SRC-MWN H.B. 2728 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2728
77R10591 CLG-FBy: Crownover (Fraser)
Business & Commerce
5/9/2001
Engrossed


DIGEST AND PURPOSE 

The federal Securities Act of 1933 provides certain exemptions under
federal law to companies that intend to grant stock options to their
employees. It also extends these exemptions to consultants, managers,
partners, and others who provide services to a company. Texas law does not
currently provide exemptions for grants of options to consultants and
others who are not traditional employees of an issuer of securities. As a
result, Texas companies are unable to make certain option grants even when
federal law would permit them. H.B. 2728 amends The Securities Act to
correspond to federal law by providing for the exemption from registration
of option grants for consultants, managers, partners, and others who
provide services to a company but who are not traditional employees of the
company.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 5, The Securities Act (Article 581-5, V.T.C.S.),
as follows: 

Sec. 5.  EXEMPT TRANSACTIONS. Includes among exempt transactions certain
sales or distributions to persons, including consultants and advisors who
provide the issuer or its subsidiary bon fide services unrelated to the
offer or sale of securities in a capital-raising transaction 

SECTION 2. Effective date: September 1, 2001.
                      Makes application of this Act prospective.