (ii) the sale, or contract for the future purchase or sale, 
of jewelry, art objects or other manufactured or crafted goods 
other than bullion or bulk sales of coins; or 
    (iii) the sale of an investment metal or investment gem 
where full payment is made to the seller, and delivery of the 
investment metal or investment gem is made to the purchaser, or 
to a bank, savings institution, trust company, broker-dealer, or 
safe deposit company designated by the purchaser, within 20 days 
of the date of purchase, if the bank, savings institution, trust 
company, broker-dealer, or safe deposit company is located 
within this state, and is, where required, licensed under the 
laws of this state, provided that a purchaser may designate a 
bank, savings institution, trust company, or licensed 
broker-dealer, within this state, to accept delivery on his 
behalf if the bank, savings institution, trust company or 
licensed broker-dealer maintains the investment metal or 
investment gem in safe-keeping and as the specifically 
identifiable property of the purchaser a safe deposit company 
accepting such delivery may not be an affiliate of the seller; 
or 
    (iv) any futures contracts traded on a commodities exchange 
registered under the Federal Commodity Futures Trading 
Commission Act of 1974. 
    Sec. 11.  Minnesota Statutes 1982, section 82.17, 
subdivision 4, is amended to read: 
    Subd. 4.  "Real estate broker" or "broker" means any person 
who: 
    (a) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly lists, sells, exchanges, buys or 
rents, manages, or offers or attempts to negotiate a sale, 
option, exchange, purchase or rental of an interest or estate in 
real estate, or advertises or holds himself, herself, or itself 
out as engaged in such these activities; 
    (b) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly negotiates or offers or attempts 
to negotiate a loan, secured or to be secured by a mortgage or 
other encumbrance on real estate; 
    (c) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly lists, sells, exchanges, buys, 
rents, manages, offers or attempts to negotiate a sale, option, 
exchange, purchase or rental of any business opportunity or 
business, or its goodwill, inventory, or fixtures, or any 
interest therein; 
    (d) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly offers, sells or attempts to 
negotiate the sale of property that is subject to the 
registration requirements of chapter 83, concerning subdivided 
land; 
    (e) engages in the business of charging an advance fee or 
contracting for collection of a fee in connection with any 
contract whereby he or she undertakes to promote the sale of 
real estate through its listing in a publication issued 
primarily for such this purpose; 
    (f) engages wholly or in part in the business of selling 
real estate to the extent that a pattern of real estate sales is 
established, whether or not such the real estate is owned by 
such the person.  A person shall be presumed to be engaged in 
the business of selling real estate if such the person engages 
as principal in five or more transactions during any 12-month 
period, unless the person is represented by a licensed real 
estate broker or salesperson.  
    Sec. 12.  Minnesota Statutes 1982, section 82.17, 
subdivision 6, is amended to read: 
    Subd. 6.  "Trust account" means, for purposes of this 
chapter, a demand deposit or checking account maintained for the 
purpose of segregating trust funds from other funds.  A trust 
account shall not be an interest bearing account except by 
agreement of the parties and subject to regulations rules of the 
commissioner, and shall not allow the financial institution a 
right of set off against moneys owed it by the licensee.  
    Sec. 13.  Minnesota Statutes 1982, section 82.18, is 
amended to read: 
    82.18 [EXCEPTIONS.] 
    Unless a person is licensed or otherwise required to be 
licensed under this chapter, the term real estate broker does 
not include: 
    (a) a licensed practicing attorney acting solely as an 
incident to the practice of law, provided, however, that the 
attorney complies in all respects with the trust account 
provisions of this chapter; 
    (b) a receiver, trustee, administrator, guardian, executor, 
or other person appointed by or acting under the judgment or 
order of any court; 
    (c) any person owning and operating a cemetery and selling 
lots therein solely for use as burial plots; 
    (d) any custodian, janitor, or employee of the owner or 
manager of a residential building who leases residential units 
in such the building; 
    (e) any bank, trust company, savings and loan association, 
public utility, or any land mortgage or farm loan association 
organized under the laws of this state or the United States, 
when engaged in the transaction of business within the scope of 
its corporate powers as provided by law; 
    (f) public officers while performing their official duties; 
    (g) employees of persons enumerated in clauses (b), (e) and 
(f), when engaged in the specific performance of their duties; 
    (h) any person who acts as an auctioneer bonded in 
conformity with section 330.02, when he that person is engaged 
in the specific performance of his or her duties as an 
auctioneer; 
    (i) any person who acquires such real estate for the 
purpose of engaging in and does engage in, or who is engaged in 
the business of constructing residential, commercial or 
industrial buildings for the purpose of resale, provided that if 
no more than 25 such transactions occur in any 12-month period 
and that the person complies with section 82.24; 
    (j) any person who offers to sell or sells an interest or 
estate in real estate which is a security registered pursuant to 
chapter 80A, when acting solely as an incident to the sale of 
such these securities; 
    (k) any person who offers to sell or sells a business 
opportunity which is a franchise registered pursuant to chapter 
80C, when acting solely to sell the franchise; 
    (l) any person who contracts with or solicits on behalf of 
a provider a contract with a resident or prospective resident to 
provide continuing care in a facility, pursuant to the 
Continuing Care Facility Disclosure and Rehabilitation Act 
(chapter 80D), when acting solely as incident to the contract.;  
    (m) any broker-dealer or agent of a broker-dealer when 
participating in a transaction in which all or part of a 
business opportunity or business, including any interest 
therein, is conveyed or acquired pursuant to an asset purchase, 
merger, exchange of securities or other business combination, if 
the agent or broker-dealer is licensed pursuant to chapter 80A.  
