1-1                                   AN ACT

 1-2     relating to limiting the liability of certain persons involved in

 1-3     an issuance of securities by a small business.

 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 in Small Business Issuances.

 1-9     (1)  For purposes of this Section 33N, unless the context otherwise

1-10     requires, "small business issuer" means an issuer of securities

1-11     that, at the time of an offer to which this Section 33N applies:

1-12                 (a)  has annual gross revenues in an amount that does

1-13     not exceed $25 million; and

1-14                 (b)  does not have a class of equity securities

1-15     registered, or required to be registered, with the Securities and

1-16     Exchange Commission under Section 12 of the Securities Exchange Act

1-17     of 1934, as amended (15 U.S.C. Section 78l).

1-18           (2)  This Section 33N applies only to:

1-19                 (a)  an offer of securities made by a small business

1-20     issuer or by the seller of securities of a small business issuer

1-21     that is in an aggregate amount that does not exceed $5 million; and

1-22                 (b)  a person who has been engaged to provide services

1-23     relating to an offer of securities described by Section 33N(2)(a),

1-24     including an attorney, an accountant, a consultant, or the firm of

 2-1     the attorney, accountant, or consultant.

 2-2           (3)  The maximum amount that may be recovered against a

 2-3     person to which this Section 33N applies in any action or series of

 2-4     actions under Section 33 relating to an offer of securities to

 2-5     which this Section 33N applies is an amount equal to three times

 2-6     the fee paid by the issuer or other seller to the person for the

 2-7     services related to the offer of securities, unless the trier of

 2-8     fact finds the person engaged in intentional wrongdoing in

 2-9     providing the services.

2-10           (4)  A small business issuer making an offer of securities

2-11     shall provide to the prospective buyer a written disclosure of the

2-12     limitation of liability  created by this Section 33N and shall

2-13     receive a signed acknowledgement that the disclosure was provided.

2-14           SECTION 2.  This Act applies only to an action filed on or

2-15     after the effective date of this Act.  An action filed before the

2-16     effective date of this Act is governed by the law in effect at the

2-17     time the action  was filed, and that law is continued in effect for

2-18     that purpose.

2-19           SECTION 3.  The importance of this legislation and the

2-20     crowded condition of the calendars in both houses create an

2-21     emergency and an imperative public necessity that the

2-22     constitutional rule requiring bills to be read on three several

2-23     days in each house be suspended, and this rule is hereby suspended,

2-24     and that this Act take effect and be in force from and after its

2-25     passage, and it is so enacted.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I certify that H.B. No. 1507 was passed by the House on May

         15, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 1507 was passed by the Senate on May

         21, 1997, by the following vote:  Yeas 27, Nays 2, 1 present, not

         voting.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor