Enrolled HB 308: Relating to the exemptions under the Alaska Securities Act and to securities issued by Native corporations; and providing for an effective date.
00Enrolled HB 308 01 Relating to the exemptions under the Alaska Securities Act and to securities issued by Native 02 corporations; and providing for an effective date. 03 _______________ 04 * Section 1. AS 45.55.900(b) is amended to read: 05 (b) The following transactions are exempted from AS 45.55.070 and 06 45.55.075: 07 (1) a transaction between the issuer or other person on whose behalf 08 the offering is made and an underwriter, or among underwriters; 09 (2) a transaction in a bond or other evidence of indebtedness secured 10 by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real 11 estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all 12 the bonds or other evidence of indebtedness, secured under those documents, is 13 offered and sold as a unit; 14 (3) a transaction by an executor, administrator, sheriff, marshal,
01 receiver, trustee in bankruptcy, guardian, or conservator; 02 (4) an offer or sale to a bank, savings institution, trust company, 03 insurance company, investment company as defined in 15 U.S.C. 80a-1 - 80a-64 04 (Investment Company Act of 1940), pension or profit-sharing trust, or other financial 05 institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting 06 for itself or in some fiduciary capacity; 07 (5) sales by an issuer 08 (A) to not [NO] more than 10 persons in this state other than 09 those designated in (4) of this subsection during a period of 12 consecutive 10 months, regardless of whether the seller or any of the buyers is then present in 11 this state, if 12 (i) a commission or other remuneration is not paid or 13 given directly or indirectly for soliciting a prospective buyer in this 14 state; 15 (ii) a legend is placed on the certificate or other 16 document evidencing ownership of the security, stating that the security 17 is not registered under this chapter and cannot be resold without 18 registration under this chapter or exemption from it; and 19 (iii) offers are made without public solicitation or 20 advertisement; [AND 21 (iv) THE ISSUER FILES WITH THE 22 ADMINISTRATOR A NOTICE SPECIFYING THE ISSUER, THE 23 SECURITY TO BE SOLD, AND THE TERMS OF THE OFFER AT 24 LEAST TWO DAYS BEFORE ANY SALES ARE MADE;] 25 (B) to not [NO] more than 25 persons in this state other than 26 those designated in (4) of this subsection during a period of 12 consecutive 27 months, regardless of whether the seller or any of the buyers is then present in 28 this state, if 29 (i) the sales are made solely in this state; 30 (ii) before a sale, each prospective buyer is furnished 31 information that is sufficient to make an informed investment decision,
01 which information shall be furnished to the administrator upon request; 02 in this sub-subparagraph, "information that is sufficient to make an 03 informed investment decision" includes a business plan, an income and 04 expense statement, a balance sheet, a statement of risks, and a 05 disclosure of any significant negative factors that may affect the 06 outcome of the investment; 07 (iii) commissions or other remuneration meet the 08 requirements of this chapter and are made only to persons registered 09 under AS 45.55.040; 10 (iv) a legend is placed on the certificate or other 11 document evidencing ownership of the security, stating that the security 12 is not registered under this chapter and cannot be resold without 13 registration under this chapter or exemption from it; 14 (v) the issuer obtains a signed agreement from the buyer 15 acknowledging that the buyer is buying for investment purposes and 16 that the securities will not be resold without registration under this 17 chapter; and 18 (vi) offers are made without public solicitation or 19 advertisement; [AND 20 (vii) THE ISSUER FILES WITH THE 21 ADMINISTRATOR A NOTICE SPECIFYING THE ISSUER, THE 22 SECURITY TO BE SOLD, AND THE TERMS OF THE OFFER AT 23 LEAST TWO DAYS BEFORE ANY SALES ARE MADE;] 24 (C) to not [NO] more than 10 persons who are to receive the 25 initial issue of shares of a nonpublicly traded corporation, limited liability 26 company, limited partnership, or limited liability partnership if the 27 requirements of (B)(ii) - (iv) and (vi) of this paragraph are met; 28 (D) to the buyer of an enterprise or a business and the assets 29 and liabilities of the enterprise or business if 30 (i) the transfer of stock to the buyer is solely incidental 31 to the sale of the enterprise or business and its assets and liabilities;
