Florida Senate - 2016 COMMITTEE AMENDMENT Bill No. SB 286 Ì461312lÎ461312 LEGISLATIVE ACTION Senate . House Comm: RCS . 12/01/2015 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Banking and Insurance (Negron) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 Section 1. Subsection (22) is added to section 517.061, 6 Florida Statutes, to read: 7 517.061 Exempt transactions.—Except as otherwise provided 8 in s. 517.0611 for a transaction listed in subsection (21), the 9 exemption for each transaction listed below is self-executing 10 and does not require any filing with the office before claiming 11 the exemption. Any person who claims entitlement to any of the 12 exemptions bears the burden of proving such entitlement in any 13 proceeding brought under this chapter. The registration 14 provisions of s. 517.07 do not apply to any of the following 15 transactions; however, such transactions are subject to the 16 provisions of ss. 517.301, 517.311, and 517.312: 17 (22) The offer or sale of securities, solely in connection 18 with the transfer of ownership of an eligible privately held 19 company, through a merger and acquisition broker in accordance 20 with s. 517.12(22). 21 Section 2. Subsection (22) is added to section 517.12, 22 Florida Statutes, to read: 23 517.12 Registration of dealers, associated persons, 24 intermediaries, and investment advisers.— 25 (22)(a) As used in this subsection, the term: 26 1. “Broker” has the same meaning as “dealer” as defined in 27 s. 517.021. 28 2. “Control person” means an individual or entity that 29 possesses the power, directly or indirectly, to direct the 30 management or policies of a company through ownership of 31 securities, by contract, or otherwise. A person is presumed to 32 be a control person of a company if, with respect to a 33 particular company, the person: 34 a. Is a director, a general partner, a member, or a manager 35 of a limited liability company, or is an officer who exercises 36 executive responsibility or has a similar status or function; 37 b. Has the power to vote 20 percent or more of a class of 38 voting securities or has the power to sell or direct the sale of 39 20 percent or more of a class of voting securities; or 40 c. In the case of a partnership or limited liability 41 company, may receive upon dissolution, or has contributed, 20 42 percent or more of the capital. 43 3. “Eligible privately held company” means a company that 44 meets all of the following conditions: 45 a. The company does not have any class of securities which 46 is registered, or which is required to be registered, with the 47 United States Securities and Exchange Commission under the 48 Securities Exchange Act of 1934, 15 U.S.C. ss. 78a et seq., or 49 with the office under s. 517.07, or for which the company files, 50 or is required to file, summary and periodic information, 51 documents, and reports under Section 15(d) of the Securities 52 Exchange Act of 1934, 15 U.S.C. s. 78o(d). 53 b. In the fiscal year immediately preceding the fiscal year 54 during which the merger and acquisition broker begins to provide 55 services for the securities transaction, the company, in 56 accordance with its historical financial accounting records, has 57 earnings before interest, taxes, depreciation, and amortization 58 of less than $25 million or has gross revenues of less than $250 59 million. On July 1, 2016, and every 5 years thereafter, each 60 dollar amount in this sub-subparagraph shall be adjusted by 61 dividing the annual value of the Employment Cost Index for wages 62 and salaries for private industry workers, or any successor 63 index, as published by the Bureau of Labor Statistics, for the 64 calendar year preceding the calendar year in which the 65 adjustment is being made, by the annual value of such index or 66 successor index for the calendar year ending December 31, 2012, 67 and multiplying such dollar amount by the quotient obtained. 68 Each dollar amount determined under this sub-subparagraph shall 69 be rounded to the nearest multiple of $100,000. 70 4. “Merger and acquisition broker” means any broker and any 71 person associated with a broker engaged in the business of 72 effecting securities transactions solely in connection with the 73 transfer of ownership of an eligible privately held company, 74 regardless of whether that broker acts on behalf of a seller or 75 buyer, through the purchase, sale, exchange, issuance, 76 repurchase, or redemption of, or a business combination 77 involving, securities or assets of the eligible privately held 78 company. 