Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 206-H.F.No. 1287 
           An act relating to commerce; securities; exempting 
          nonissuer sales of securities issued by the state, its 
          subdivisions, or instrumentalities from regulation; 
          amending Minnesota Statutes 1988, section 80A.15, 
          subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 80A.15, 
subdivision 2, is amended to read: 
    Subd. 2.  The following transactions are exempted from 
sections 80A.08 and 80A.16: 
    (a) Any isolated sales, whether or not effected through a 
broker-dealer, provided that no person shall make more than ten 
sales of securities of the same issuer pursuant to this 
exemption during any period of 12 consecutive months; provided 
further, that in the case of sales by an issuer, except sales of 
securities registered under the Securities Act of 1933 or 
exempted by section 3(b) of that act, (1) the seller reasonably 
believes that all buyers are purchasing for investment, and (2) 
the securities are not advertised for sale to the general public 
in newspapers or other publications of general circulation or 
otherwise, or by radio, television, electronic means or similar 
communications media, or through a program of general 
solicitation by means of mail or telephone. 
    (b) Any nonissuer distribution of an outstanding security 
if (1) either Moody's, Fitch's, or Standard & Poor's Securities 
Manuals, or other recognized manuals approved by the 
commissioner contains the names of the issuer's officers and 
directors, a balance sheet of the issuer as of a date not more 
than 18 months prior to the date of the sale, and a profit and 
loss statement for the fiscal year preceding the date of the 
balance sheet, and (2) the issuer or its predecessor has been in 
active, continuous business operation for the five-year period 
next preceding the date of sale, and (3) if the security has a 
fixed maturity or fixed interest or dividend provision, the 
issuer has not, within the three preceding fiscal years, 
defaulted in payment of principal, interest, or dividends on the 
securities. 
        (c) The execution of any orders by a licensed broker-dealer 
for the purchase or sale of any security, pursuant to an 
unsolicited offer to purchase or sell; provided that the 
broker-dealer acts as agent for the purchaser or seller, and has 
no direct material interest in the sale or distribution of the 
security, receives no commission, profit, or other compensation 
from any source other than the purchaser and seller and delivers 
to the purchaser and seller written confirmation of the 
transaction which clearly itemizes the commission, or other 
compensation. 
        (d) Any nonissuer sale of notes or bonds secured by a 
mortgage lien if the entire mortgage, together with all notes or 
bonds secured thereby, is sold to a single purchaser at a single 
sale. 
       (e) Any judicial sale, exchange, or issuance of securities 
made pursuant to an order of a court of competent jurisdiction. 
       (f) The sale, by a pledge holder, of a security pledged in 
good faith as collateral for a bona fide debt. 
       (g) Any offer or sale to a bank, savings institution, trust 
company, insurance company, investment company as defined in the 
Investment Company Act of 1940, pension or profit sharing trust, 
or other financial institution or institutional buyer, or to a 
broker-dealer, whether the purchaser is acting for itself or in 
some fiduciary capacity. 
