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ARTICLE 1. FINANCIAL COACHES
ASSISTING CLIENTS OF CERTAIN NONPROFIT ORGANIZATIONS
SECTION 1.01. Section 5, The
Securities Act (Article 581-5, Vernon's Texas Civil Statutes), is amended
to read as follows:
Sec. 5. EXEMPT
TRANSACTIONS. Except as hereinafter in this Act specifically provided, the
provisions of this Act shall 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 shall 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:
A. At any judicial,
executor's, administrator's, guardian's or conservator's sale, or any sale
by a receiver or trustee in insolvency or bankruptcy.
B. The sale by or for the
account of a pledge holder or mortgagee, selling or offering for sale or
delivery in the ordinary course of business to liquidate a bona fide debt,
of a security pledged in good faith as security for such debt.
C. (1) Sales of securities
made by or in behalf of a vendor, whether by dealer or other agent, in the
ordinary course of bona fide personal investment of the personal holdings
of such vendor, or change in such investment, if such vendor is not engaged
in the business of selling securities and the sale or sales are isolated
transactions not made in the course of repeated and successive transactions
of a like character; provided, that in no event shall such sales or
offerings be exempt from the provisions of this Act when made or intended
by the vendor or his agent, for the benefit, either directly or indirectly,
of any company or corporation except the individual vendor (other than a
usual commission to said agent), and provided further, that any person
acting as agent for said vendor shall be registered pursuant to this Act;
(2) Sales by or on behalf of
any insurance company subject to the supervision or control of the Texas
Department of Insurance of any security owned by such company as a legal
and bona fide investment, provided that in no event shall any such sale or
offering be exempt from the provisions of this Act when made or intended,
either directly or indirectly, for the benefit of any other company as that
term is defined in this Act.
D. The distribution by a
corporation of securities direct to its stockholders as a stock dividend or
other distribution paid out of earnings or surplus.
E. Any offer and any
transaction pursuant to any offer by the issuer of its securities to its
existing security holders (including persons who at the time of the
transaction are holders of convertible securities or nontransferable warrants)
if no commission or other remuneration (other than a stand-by commission)
is paid or given directly or indirectly for soliciting any security holder
in this State.
F. The issue in good faith
of securities by a company to its security holders, or creditors, in the
process of a bona fide reorganization of the company made in good faith, or
the issue in good faith of securities by a company, organized solely for
the purpose of taking over the assets and continuing the business of a
predecessor company, to the security holders or creditors of such
predecessor company, provided that in either such case such securities are
issued in exchange for the securities of such holders or claims of such
creditors, or both, and in either such case security holders or creditors
do not pay or give or promise and are not obligated to pay or give any
consideration for the securities so issued other than the securities of or
claims against said company or its predecessor then held or owned by them.
G. The issue or sale of securities
(a) by one corporation to another corporation or the security holders
thereof pursuant to a vote by one or more classes of such security holders,
as required by the certificate of incorporation or the applicable
corporation statute, in connection with a merger, consolidation or sale of
corporate assets, or (b) by one corporation to its own stockholders in
connection with the change of par value stock to no par value stock or vice
versa, or the exchange of outstanding shares for the same or a greater or
smaller number of shares; provided that in any such case such security
holders do not pay or give or promise and are not obligated to pay or give
any consideration for the securities so issued or sold other than the
securities of the corporation then held by them.
H. The sale of any security
to any bank, trust company, building and loan association, insurance
company, surety or guaranty company, savings institution, investment
company as defined in the Investment Company Act of 1940, small business
investment company as defined in the Small Business Investment Act of 1958,
as amended, or to any registered dealer actually engaged in buying and
selling securities.
I. Provided such sale is
made without any public solicitation or advertisements:
(a) the sale of any security
by the issuer thereof so long as the total number of security holders of
the issuer thereof does not exceed thirty-five (35) persons after taking
such sale into account;
(b) the sale or distribution
by an issuer or a participating subsidiary of the issuer, if any, of a
security under a bona fide thrift, savings, stock purchase, retirement,
pension, profit-sharing, option, bonus, appreciation right, incentive, or
similar written compensation plan or written compensation contract established
by the issuer or its subsidiary for the benefit of employees, directors,
general partners, managers, or officers of the issuer or subsidiary, for
the benefit of its trustees if the issuer or subsidiary is a business
trust, or for the benefit of consultants or advisors who provide to the
issuer or subsidiary bona fide services unrelated to the offer or sale of
securities in a capital-raising transaction; or
(c) the sale by an issuer of
its securities during the period of twelve (12) months ending with the date
of the sale in question to not more than fifteen (15) persons (excluding,
in determining such fifteen (15) persons, purchasers of securities in
transactions exempt under other provisions of this Section 5, purchasers of
securities exempt under Section 6 hereof and purchasers of securities which
are part of an offering registered under Section 7 hereof), provided such
persons purchased such securities for their own account and not for
distribution.