79 5. “Public shell company” means a company that at the time 80 of a transaction with an eligible privately held company: 81 a. Has any class of securities which is registered, or 82 which is required to be registered, with the United States 83 Securities and Exchange Commission under the Securities Exchange 84 Act of 1934, 15 U.S.C. ss. 78a et seq., or with the office under 85 s. 517.07, or for which the company files, or is required to 86 file, summary and periodic information, documents, and reports 87 under Section 15(d) of the Securities Exchange Act of 1934, 15 88 U.S.C. s. 78o(d); 89 b. Has nominal or no operations; and 90 c. Has nominal assets or no assets, assets consisting 91 solely of cash and cash equivalents, or assets consisting of any 92 amount of cash and cash equivalents and nominal other assets. 93 (b) Prior to the completion of any securities transaction 94 described in s. 517.061(22), a merger and acquisition broker 95 must receive written assurances from the control person with the 96 largest percentage of ownership for both the buyer and seller 97 engaged in the transaction that: 98 a. After the transaction is completed, any person who 99 acquires securities or assets of the eligible privately held 100 company, acting alone or in concert, will be a control person of 101 the eligible privately held company or will be a control person 102 for the business conducted with the assets of the eligible 103 privately held company; and 104 b. If any person is offered securities in exchange for 105 securities or assets of the eligible privately held company, 106 such person will, before becoming legally bound to complete the 107 transaction, receive or be given reasonable access to the most 108 recent year-end financial statements of the issuer of the 109 securities offered in exchange. The most recent year-end 110 financial statements shall be customarily prepared by the 111 issuer’s management in the normal course of operations. If the 112 financial statements of the issuer are audited, reviewed, or 113 compiled, the most recent year-end financial statements must 114 include any related statement by the independent certified 115 public accountant; a balance sheet dated not more than 120 days 116 before the date of the exchange offer; and information 117 pertaining to the management, business, results of operations 118 for the period covered by the foregoing financial statements, 119 and material loss contingencies of the issuer. 120 (c) A merger and acquisition broker engaged in a 121 transaction exempt under s. 517.061(22) is exempt from 122 registration under this section unless the merger and 123 acquisition broker: 124 1. Directly or indirectly, in connection with the transfer 125 of ownership of an eligible privately held company, receives, 126 holds, transmits, or has custody of the funds or securities to 127 be exchanged by the parties to the transaction; 128 2. Engages on behalf of an issuer in a public offering of 129 any class of securities which is registered, or which is 130 required to be registered, with the United States Securities and 131 Exchange Commission under the Securities Exchange Act of 1934, 132 15 U.S.C. ss. 78a et seq., or with the office under s. 517.07; 133 or for which the issuer files, or is required to file, periodic 134 information, documents, and reports under Section 15(d) of the 135 Securities Exchange Act of 1934, 15 U.S.C. s. 78o(d); 136 3. Engages on behalf of any party in a transaction 137 involving a public shell company; 138 4. Is subject to a suspension or revocation of registration 139 under Section 15(b)(4) of the Securities Exchange Act of 1934, 140 15 U.S.C. s. 78o(b)(4); 141 5. Is subject to a statutory disqualification described in 142 Section 3(a)(39) of the Securities Exchange Act of 1934, 15 143 U.S.C. s. 78c(a)(39); 144 6. Is subject to a disqualification under U.S. Securities 145 and Exchange Commission Rule 506(d), 17 C.F.R. s. 230.506(d); or 146 7. Is subject to a final order described in Section 147 15(b)(4)(H) of the Securities Exchange Act of 1934, 15 U.S.C. s. 148 78o(b)(4)(H). 149 Section 3. This act shall take effect July 1, 2016. 150 151 ================= T I T L E A M E N D M E N T ================ 152 And the title is amended as follows: 153 Delete everything before the enacting clause 154 and insert: 155 A bill to be entitled 156 An act relating to merger and acquisition brokers; 157 amending s. 517.061, F.S.; providing an exemption from 158 certain registration requirements with the Office of 159 Financial Regulation for a specified offer or sale of 160 securities; amending s. 517.12, F.S.; defining terms; 161 requiring a merger and acquisition broker to receive 162 certain written assurances from a specified person 163 prior to the completion of specified securities 164 transactions; providing an exemption from certain 165 registration requirements with the office for a merger 166 and acquisition broker under certain circumstances; 167 specifying disqualifying conditions for the exemption; 168 providing an effective date.