01 (ii) the seller provides full access to the buyer of the 02 books and records of the enterprise or business; and 03 (iii) a legend is placed on the certificate or other 04 document evidencing ownership of the security, stating that the security 05 is not registered under this chapter and cannot be resold without 06 registration under this chapter or exemption from it; 07 (6) an offer or sale of a preorganization certificate or subscription if 08 (A) a commission or other remuneration is not paid or given 09 directly or indirectly for soliciting a prospective subscriber; 10 (B) the number of subscribers does not exceed 10; and 11 (C) a payment is not made by any subscriber; 12 (7) a transaction under an offer to existing security holders of the 13 issuer, including persons who, at the time of the transaction, are holders of convertible 14 securities, nontransferable warrants, or transferable warrants exercisable [WITHIN] 15 not later [MORE] than 90 days after [OF] their issuance, if 16 [(A)] a commission or other remuneration, other than a standby 17 commission, is not paid or given directly or indirectly for soliciting a security 18 holder in this state; [OR 19 (B) THE ISSUER FIRST FILES A NOTICE SPECIFYING 20 THE TERMS OF THE OFFER AND THE ADMINISTRATOR DOES NOT 21 BY ORDER DISALLOW THE EXEMPTION WITHIN THE NEXT FIVE 22 FULL BUSINESS DAYS;] 23 (8) an offer, but not a sale, of a security for which registration 24 statements have been filed under both this chapter and 15 U.S.C. 77a - 77bbbb 25 (Securities Act of 1933) if a stop order or refusal order is not in effect and a public 26 proceeding or examination looking toward an order is not pending under either this 27 chapter or 15 U.S.C. 77a - 77bbbb (Securities Act of 1933); 28 (9) an isolated nonissuer transaction, regardless of whether effected 29 through a broker-dealer, if the seller is not a promoter or controlling person as the 30 administrator may define by regulation or order or if the administrator at the request of 31 the seller waives the requirement that the seller not be a promoter or controlling
01 person; 02 (10) a nonissuer transaction effected by or through a registered broker- 03 dealer under an unsolicited order or offer to buy; however, the administrator may by 04 regulation require that the customer acknowledge on a specified form that the sale was 05 unsolicited, and that a signed copy of each form be preserved by the broker-dealer for 06 a specified period; 07 (11) a transaction executed by a bona fide pledgee without intending to 08 evade this chapter; 09 (12) a transaction incident to a right of conversion or a statutory or 10 judicially approved reclassification, recapitalization, reorganization, quasi- 11 reorganization, stock split, reverse stock split, merger, consolidation, or sale of assets; 12 (13) a stock dividend, regardless of whether the corporation 13 distributing the dividend is the issuer of the stock, if nothing of value is given by 14 stockholders for the dividend other than the surrender of a right to a cash or property 15 dividend when each stockholder may elect to take the dividend in cash or property or 16 in stock; 17 (14) an act incident to a statutory vote by security holders on a merger, 18 consolidation, reclassification of securities, or sale of assets in consideration of the 19 issuance of securities of another issuer; 20 (15) the offer or sale by a registered broker-dealer, acting either as 21 principal or agent, of securities previously sold and distributed to the public if the 22 securities 23 (A) are sold at prices reasonably related to the current market 24 price at the time of sale, and, if the broker-dealer is acting as agent, the 25 commission collected by the broker-dealer on account of the sale is not in 26 excess of usual and customary commissions collected with respect to securities 27 and transactions having comparable characteristics; 28 (B) do not constitute the whole or a part of an unsold allotment 29 to or subscription or participation by the broker-dealer as an underwriter of the 30 securities or as a participant in the distribution of the securities by the issuer, 31 by an underwriter, or by a person or group of persons in substantial control of
01 the issuer or of the outstanding securities of the class being distributed; and 02 (C) have been lawfully sold and distributed in this state under 03 this chapter; 04 (16) offers or sales of certificates of interest or participation in oil, gas, 05 or mining rights, titles, or leases, or in payments out of production under those 06 [SUCH] rights, titles, or leases, if the purchasers 07 (A) are or have been during the preceding two years engaged 08 primarily in the business of exploring for, mining, producing, or refining oil, 09 gas, or minerals; or 10 (B) have been found by the administrator upon written 11 application to be substantially engaged in the business of exploring for, 12 mining, producing, or refining oil, gas, or minerals so as not to require the 13 protection provided by AS 45.55.070; 14 (17) a nonissuer transaction by a registered agent of a registered 15 broker-dealer, and a resale transaction by a sponsor of a unit investment trust 16 registered