WSR 98-15-131

PROPOSED RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

[Filed July 22, 1998, 8:27 a.m.]



Original Notice.

Preproposal statement of inquiry was filed as WSR 98-11-015.

Title of Rule: Notice filing requirements for federal covered securities.

Purpose: Adopt notice filing procedures for investments companies and municipal securities pursuant to section 12, chapter 15, Laws of 1998.

Other Identifying Information: New chapter 460-18A WAC.

Statutory Authority for Adoption: RCW 21.20.450, section 12, chapter 15, Laws of 1998.

Statute Being Implemented: Chapter 21.20 RCW.

Summary: Section 12 of SB 6202 (chapter 15, Laws of 1998) grants to the director the power to adopt rules governing the filing requirements for federal covered securities pursuant to the National Securities Markets Improvement Act of 1996 (NSMIA). The new sections proposed herein would establish notice filing requirements for investment company offerings and municipal securities offerings that are federal covered securities.

Reasons Supporting Proposal: NSMIA authorizes a state to impose notice filings and notice filing fees that are consistent with filings and fees that it imposed prior to NSMIA. Shortly after the passage of NSMIA, Washington adopted two policy statements to cover notice filings by investments companies and municipal offerings. These rules incorporate the provisions of those policy statements.

Name of Agency Personnel Responsible for Drafting: William M. Beatty, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760; Implementation: John L. Bley, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760; and Enforcement: Deborah R. Bortner, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760.

Name of Proponent: Department of Financial Institutions, Securities Division, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Section 12 of SB 6202 (chapter 15, Laws of 1998) grants to the director the power to adopt rules governing the filing requirements for federal covered securities pursuant to the National Securities Markets Improvement Act of 1996 (NSMIA). The new sections proposed herein would establish notice filing requirements for investment company offerings and municipal securities offerings that are federal covered securities. NSMIA authorizes a state to impose notice filings and notice filing fees that are consistent with filings and fees that it imposed prior to NSMIA. Shortly after the passage of NSMIA, Washington adopted two policy statements to cover notice filings by investments companies and municipal offerings. These rules incorporate the provisions of those policy statements.

Proposal does not change existing rules.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposal does not impose additional costs on business.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. The Department of Financial Institutions is not one of the agencies listed in section 201.

Hearing Location: Department of Financial Institutions, Securities Division, Executive Conference Room, 210 11th Avenue S.W., Suite 300, Olympia, WA 98504, on August 25, 1998, at 2:00 p.m.

Assistance for Persons with Disabilities: Contact Darlene Christianson by August 21, 1998, TDD (360) 664-8126, or (360) 902-8760.

Submit Written Comments to: William M. Beatty, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, fax (360) 704-6923, e-mail bbeatty@dfi.wa.gov, by August 24, 1998.

Date of Intended Adoption: August 26, 1998.

July 3, 1998

John L. Bley

Director

OTS-2258.2

Chapter 460-18A WAC



NOTICE FILINGS FOR FEDERAL COVERED SECURITIES



NEW SECTION



WAC 460-18A-010  Filing requirements--Investment companies other than closed-end companies. The following provisions apply to investment companies other than closed-end companies, as those terms are defined by the Investment Company Act of 1940:

(1) Initial filing. An investment company, other than a closed-end company, making an initial notice filing pursuant to RCW 21.20.327 (1)(a) shall submit the following prior to the initial offer in this state:

(a) A completed Form NF or other document identifying the filing;

(b) A consent to service of process on Form U-2; and

(c) The filing fee prescribed by RCW 21.20.340 (2)(b).

The initial notice filing is effective for twelve months.

(2) Renewal. An investment company, other than a closed-end company, complying with RCW 21.20.327 (1)(b) may renew the unsold portion of its initial notice filing for one additional twelve-month period by filing the following on or before the expiration of the initial notice filing:

(a) The renewal announcement provided by the division and/or a cover letter or other document requesting renewal;

(b) The renewal fee prescribed by RCW 21.20.340 (2)(b) to renew the unsold portion of securities for which a filing fee has previously been paid; and

(c) If the amount of securities subject to the notice filing is being increased, the fee prescribed by RCW 21.20.340 (2)(b) to cover the increase in the amount of securities to be offered.

(3) Renotification. An investment company, other than a closed-end company, complying with RCW 21.20.327 (1)(b) may continue its offering following the twelve-month renewal period specified in subsection (2) of this section by complying with subsection (1) of this section.