J. Wherein the securities
disposed of consist exclusively of notes or bonds secured by mortgage or
vendor's lien upon real estate or tangible personal property, and the
entire mortgage is sold or transferred with all of the notes or bonds
secured thereby in a single transaction.
K. Any security or membership
issued by a corporation or association, organized exclusively for
religious, educational, benevolent, fraternal, charitable, or reformatory
purposes and not for pecuniary profit, and no part of the net earnings of
which inures to the benefit of any stockholder, shareholder, or individual
members, and where no commission or remuneration is paid or given or is to
be paid or given in connection with the disposition thereof.
L. The sale by the issuer
itself, or by a registered dealer, of any security issued or guaranteed by
any bank organized and subject to regulation under the laws of the United
States or under the laws of any State or territory of the United States, or
any insular possession thereof, or by any savings and loan association
organized and subject to regulation under the laws of this State, or the
sale by the issuer itself of any security issued by any federal savings and
loan association.
M. The sale by the issuer
itself, or by a registered dealer, of any security either issued or guaranteed
by the United States or by any territory or insular possession thereof, or
by the District of Columbia, or by any state of the United States, or
political subdivision thereof (including but not limited to any county,
city, municipal corporation, district, or authority), or by any public or
governmental agency or instrumentality of any of the foregoing.
N. The sale and issuance of
any securities issued by any farmers' cooperative marketing association
organized under Chapter 52, Agriculture Code, or the predecessor of that
law (Article 5737 et seq., Revised Statutes); the sale and issuance of any
securities issued by any mutual loan corporation organized under Chapter
54, Agriculture Code, or the predecessor of that law (Article 2500 et seq.,
Revised Statutes); the sale and issuance of any equity securities issued by
any cooperative association organized under the Cooperative Association
Act, as amended (Article 1396-50.01, Vernon's Texas Civil Statutes); and
the sale of any securities issued by any farmers' cooperative society
organized under Chapter 51, Agriculture Code, or the predecessor of that
law (Article 2514 et seq., Revised Statutes). Provided, however, this
exemption shall not be applicable to agents of any farmers' cooperative
marketing association, mutual loan corporation, cooperative association, or
farmers' cooperative society when the sale of such securities is made to
non-members, or when the sale of such securities is made to members or
non-members and a commission is paid or contracted to be paid to the said
agents.
O. The sale by a registered
dealer of outstanding securities provided that:
(1) Such securities form no
part of an unsold allotment to or subscription by such dealer as a
participant in the distribution of such securities by the issuer thereof;
and
(2) Securities of the same
class, of the same issuer, are outstanding in the hands of the public; and
(3) Such securities are
offered for sale, in good faith, at prices reasonably related to the
current market price of such securities at the time of such sale; and
(4) No part of the proceeds
of such sale are paid directly or indirectly to the issuer of such
securities; and
(5) Such sale is not
directly or indirectly for the purposes of providing or furthering any
scheme to violate or evade any provision of this Act; and
(6) The right to sell or
resell such securities has not been enjoined by any court of competent
jurisdiction in this State by proceedings instituted by an officer or
agency of this State charged with enforcement of this Act; and
(7) The right to sell such
securities has not been revoked or suspended by the commissioner under any
of the provisions of this Act, or, if so, revocation or suspension is not
in force and effect; and
(8) At the time of such
sale, the issuer of such securities shall be a going concern actually
engaged in business and shall then be neither in an organization stage nor
in receivership or bankruptcy; and
(9) Such securities or other
securities of the issuer of the same class have been registered by
qualification, notification or coordination under Section 7 of this Act; or
at the time of such sale at least the following information about the
issuer shall appear in a recognized securities manual or in a statement, in
form and extent acceptable to the commissioner, filed with the commissioner
by the issuer or by a registered dealer:
(a) A statement of the
issuer's principal business;
(b) A balance sheet as of a
date within eighteen (18) months of the date of such sale; and
(c) Profit and loss
statements and a record of the dividends paid, if any, for a period of not
less than three (3) years prior to the date of such balance sheet or for
the period of existence of the issuer, if such period of existence is less
than three (3) years.
