Florida Senate - 2016                        COMMITTEE AMENDMENT
       Bill No. SB 286
       
       
       
       
       
       
                                Ì461312lÎ461312                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  12/01/2015           .                                
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       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.