under 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), in a 17 security of a class that has been outstanding in the hands of the public for at least 90 18 days if, at the time of the transaction, 19 (A) the issuer of the security is actually engaged in business 20 and not in the organization stage or in bankruptcy or receivership and is not a 21 blank check, blind pool, or shell company whose primary plan of business is to 22 engage in a merger or combination of the business with, or an acquisition of, 23 an unidentified person or persons; 24 (B) the security is sold at a price reasonably related to the 25 current market price of the security; 26 (C) the security does not constitute the whole or part of an 27 unsold allotment to, or a subscription or participation by, the broker-dealer as 28 an underwriter of the security; 29 (D) a nationally recognized securities manual, which may be 30 designated by rule or order of the administrator, or a document filed with the 31 United States Securities and Exchange Commission that is publicly available
01 through the United States Securities and Exchange Commission's electronic 02 data gathering and retrieval system, contains 03 (i) a description of the business and operations of the 04 issuer; 05 (ii) the names of the issuer's officers and directors, if 06 any, or, in the case of an issuer not domiciled in the United States, the 07 corporate equivalents of the issuer's officers and directors in the issuer's 08 country of domicile; 09 (iii) an audited balance sheet of the issuer dated not 10 earlier than [AS OF A DATE WITHIN] 18 months before the 11 transaction or, in the case of a reorganization or merger in which 12 [WHERE] parties to the reorganization or merger had that audited 13 balance sheet, a pro forma balance sheet; and 14 (iv) an audited income statement for each of the issuer's 15 immediately preceding two fiscal years or for the period of existence of 16 the issuer if the issuer has been in existence for less than two years or, 17 in the case of a reorganization or merger where the parties to the 18 reorganization or merger had that audited income statement, a pro 19 forma income statement; and 20 (E) the issuer of the security has a class of equity securities 21 listed on a national securities exchange registered under 15 U.S.C. 78a - 78lll 22 (Securities Exchange Act of 1934) or designated for trading on the National 23 Association of Securities Dealers Automated Quotation System, unless the 24 issuer of the security 25 (i) is a unit investment trust registered under 15 U.S.C. 26 80a-1 - 80a-64 (Investment Company Act of 1940); 27 (ii) including predecessors, has been engaged in 28 continuous business for at least three years; or 29 (iii) has total assets of at least $2,000,000 based on an 30 audited balance sheet dated not earlier than [AS OF A DATE 31 WITHIN] 18 months before the transaction or, in the case of a
01 reorganization or merger in which the [WHERE] parties to the 02 reorganization or merger had that balance sheet, a pro forma balance 03 sheet; 04 (18) an offer or a sale of a security by an issuer that has a specific 05 business plan or purpose, is not in the development stage, and has not indicated that its 06 business plan is to engage in a merger or acquisition with an unidentified company or 07 other entity or person, under the following conditions: 08 (A) sales of securities are made only to persons who are or the 09 issuer reasonably believes are accredited investors as defined in 17 C.F.R. 10 230.501(a), as that regulation exists on or after October 1, 2013 [1999]; 11 (B) the issuer reasonably believes that all purchasers are 12 purchasing for investment and not with the view to or for sale in connection 13 with a distribution of the security; a resale of a security sold in reliance on this 14 exemption [WITHIN 12 MONTHS OF SALE] is presumed to be with a view 15 to distribution and not for investment if the resale occurs not later than 12 16 months after sale, except a resale under a registration statement under 17 AS 45.55.070 - 45.55.120 or to an accredited investor under an exemption 18 available under this chapter; 19 (C) the exemption in this paragraph is not available to an issuer 20 if the issuer, a predecessor of the issuer, an affiliated issuer, a director, an 21 officer, or a general partner of the issuer, a beneficial owner of 10 percent or 22 more of a class of the issuer's equity securities, a promoter of the issuer 23 presently connected with the issuer in any capacity, an underwriter of the 24 securities to be offered, or a partner, a director, or an officer of the underwriter 25 (i) within the last five years has filed a registration 26 statement that is the subject of a currently effective registration stop 27 order entered by a state securities administrator or the United States 28 Securities and Exchange Commission; 29 (ii) within the last five years has been convicted of a 30 criminal offense in connection with the offer, purchase, or sale of a 31 security, of a criminal offense involving fraud or deceit, or of a felony;
