HBA-TBM H.B. 3015 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3015
By: Crownover, Myra
Pensions & Investments
3/25/2001
Introduced



BACKGROUND 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 effort.  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 option 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.  House Bill
3015 exempts the donation of securities to charitable organizations from
The Securities Act.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 3015 amends The Securities Act (Act) to exempt issuance or
transfer of securities by the issuer (transfer) to a charitable
organization.  The bill sets forth the following conditions for a transfer
to qualify for exemption:   

 _the charitable organization may not provide anything of value for the
transfer other than payment of the exercise price of an option to acquire
the securities,  
 
 _in the case of any security that is an option, the exercise price of the
option may not exceed the fair market value of the securities to be
acquired on exercise of the option on the date of the transfer,  
 
 _the transfer, including, if the securities are options, the transfer on
exercise of the options, may not be made for the purpose of raising capital
for the issuer,  
 
 _no commission or other form of consideration may be paid or provided to a
third party with respect to the transfer, and  
 
 _the transfer may not be directly or indirectly for the purpose of
providing or furthering a scheme in violation of the Act.   

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.