_______________________________________________

 

                                           SUBSTITUTE HOUSE BILL NO. 205

                        _______________________________________________

 

State of Washington                              49th Legislature                              1985 Regular Session

 

By House Committee on Ways & Means (originally sponsored by Representatives Lux, Winsley and Zellinsky; by Department of Licensing request)

 

 

Read first time 3/8/85 and passed to Committee on Rules.

 

 


AN ACT Relating to the securities act of Washington; amending RCW 21.20.320 and 21.20.340; providing an effective date; and declaring an emergency.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

 

        Sec. 1.  Section 32, chapter 282, Laws of 1959 as last amended by section 6, chapter 272, Laws of 1981 and RCW 21.20.320 are each amended to read as follows:

          The following transactions are exempt from RCW 21.20.040 through 21.20.300 except as expressly provided:

          (1) Any isolated transaction, or sales not involving a public offering, whether effected through a broker-dealer or not; or any transaction effected in accordance with any rule by the director establishing a nonpublic offering exemption pursuant to this subsection where registration is not necessary or appropriate in the public interest or for the protection of investors.

          (2) Any nonissuer distribution of an outstanding security by a registered broker-dealer if (a) a recognized securities manual contains the names of the issuer's officers and directors, a balance sheet of the issuer as of a date within eighteen months, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations, or (b) the security has a fixed maturity or a fixed interest or dividend provision and there has been no default during the current fiscal year or within the three preceding fiscal years, or during the existence of the issuer and any predecessors if less than three years, in the payment of principal, interest, or dividends on the security.

(3) Any nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy; but the director may by rule require that the customer acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each such form be preserved by the broker-dealer for a specified period.

(4) Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters.

(5) Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit.

(6) Any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator.

(7) Any transaction executed by a bona fide pledgee without any purpose of evading this chapter.

(8) Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity.

          (9) Any transaction pursuant to an offering not exceeding five hundred thousand dollars effected in accordance with any rule by the director if the director finds that registration is not necessary in the public interest and for the protection of investors.

          (10) Any offer or sale of a preorganization certificate or subscription if (a) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber, (b) the number of subscribers does not exceed ten, and (c) no payment is made by any subscriber.

          (11) Any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than ninety days of their issuance, if (a) no commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in this state, or (b) the issuer first files a notice specifying the terms of the offer and the director does not by order disallow the exemption within the next five full business days.

          (12) Any offer (but not a sale) of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no stop order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under either act.

          (13) The issuance of any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the distribution other than the surrender of a right to a cash dividend where the stockholder can elect to take a dividend in cash or stock.

          (14) Any transaction incident to a right of conversion or a statutory or judicially approved reclassification, recapitalization, reorganization, quasi reorganization, stock split, reverse stock split, merger, consolidation, or sale of assets.

          (15) The offer or sale by a registered broker-dealer, or a person exempted from the registration requirements pursuant to RCW 21.20.040, acting either as principal or agent, of securities previously sold and distributed to the public:  PROVIDED, That:

          (a) Such securities are sold at prices reasonably related to the current market price thereof at the time of sale, and, if such broker-dealer is acting as agent, the commission collected by such broker-dealer on account of the sale thereof is not in excess of usual and customary commissions collected with respect to securities and transactions having comparable characteristics;

          (b) Such securities do not constitute the whole or a part of an unsold allotment to or subscription or participation by such broker-dealer as an underwriter of such securities or as a participant in the distribution of such securities by the issuer, by an underwriter or by a person or group of persons in substantial control of the issuer or of the outstanding securities of the class being distributed; and

          (c) The security has been lawfully sold and distributed in this state or any other state of the United States under this or any act regulating the sale of such securities.

          (16) Any transactions by a mutual or cooperative association issuing to its patrons any receipt, written notice, certificate of indebtedness, or stock for a patronage dividend, or for contributions to capital by such patrons in the association if any such receipt, written notice, or certificate made pursuant to this paragraph is nontransferable except in the case of death or by operation of law and so states conspicuously on its face.

          (17) Any transaction effected in accordance with any rule adopted by the director establishing a limited offering exemption which furthers objectives of compatibility with federal exemptions and uniformity among the states, provided that in adopting any such rule the director may require that no commission or other remuneration be paid or given to any person, directly or indirectly, for effecting sales unless the person is registered under this chapter as a broker-dealer or salesperson.