The term "recognized
securities manual" means a nationally distributed manual of securities
that is approved for use hereunder by the Board.
The Commissioner may issue a
stop order or by order prohibit, revoke or suspend the exemption under this
Subsection 0 with respect to any security if the Commissioner has
reasonable cause to believe that the plan of business of the issuer of such
security, the security, or the sale thereof would tend to work a fraud or
deceit upon any purchaser or purchasers thereof, such order to be subject
to review in the manner provided by Section 24 of this Act. Notice of any
court injunction enjoining the sale, or resale, of any such security, or of
an order revoking or suspending the exemption under this subdivision with
respect to any security, shall be delivered or shall be mailed by certified
or registered mail with return receipt requested, to any dealers believed
to be selling, or offering for sale, securities of the type referred to in
the notice; and the prohibitions of (6) and (7) above of this Subsection 0
shall be inapplicable to any dealer until the dealer has received actual
notice from the commissioner of such revocation or suspension.
The Board may for cause shown
revoke or suspend the recognition hereunder of any manuals previously
approved under this Subsection but no such action may be taken unless upon
notice and opportunity for hearing before the Board or a hearings officer
as now or hereafter required by law. A judgment sustaining the Board in the
action complained of shall not bar after one year an application by the
plaintiff for approval of its manual or manuals hereunder, nor shall a
judgment in favor of the plaintiff prevent the Board from thereafter
revoking such recognition for any proper cause which may thereafter accrue
or be discovered.
P. The execution by a dealer
of an unsolicited order for the purchase of securities, where the initial
offering of such securities has been completed and provided that the dealer
acts solely as an agent for the purchaser, has no direct or indirect
interest in the sale or distribution of the security ordered, and receives
no commission, profit, or other compensation from any source other than the
purchaser.
Q. The sales of interests in
and under oil, gas or mining leases, fees or titles, or contracts relating
thereto, where (1) the total number of sales by any one owner of interests,
whether whole, fractional, segregated or undivided in any single oil, gas
or mineral lease, fee or title, or contract relating thereto, shall not
exceed thirty-five (35) within a period of twelve (12) consecutive months
and (2) no use is made of advertisement or public solicitation; provided,
however, if such sale or sales are made by an agent for such owner or
owners, such agent shall be licensed pursuant to this Act. No oil, gas or
mineral unitization or pooling agreement shall be deemed a sale under this
Act.
R. The sale by the issuer
itself, or by a subsidiary of such issuer, of any securities which would be
exempt if sold by a registered dealer under Section 6 (other than Section
6E) of this Act.
S. The sale by or through a
registered dealer of any option if at the time of the sale of the option:
(1) the performance of the
terms of the option is guaranteed by any broker-dealer registered under the
federal Securities Exchange Act of 1934, as amended, which guaranty and
broker-dealer are in compliance with such requirements or regulations as
may be approved or adopted by the board;
(2) the option is not sold
by or for the benefit of the issuer of the security which may be purchased
or sold upon exercise of the option;
(3) the security which may
be purchased or sold upon exercise of the option is either (a) exempted
under Subsection F of Section 6 of this Act or (b) quoted on the NASDAQ stock
market and meets the requirements of Paragraphs (1), (6), (7), and (8) of
Subsection 0 of Section 5 of this Act; and
(4) such sale is not
directly or indirectly for the purposes of providing or furthering any
scheme to violate or evade any provisions of this Act.
For purposes of this
subsection the term "option" shall mean and include any put,
call, straddle, or other option or privilege of buying or selling a
specified number of securities at a specified price from or to another
person, without being bound to do so, on or prior to a specified date, but
such term shall not include any option or privilege which by its terms may
terminate prior to such specified date upon the occurrence of a specified
event.
T. Such other transactions
or conditions as the board by rule, regulation, or order may define or
prescribe, conditionally or unconditionally.
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.
V. The sale of a security
involving an individual's enrollment in any fund or plan established under
Subchapter G or H, Chapter 54, Education Code, that is arranged or
facilitated by a financial coach certified under Section 14.1021, Finance
Code, who is working for a nonprofit corporation that:
(a) is located in this
State;
(b) is exempt from
federal income tax under Section 501(a), Internal Revenue Code of 1986, by
being listed as an exempt organization in Section 501(c)(3) of that code;
and
(c) provides services to
economically disadvantaged individuals and families.
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