(4) Amendment. An investment company, other than a closed-end company, complying with RCW 21.20.327 (1)(b) may increase the amount of securities offered in this state by submitting an amended Form NF or other document describing the transaction and a fee calculated pursuant to RCW 21.20.340 (2)(b) to cover the increase in the amount of securities being offered.



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NEW SECTION



WAC 460-18A-020  Filing requirements--Closed-end investment companies. The following provisions apply to closed-end investment companies as that term is defined by the Investment Company Act of 1940:

(1) Initial filing. A closed-end investment company making an initial notice filing pursuant to RCW 21.20.327 (1)(a) shall file the following prior to the initial offer in this state:

(a) A completed Form NF or other document identifying the filing;

(b) A consent to service of process on Form U-2; and

(c) The filing fee prescribed by RCW 21.20.340 (3)(b).

The initial notice filing is effective for twelve months.

(2) Renewal. For each additional twelve-month period in which the same offering is continued, a closed-end investment company complying with RCW 21.20.327 (1)(b) may renew the unsold portion of its notice filing by filing the following on or before the expiration of the notice filing:

(a) The renewal announcement provided by the division and/or a cover letter or other document requesting renewal;

(b) The renewal fee prescribed by RCW 21.20.340 (3)(b) to renew the unsold portion of securities for which a filing fee has previously been paid; and

(c) If the amount of securities subject to the notice filing is being increased, the fee prescribed by RCW 21.20.340 (3)(b) to cover the increase in the amount of securities to be offered.

(3) A closed-end investment company complying with RCW 21.20.327 (1)(b) may increase the amount of securities offered in this state by submitting an amended Form NF or other document describing the transaction and a fee calculated pursuant to RCW 21.20.340 (3)(b) to cover the increase in the amount of securities being offered.



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NEW SECTION



WAC 460-18A-030  Filing requirements--Investment companies--Name changes. The name, address, or telephone number of the investment company, applicant, or contact person may be changed by submitting a revised Form NF and the fee required by RCW 21.20.340 (5)(a).



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NEW SECTION



WAC 460-18A-040  Investment companies--Report of sales. An investment company complying with RCW 21.20.327 (1)(c) shall file a report of sales of Form NF, together with the fee required by RCW 21.20.340 (5)(b), within sixty days of the annual expiration of its notice filing.



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NEW SECTION



WAC 460-18A-100  Filing requirements--Municipal securities. The following provisions apply to an issuer of a covered security pursuant to sections 3 (a)(2) and 18 (b)(4)(C) of the Securities Act of 1933 and RCW 21.20.327(3), hereinafter referred to as a "municipal covered securities issuer":

(1) Initial notice filing. A municipal covered securities issuer making an initial filing shall submit the following prior to the initial offer in this state:

(a) A completed municipal securities notice filing form or other document identifying the transaction;

(b) A consent to service of process on Form U-2; and

(c) The filing fee required by RCW 21.20.340 (1)(b).

Although not required, the issuer may wish to submit a copy of the official statement, or at least the first page, so that it is clear as to which offering the notification is being made. The initial notice filing is effective for one year.

(2) Renewal. A municipal covered securities issuer may renew the unsold portion of its initial notice filing for one additional twelve-month period by filing the following on or before the expiration of the initial notice filing:

(a) The renewal announcement provided by the division and/or a cover letter or other document requesting renewal;

(b) The renewal fee prescribed by RCW 21.20.340 (1)(b) to renew the unsold portion of securities for which a notice filing fee has previously been paid; and

(c) If the amount of securities subject to the notice filing is being increased, the fee prescribed by RCW 21.20.340 (1)(b) to cover the increase in the amount of securities to be offered.

(3) Renotification. A municipal covered securities issuer may continue its offering following the twelve-month renewal period specified in subsection (2) of this section by complying with subsection (1) of this section.

(4) Amendment. A municipal covered securities issuer may increase the amount of securities offered in this state by submitting an amended municipal securities notice filing form or other document describing the transaction and a fee calculated pursuant to RCW 21.20.340 (1)(b) to cover the increase in the amount of securities being offered.





Note: Notice filing procedures for issuers of covered securities pursuant to sections 4(2) and 18(b)(4)(D) and rule 506 of the Securities Act of 1933 and RCW 21.20.327(2) may be found at WAC 460-44A-503.





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