01 (iii) is currently subject to a state or federal 02 administrative enforcement order or judgment entered in the past 03 [WITHIN THE LAST] five years finding fraud or deceit in connection 04 with the purchase or sale of a security; or 05 (iv) is currently subject to an order, judgment, or decree 06 of a court of competent jurisdiction entered in the past [WITHIN THE 07 LAST] five years, temporarily, preliminarily, or permanently 08 restraining or enjoining the person from engaging in or continuing to 09 engage in conduct or a practice involving fraud or deceit in connection 10 with the purchase or sale of a security; 11 (D) the nonavailability of the exemption under (C) of this 12 paragraph does not apply if 13 (i) the person subject to the disqualification is licensed 14 or registered to conduct securities related business in the state in which 15 the order, judgment, or decree creating the disqualification was entered 16 against the person; 17 (ii) before the first offer under this exemption, the state 18 securities administrator or the court or regulatory authority that entered 19 the order, judgment, or decree waives the disqualification; or 20 (iii) the issuer establishes that it did not know and, in 21 the exercise of reasonable care, based on a factual inquiry, could not 22 have known that a disqualification existed under this paragraph; 23 (E) a general announcement of the proposed offering may be 24 made by any means and may include only the following information unless the 25 administrator specifically permits additional information: 26 (i) the name, address, and telephone number of the 27 issuer of the security; 28 (ii) the name, a brief description, and the price, if 29 known, of the security to be issued; 30 (iii) a brief description in 25 words or less of the 31 business of the issuer;
01 (iv) the type, number, and aggregate amount of 02 securities being offered; 03 (v) the name, address, and telephone number of the 04 person to contact for additional information; 05 (vi) a statement that sales will be made only to 06 accredited investors; 07 (vii) a statement that money or other consideration is 08 not being solicited or will not be accepted by way of this general 09 announcement; and 10 (viii) a statement that the securities have not been 11 registered with or approved by a state securities agency or the United 12 States Securities and Exchange Commission and are being offered and 13 sold under an exemption from registration; 14 (F) the issuer in connection with any offer may provide 15 information in addition to the general announcement under (E) of this 16 paragraph if the information is delivered 17 (i) through an electronic database that is restricted to 18 persons who have been prequalified as accredited investors; or 19 (ii) to a prospective purchaser that the issuer reasonably 20 believes is an accredited investor; 21 (G) a telephone solicitation is not permitted unless, before 22 placing the call, the issuer reasonably believes that the prospective purchaser 23 being solicited is an accredited investor; 24 (H) dissemination of the general announcement of the proposed 25 offering to persons who are not accredited investors does not disqualify the 26 issuer from claiming this exemption; 27 (I) the issuer shall file a notice of the transaction with the 28 administrator, a copy of the general announcement, and the fee for exemption 29 filings established by regulation within 15 days after the first sale in this state; 30 (19) an offer to repay, under AS 45.55.930, the buyer of a security if 31 the offeror first files with the administrator a notice specifying the terms of the offer at
01 least 10 [TWO] days before the offer is made; 02 (20) a transaction involving only family members who are related, 03 including related by adoption, within the fourth degree of affinity or consanguinity, or 04 involving only those family members and the corporations, partnerships, limited 05 liability companies, limited partnerships, limited liability partnerships, associations, 06 joint-stock companies, or trusts that are organized, formed, or created by those family 07 members or at the direction of those family members; 08 (21) a security that is not part of an initial issue of stock covered 09 by AS 45.55.138, but that is issued by a corporation organized under state law in 10 accordance with 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act), if 11 the corporation qualifies for exempt status under 43 U.S.C. 1625(a). 12 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 APPLICABILITY. This Act applies to transactions entered into on or after the 15 effective date of this Act. 16 * Sec. 3. This Act takes effect July 1, 2014.