    Sec. 14.  Minnesota Statutes 1982, section 82.22, 
subdivision 6, is amended to read: 
    Subd. 6.  [INSTRUCTION; NEW LICENSES.] (a) Every 
salesperson, licensed after July 1, 1973 and before July 1, 1976 
shall, within two years of the date his license was first 
granted be required to successfully complete a course of study 
in the real estate field consisting of not less than 60 hours of 
instruction, approved by the commissioner.  Upon appropriate 
showing of hardship by the licensee, or for persons licensed 
pursuant to section 82.20, subdivision 1, clause (b), the 
commissioner may waive or modify the requirements of this 
subdivision.  Every salesperson licensed after July 1, 1976 and 
before July 1, 1978 shall, within three years of the date his 
license was first issued, be required to successfully complete a 
course of study in the real estate field consisting of not less 
than 90 hours of instruction, approved by the commissioner; 
    (b) After July 1, 1978, and before January 1, 1984, every 
applicant for a salesperson's license shall be required to 
successfully complete a course of study in the real estate field 
consisting of 30 hours of instruction approved by the 
commissioner before taking the examination specified in 
subdivision 1.  Every salesperson licensed after July 1, 1978, 
and before January 1, 1984, shall, within one year of the date 
his license was first issued, be required to successfully 
complete a course of study in the real estate field consisting 
of 60 hours of instruction approved by the commissioner. 
    (c) After December 31, 1983, every applicant for a 
salesperson's license shall be required to successfully complete 
a course of study in the real estate field consisting of 30 
hours of instruction approved by the commissioner before taking 
the examination specified in subdivision 1.  After December 31, 
1983, every applicant for a salesperson's license shall be 
required to successfully complete an additional course of study 
in the real estate field consisting of 30 hours of instruction 
approved by the commissioner before filing an application for 
the license.  Every salesperson licensed after December 31, 
1983, shall, within one year of the date his license was first 
issued, be required to successfully complete a course of study 
in the real estate field consisting of 30 hours of instruction 
approved by the commissioner.  
    (d) The commissioner may approve courses of study in the 
real estate field offered in educational institutions of higher 
learning in this state or courses of study in the real estate 
field developed by and offered under the auspices of the 
national association of realtors, its affiliates, or private 
real estate schools licensed by the state department of 
education.  The commissioner may by rule prescribe the 
curriculum and qualification of those employed as instructors. 
    Sec. 15.  Minnesota Statutes 1982, section 82.27, 
subdivision 3, is amended to read: 
    Subd. 3.  The commissioner shall issue an order requiring a 
licensee or applicant for a license to show cause why the 
license should not be revoked or suspended, or the licensee 
censured, or the application denied.  The order shall be 
calculated to give reasonable notice of the time and place for 
hearing thereon, and shall state the reasons for the entry of 
the order.  The commissioner may by order summarily suspend a 
license pending final determination of any order to show cause. 
If a license is suspended pending final determination of an 
order to show cause, a hearing on the merits shall be held 
within 30 days of the issuance of the order of suspension.  All 
hearings shall be conducted in accordance with the provisions of 
chapter 14.  After the hearing, the commissioner shall enter an 
order making such disposition of the matter as the facts 
require.  If the licensee or applicant fails to appear at a 
hearing of which he has been duly notified, such person shall be 
deemed in default, and the proceeding may be determined against 
him upon consideration of the order to show cause, the 
allegations of which may be deemed to be true.  
    Sec. 16.  Minnesota Statutes 1982, section 82.34, 
subdivision 7, is amended to read: 
    Subd. 7.  When any aggrieved person obtains a final 
judgment in any court of competent jurisdiction against any 
person licensed under this chapter, on grounds of fraudulent, 
deceptive or dishonest practices, or conversion of trust funds 
arising directly out of any transaction when the judgment debtor 
was licensed and performed acts for which a license is required 
under this chapter, or performed acts permitted by section 
327.55, subdivision 1a, and which cause of action occurred on or 
after July 1, 1973, the aggrieved person may, upon the judgment 
becoming final, and upon termination of all proceedings, 
including reviews and appeals, file a verified application in 
the court in which the judgment was entered for an order 
directing payment out of the recovery portion of the fund of the 
amount of actual and direct out of pocket loss in such the 
transaction, but excluding any attorney's fees, interest on the 
loss and on any judgment obtained as a result of such the loss, 
up to the sum of $20,000 of the amount unpaid upon the judgment, 
provided that nothing in this chapter shall be construed to 
obligate the fund for more than $20,000 per transaction, subject 
to the limitations set forth in subdivisions 12 and 14, 
regardless of the number of persons aggrieved or parcels of real 
estate involved in such the transaction.  A copy of the verified 
application shall be served upon the commissioner and upon the 
judgment debtor, and a certificate or affidavit of such service 
filed with the court.  For the purpose of this section 
"aggrieved person" shall not include a real estate licensee who 
is seeking to recover a commission.  
    Sec. 17.  Minnesota Statutes 1982, section 309.515, 
subdivision 1, is amended to read: 
    Subdivision 1.  Subject to the provisions of subdivisions 2 
and 3, sections 309.52 and 309.53 shall not apply to any of the 
following: 
    (a) Charitable organizations: 
    (1) which did not receive total contributions in excess of 
$10,000 from the public within or without this state during the 
accounting year last ended, and 
    (2) which do not plan to receive total contributions in 
excess of such amount from the public within or without this 
state during any accounting year, and 
    (3) whose functions and activities, including fund raising, 
are performed wholly by persons who are unpaid for their 
services, and 
    (4) none of whose assets or income inure to the benefit of 
or are paid to any officer. 
    For purposes of this chapter, a charitable organization 
shall be deemed to receive in addition to such contributions as 
are solicited from the public by it, such the contributions as 
are solicited from the public by any other person and 
transferred to it.  Any organization constituted for a 
charitable purpose receiving an allocation from a community 
chest, united fund or similar organization shall be deemed to 
have solicited that allocation from the public. 
    (b) A religious society or organization which received more 
than half of the contributions it received in the accounting 
year last ended (1) from persons who are members of the 
organization; or (2) from a parent organization or affiliated 
organization; or (3) from a combination of the sources listed in 
clauses (1) and (2).  A religious society or organization which 
solicits from its religious affiliates who are qualified under 
this subdivision and who are represented in a body or convention 
is exempt from the requirements of sections 309.52 and 309.53. 
The term "member" shall not include those persons who are 
granted a membership upon making a contribution as a result of a 
solicitation.  
    (c) Any educational institution which is under the general 
supervision of the state board of education, the state 
university board, the state board for community colleges, or the 
University of Minnesota or any educational institution which is 
accredited by the University of Minnesota or the North Central 
association of colleges and secondary schools, or by any other 
national or regional accrediting association. 
    (d) A fraternal, patriotic, social, educational, alumni, 
professional, trade or learned society which limits solicitation 
of contributions to persons who have a right to vote as a 
member.  The term "member" shall not include those persons who 
are granted a membership upon making a contribution as the 
result of a solicitation. 
    (e) A charitable organization soliciting contributions for 
any person specified by name at the time of the solicitation if 
all of the contributions received are transferred to the person 
named with no restrictions on his expenditure of it and with no 
deductions whatsoever. 
    (f) A private foundation, as defined in section 509(a) of 
the Internal Revenue Code of 1954, which did not solicit 
contributions from more than 100 persons during the accounting 
year last ended. 
    Sec. 18.  Minnesota Statutes 1982, section 309.53, 
subdivision 2, is amended to read: 
    Subd. 2.  Such annual report shall include a financial 
statement covering the immediately preceding 12 months period of 
operation, and shall be executed by any two duly constituted 
officers of the charitable organization, who shall acknowledge 
that it was executed pursuant to resolution of the board of 
directors or trustees, or if there be no such board, then by its 
managing group which has approved the content of the annual 
report.  Such annual report shall also include a copy of any tax 
return, including amendments, submitted by the charitable 
organization to the Internal Revenue Service for the period 
covered by the annual report.  
    A charitable organization which files the annual report 
required under this subdivision with the securities and real 
estate division is not required to file the tax return with the 
commissioner of revenue.  An organization which fails to file 
the tax return required under this section is subject to the 
penalties imposed by the commissioner of revenue as set forth in 
section 290.05, subdivisions 4 and 5.  
    Sec. 19.  Minnesota Statutes 1982, section 309.53, is 
amended by adding a subdivision to read: 
    Subd. 3a.  The federal tax return may be filed in lieu of 
other financial statements if it is prepared in accordance with 
generally accepted accounting principles and meets the 
requirements for financial statements set forth in subdivisions 
2, 3 and 4. 
    Approved June 7, 1983