By Dutton H.B. No. 2563 74R7986 T A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to initiatives for small businesses and rights and 1-3 remedies under The Securities Act. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Section 33, The Securities Act (Article 581-33, 1-6 Vernon's Texas Civil Statutes), is amended by adding Subsection N 1-7 to read as follows: 1-8 N. Limitation of Liability of Certain Parties. 1-9 (1) Definitions. For purposes of this Section 33.N, 1-10 the following terms shall, unless the context otherwise indicates, 1-11 have the following respective meanings: 1-12 a. The term "Small Business Issuer" shall mean 1-13 an issuer of securities that, at the time of the offering in 1-14 question, (1) has annual gross revenues not in excess of 1-15 $25,000,000 and (2) does not have a class of equity securities 1-16 registered, or required to be registered, with the U.S. Securities 1-17 and Exchange Commission under Section 12 of the Securities 1-18 Exchange Act of 1934, as amended. 1-19 b. The term "Covered Person" shall mean an 1-20 attorney (or the attorney's firm (if any)), or an accountant (or 1-21 the accountant's firm (if any)) or a consultant or similar person, 1-22 who has been engaged to provides services to a Small Business 1-23 Issuer, or to a seller of securities of a Small Business Issuer, in 1-24 connection with a Covered Transaction. 2-1 c. The term "Covered Transaction" shall mean an 2-2 offering of securities by a Small Business Issuer, or by a seller 2-3 of securities of a Small Business Issuer, in an aggregate amount 2-4 not in excess of $5,000,000 which is registered under Section 7 of 2-5 this Act or exempt from registration under Section 5 of this Act or 2-6 any rule promulgated under Section 5.T of this Act. 2-7 (2) Limitation of Liability of Covered Persons. 2-8 a. General Rule. Notwithstanding any other 2-9 provision of this section to the contrary (other than Section 2-10 33.N(2)b), in any action or series of actions relating to a Covered 2-11 Transaction under this section where liability against a Covered 2-12 Person has already been established in connection with such Covered 2-13 Transaction, the maximum amount that may be recovered against any 2-14 such liable Covered Person in all actions relating to such Covered 2-15 Transaction shall not exceed, in the aggregate, the amount that is 2-16 three times the fee (exclusive of reimbursed expenses) paid by the 2-17 issuer or other seller to the Covered Person with respect to such 2-18 Covered Transaction. 2-19 b. Limitation of Liability Not Available. The 2-20 limitation of liability provided by Section 33.N(2)a shall not be 2-21 available if the Covered Person shall be found in such action by 2-22 the trier of fact to have engaged in intentional wrongdoing in 2-23 providing services in connection with the Covered Transaction. 2-24 SECTION 2. Section 1 of this Act applies only to lawsuits 2-25 filed on or after the effective date of this Act. Lawsuits filed 2-26 before the effective date of this Act are governed by the law in 2-27 effect when the suit was filed, and the former law is continued in 3-1 effect for this purpose. 3-2 SECTION 3. The importance of this legislation and the 3-3 crowded condition of the calendars in both houses create an 3-4 emergency and an imperative public necessity that the 3-5 constitutional rule requiring bills to be read on three several 3-6 days in each house be suspended, and this rule is hereby suspended, 3-7 and that this Act take effect and be in force from and after its 3-8 passage, and it is so enacted.