SRC-TBR H.B. 3015 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 3015
77R11494 CLG-FBy: Crownover(Truan)
Business & Commerce
5/6/2001
Engrossed


DIGEST AND PURPOSE 

Charitable organizations have begun to recognize the benefit of accepting
stock and stock options in addition to monetary donations in their
fund-raising efforts.  Donation of stock provides charities with great
potential gains without great risk.  The options also provide cash-poor
corporations with the means to provide potentially large donations to
charities.  As a result of these types of fund-raising efforts, start-up
companies have begun to issue stock options to charities when the strike
price of the options is low and the potential benefits are significant.
Currently, The Securities Act of Texas does not provide an exemption from
registration under state law for the charitable donation of securities,
which may negate the inherent incentives of stock donation.  H.B. 3015
exempts the donation of securities to charitable organizations from The
Securities Act. 

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.  Provides that, except as hereinafter in this
Act specifically provided, the provisions of this Act do not apply to the
sale of any security when made in any of the following transactions and
under any of the following conditions, and the company or person engaged
therein shall not be deemed a dealer within the meaning of this Act;  that
is to say, the provisions of this Act do not apply to any sale, offer for
sale, solicitation, subscription, dealing in or delivery of any security
under any of the following transactions or conditions: 

U.  The issuance or transfer of securities by the issuer of its securities
to a corporation or association, organized exclusively for religious,
educational, benevolent, fraternal, charitable, or reformatory purposes and
not for pecuniary profit, only if: 

(a)  the corporation or association does not provide anything of value for
the securities other than, in the case of any security that is an option,
payment of the exercise price of the option to acquire the securities at a
price not to exceed the fair market value of the underlying securities on
the date the option was granted; 

(b)  the issuance or transfer of securities is not made for the purpose of
raising capital for the issuer; 

(c)  no commission or other form of consideration is paid or provided to a
third party with respect to the issuance or transfer; and 

(d)  the issuance or transfer is not directly or indirectly for the purpose
of providing or  furthering a scheme in violation of or to evade this Act. 

SECTION 2.  Effective date: upon passage or September 1, 2001.