 

        Sec. 2.  Section 24, chapter 68, Laws of 1979 ex. sess. as amended by section 7, chapter 272, Laws of 1981 and RCW 21.20.340 are each amended to read as follows:

          The following fees shall be paid in advance under the provisions of this chapter:

          (1) For registration of all securities other than investment trusts and securities registered by coordination the fee shall be one hundred dollars for the first one hundred thousand dollars of initial issue, or portion thereof in this state, based on offering price, plus one-twentieth of one percent for any excess over one hundred thousand dollars which are to be offered during that year:  PROVIDED, HOWEVER, That an issuer may upon the payment of a fifty dollar fee renew for one additional twelve-month period only the unsold portion for which the registration fee has been paid.

          (2) For registration of securities issued by a face-amount certificate company or redeemable security issued by an open-end management company or investment trust, as those terms are defined in the Investment Company Act of 1940, the fee shall be one hundred dollars for the first one hundred thousand dollars of initial issue, or portion thereof in this state, based on offering price, plus one-twentieth of one percent for any excess over one hundred thousand dollars which are to be offered in this state during that year:  PROVIDED, HOWEVER, That an issuer may upon the payment of a fifty dollar fee renew for an additional twelve- month period the unsold portion for which the registration fee has been paid.

          (3) For registration by coordination, other than investment trusts, the initial filing fee shall be one hundred dollars for the first one hundred thousand dollars of initial issue, or portion thereof in this state, based on offering price, plus one-fortieth of one percent for any excess over one hundred thousand dollars for the first twelve- month period plus one hundred dollars for each additional twelve months in which the same offering is continued.

          (4) For filing annual financial statements, the fee shall be twenty-five dollars.

          (5) For filing an amended offering circular after the initial registration permit has been granted the fee shall be ten dollars.

          (6) For registration of a broker-dealer or investment adviser, the fee shall be one hundred fifty dollars for original registration and seventy-five dollars for each annual renewal.  When an application is denied or withdrawn the director shall retain one-half of the fee.

          (7) For registration of a salesperson or investment adviser salesperson, the fee shall be thirty-five dollars for original registration with each employer and fifteen dollars for each annual renewal.  When an application is denied or withdrawn the director shall retain one-half of the fee.

          (8) For written examination for registration as a salesperson or investment adviser salesperson, the fee shall be fifteen dollars.  For examinations for registration as a broker-dealer or investment adviser, the fee shall be fifty dollars.

          (9) If a registration of a broker-dealer, salesperson, investment adviser, or investment adviser salesperson is not renewed on or before December 31st of each year the renewal is delinquent.  The director by rule or order may set and assess a fee for delinquency not to exceed two hundred dollars.  Acceptance by the director of an application for renewal after December 31st is not a waiver of delinquency.  A delinquent application for renewal will not be accepted for filing after March 1st.

          (10) (a) For the transfer of a broker-dealer license to a successor, the fee shall be fifty dollars.

          (b) For the transfer of a salesperson license from a broker-dealer or issuer to another broker-dealer or issuer, the transfer fee shall be twenty-five dollars.

          (c) For the transfer of an investment adviser salesperson license from an investment adviser to another investment adviser, the transfer fee shall be twenty-five dollars.

          (d) For the transfer of an investment adviser license to a successor, the fee shall be fifty dollars.

          (11) The director may provide by rule for the filing of notice of claim of exemption under RCW 21.20.320 (1) ((or)), (9), and (17) and set fees accordingly not to exceed three hundred dollars.

          (12) For filing of notification of claim of exemption from registration pursuant to RCW 21.20.310(11), as now or hereafter amended, the fee shall be fifty dollars for each filing.

          (13) For rendering interpretative opinions, the fee shall be thirty-five dollars.

          (14) For certified copies of any documents filed with the director, the fee shall be the cost to the department.

          (15) For a duplicate license the fee shall be five dollars.

          All fees collected under this chapter shall be turned in to the state treasury and are not refundable, except as herein provided.

 

          NEW SECTION.  Sec. 3.                             This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1986. Passed the House March 8, 1986.


Speaker of the House.

Passed the Senate March 3, 1986.

President of the Senate.