1-1     By:  Dutton (Senate Sponsor - Ratliff)                H.B. No. 1507

 1-2           (In the Senate - Received from the House May 16, 1997;

 1-3     May 16, 1997, read first time and referred to Committee on

 1-4     Jurisprudence; May 18, 1997, reported favorably by the following

 1-5     vote:  Yeas 6, Nays 1; May 18, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to limiting the liability of certain persons involved in

 1-9     an issuance of securities by a small business.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Section 33, The Securities Act (Article  581-33,

1-12     Vernon's Texas Civil Statutes), is amended by adding Subsection N

1-13     to read as follows:

1-14           N.  Limitation of Liability in Small Business Issuances.

1-15     (1)  For purposes of this Section 33N, unless the context otherwise

1-16     requires, "small business issuer" means an issuer of securities

1-17     that, at the time of an offer to which this Section 33N applies:

1-18                 (a)  has annual gross revenues in an amount that does

1-19     not exceed $25 million; and

1-20                 (b)  does not have a class of equity securities

1-21     registered, or required to be registered, with the Securities and

1-22     Exchange Commission under Section 12 of the Securities Exchange Act

1-23     of 1934, as amended (15 U.S.C. Section 78l).

1-24           (2)  This Section 33N applies only to:

1-25                 (a)  an offer of securities made by a small business

1-26     issuer or by the seller of securities of a small business issuer

1-27     that is in an aggregate amount that does not exceed $5 million; and

1-28                 (b)  a person who has been engaged to provide services

1-29     relating to an offer of securities described by Section 33N(2)(a),

1-30     including an attorney, an accountant, a consultant, or the firm of

1-31     the attorney, accountant, or consultant.

1-32           (3)  The maximum amount that may be recovered against a

1-33     person to which this Section 33N applies in any action or series of

1-34     actions under Section 33 relating to an offer of securities to

1-35     which this Section 33N applies is an amount equal to three times

1-36     the fee paid by the issuer or other seller to the person for the

1-37     services related to the offer of securities, unless the trier of

1-38     fact finds the person engaged in intentional wrongdoing in

1-39     providing the services.

1-40           (4)  A small business issuer making an offer of securities

1-41     shall provide to the prospective buyer a written disclosure of the

1-42     limitation of liability  created by this Section 33N and shall

1-43     receive a signed acknowledgement that the disclosure was provided.

1-44           SECTION 2.  This Act applies only to an action filed on or

1-45     after the effective date of this Act.  An action filed before the

1-46     effective date of this Act is governed by the law in effect at the

1-47     time the action  was filed, and that law is continued in effect for

1-48     that purpose.

1-49           SECTION 3.  The importance of this legislation and the

1-50     crowded condition of the calendars in both houses create an

1-51     emergency and an imperative public necessity that the

1-52     constitutional rule requiring bills to be read on three several

1-53     days in each house be suspended, and this rule is hereby suspended,

1-54     and that this Act take effect and be in force from and after its

1-55     passage, and it is so enacted.

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