     (h) Any sales by an issuer to the number of persons that 
shall not exceed 25 persons in this state, or 35 persons if the 
sales are made in compliance with Regulation D promulgated by 
the Securities and Exchange Commission, Code of Federal 
Regulations, title 17, sections 230.501 to 230.506, (other than 
those designated in paragraph (a) or (g)), whether or not any of 
the purchasers is then present in this state, if (1) the issuer 
reasonably believes that all of the buyers in this state (other 
than those designated in clause (g)) are purchasing for 
investment, and (2) no commission or other remuneration is paid 
or given directly or indirectly for soliciting any prospective 
buyer in this state (other than those designated in clause (g)), 
except reasonable and customary commissions paid by the issuer 
to a broker-dealer licensed under this chapter, and (3) the 
issuer has, ten days prior to any sale pursuant to this 
paragraph, supplied the commissioner with a statement of issuer 
on forms prescribed by the commissioner, containing the 
following information:  (i) the name and address of the issuer, 
and the date and state of its organization; (ii) the number of 
units, price per unit, and a description of the securities to be 
sold; (iii) the amount of commissions to be paid and the persons 
to whom they will be paid; (iv) the names of all officers, 
directors and persons owning five percent or more of the equity 
of the issuer; (v) a brief description of the intended use of 
proceeds; (vi) a description of all sales of securities made by 
the issuer within the six-month period next preceding the date 
of filing; and (vii) a copy of the investment letter, if any, 
intended to be used in connection with any sale.  Sales that are 
made more than six months before the start of an offering made 
pursuant to this exemption or are made more than six months 
after completion of an offering made pursuant to this exemption 
will not be considered part of the offering, so long as during 
those six-month periods there are no sales of unregistered 
securities (other than those made pursuant to paragraph (a) or 
(g)) by or for the issuer that are of the same or similar class 
as those sold under this exemption.  The commissioner may by 
rule or order as to any security or transaction or any type of 
security or transaction, withdraw or further condition this 
exemption, or increase the number of offers and sales permitted, 
or waive the conditions in clause (1), (2), or (3) with or 
without the substitution of a limitation or remuneration. 
       (i) Any offer (but not a sale) of a security for which a 
registration statement has been filed under sections 80A.01 to 
80A.31, if no stop order or refusal order is in effect and no 
public proceeding or examination looking toward an order is 
pending; and any offer of a security if the sale of the security 
is or would be exempt under this section.  The commissioner may 
by rule exempt offers (but not sales) of securities for which a 
registration statement has been filed as the commissioner deems 
appropriate, consistent with the purposes of sections 80A.01 to 
80A.31. 
       (j) The offer and sale by a cooperative association 
organized under chapter 308, of its securities when the 
securities are offered and sold only to its members, or when the 
purchase of the securities is necessary or incidental to 
establishing membership in such association, or when such 
securities are issued as patronage dividends. 
       (l) The issuance and delivery of any securities of one 
corporation to another corporation or its security holders in 
connection with a merger, exchange of shares, or transfer of 
assets whereby the approval of stockholders of the other 
corporation is required to be obtained, provided, that the 
commissioner has been furnished with a general description of 
the transaction and with other information as the commissioner 
by rule prescribes not less than ten days prior to the issuance 
and delivery. 
       (m) Any transaction between the issuer or other person on 
whose behalf the offering is made and an underwriter or among 
underwriters. 
    (n) The distribution by a corporation of its or other 
securities to its own security holders as a stock dividend or as 
a dividend from earnings or surplus or as a liquidating 
distribution; or upon conversion of an outstanding convertible 
security; or pursuant to a stock split or reverse stock split. 
    (o) Any offer or sale of securities by an affiliate of the 
issuer thereof if:  (1) a registration statement is in effect 
with respect to securities of the same class of the issuer and 
(2) the offer or sale has been exempted from registration by 
rule or order of the commissioner.  
    (p) Any transaction pursuant to an offer to existing 
security holders of the issuer, including persons who at the 
time of the transaction are holders of convertible securities, 
nontransferable warrants, or transferable warrants exercisable 
within not more than 90 days of their issuance, if:  (1) no 
commission or other remuneration (other than a standby 
commission) is paid or given directly or indirectly for 
soliciting any security holder in this state; and (2) the 
commissioner has been furnished with a general description of 
the transaction and with other information as the commissioner 
may by rule prescribe no less than ten days prior to the 
transaction. 
    (q)  Any nonissuer sales of industrial revenue bonds any 
security, including a revenue obligation, issued by the state of 
Minnesota or any of its political or governmental subdivisions, 
municipalities, governmental agencies, or instrumentalities. 
      Sec. 2.  [EFFECTIVE DATE.] 
     Section 1 is effective the day following final enactment. 
    Presented to the governor May 18, 1989 
    Signed by the governor May 19, 1989, 11:10 p.m.