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28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled 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.                                                                      
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