Legislature(2013 - 2014)
03/31/2014 04:31 PM House L&C
| Audio | Topic |
|---|---|
| Start | |
| HB328 | |
| HB308 | |
| HB372 | |
| HB149 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 308-ALASKA SECURITIES ACT EXEMPTIONS
4:39:59 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 308, "An Act relating to the exemptions under the
Alaska Securities Act and to securities issued by Native
corporations; and providing for an effective date."
4:40:12 PM
REPRESENTATIVE LINDSEY HOLMES, Alaska State Legislature, stated
that HB 308 will help smaller businesses start up when they are
seeking investment by bringing in small numbers of in-state
investors. Currently, these businesses must perform a variety
of things to issue their stocks. This bill doesn't include
stocks covered under the federal securities exchange, but only
ones that are in the state and limited to a small number of
investors. The Division of Banking and Securities collects
registration forms about companies prior to their stock being
issued to small numbers of investors - 25 or fewer - or to
reinvestors. These companies are required to either pay a $50
filing fee or a $125 filing fee for expedited processing.
Currently the division does not use the information gathered on
these businesses.
REPRESENTATIVE HOLMES said that this bill leaves in place the
requirement that companies must provide investors with
information, retains consumer protection language in place, as
well as retaining all of the provisions that allow companies to
sue for damages. The bill does two other things. First, it
would increase the division's time to review an "offer to repay"
or rescission offer from 2 to 10 days. Second, it would clarify
that securities issued by Alaska Native Claims Settlement Act
(ANCSA) corporations, in compliance with applicable federal law,
are exempt from registration. Currently, state statutes did not
require regional corporations who issued their original stock
the transaction to file with the state; however, the statutes
were silent on later issuances of stock. The state must address
people born after 1971. This bill clearly indicates that later
issuances of stock are also exempt from securities registration
in the same manner as the original stock.
4:44:11 PM
KEVIN ANSELM, Director, Division of Banking & Securities,
Anchorage Office, Department of Commerce, Community & Economic
Development (DCCED), noted there are three substantive changes
contained in HB 308. First, it would eliminate the fee and
filing requirements for certain small or limited offering
exemptions, including those with 10 or fewer investors, those
with 25 or fewer investors, and existing security holders.
Second, the bill increases the division's time to review for an
offer to repay or rescission offer from 2 to 10 days since those
filings are more complicated than a regular security securities
registration, and an offer to repay usually means a problem has
arisen. Finally, the bill clarifies that securities issued by
ANCSA corporations, in compliance with applicable federal law,
don't need to be separately registered under state law.
4:46:08 PM
MS. ANSELM stated that these are often referred to as "friends
and family" exemptions. These transactions typically occur
because someone has an idea for a business or buys a business
and invites friends or family to invest. Typically, there are
no sales persons or sales commissions involved in these types of
transactions. These transactions are usually driven by the
entrepreneur so there isn't any public solicitation or
advertising; thus, the risk to the public is generally small.
Most states have these types of exemptions and these are
typically self-executing exemptions in other states, which means
that no fees and no filing are required, but all of the
requirements include consumer protection and enforcement
protection provisions.
4:47:02 PM
MS. ANSELM explained the next statutory change is to the limited
offering exemption. This applies to securities that are offered
to existing shareholders. This exemption might be used by an
existing business that is moving to the next level. The
division seldom receives filings for this exemption, in fact,
the division received one in 2013 and five in 2012. Those that
are filed are generally not necessary since there isn't any
commission paid, which is the only time an exemption needs to be
filed under current law. Further, HB 308 eliminates the $50
filing fee or $125 for expedited processing fee. It also
eliminates form preparation that will affect an average of 136
filings per year. This will reduce the division's revenue by
$6,800 per year. The statutes retain investor protection, the
division's oversight and the ability for an investor to seek
rescission or monetary damages. Anyone using an exemption has
the burden of proving the exemption, either to the division or
in a court of law. Finally, the bill clarifies that the ANCSA
securities issued after the initial issuance in 1972 do not need
to be registered with the state so long as they are in
compliance with federal law.
4:48:52 PM
REPRESENTATIVE CHENAULT asked for the purpose of the $50
processing fee.
MS. ANSELM answered that the division would review the form.
REPRESENTATIVE CHENAULT asked for the average length of time to
review the form.
MS. ANSELM answered that it would vary, depending on the
specific filing. Sometimes it can take considerable staff time
since people have questions about the filing. The division's
staff does spend time with an applicant, she said. In response
to a question, Ms. Anselm related the department's processing
time for the expedited filing is within two days of receipt.
4:49:55 PM
REPRESENTATIVE JOSEPHSON asked whether the form can be used as a
means to corroborate information in the instance in which a
dispute might arise. In other words, would anything be legally
relevant that could help resolve the dispute.
MS. ANSELM responded that the only thing would be to establish
that the party filed for an exemption, which is currently
required under the law.
4:50:51 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 308.
REPRESENTATIVE REINBOLD moved to report HB 308 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 308 was reported from the
House Labor and Commerce Standing Committee.
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