PART 7. STATE SECURITIES BOARD
CHAPTER 111. SECURITIES EXEMPT FROM REGISTRATION
The Texas State Securities Board proposes an amendment to §111.2, concerning Listed and Designated Securities. The references to sections of the Texas Securities Act (Act) would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code. The codification was adopted by HB 4171, 86th Legislature, 2019 Regular Session, and became effective January 1, 2022 (HB 4171).
The section would also be amended to replace the reference to the term "Securities and Exchange Commission" with the term "SEC" in subsection (d). SEC is already a defined term in §107.2, concerning Definitions. The nonsubstantive amendments are being made pursuant to the Agency's periodic review of its rules.
Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be (1) improved readability and clarity by updating references; and (2) statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under the authority of the Texas Government Code, §4002.151, as adopted by HB 4171. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C, and Chapter 4005.
§111.2.Listed and Designated Securities.
(a) Fully listed. As used in the Texas Securities Act, §4005.054 [§6.F], "fully listed" includes
any security listed or approved for listing upon notice of issuance
on an exchange specified in the Act, §4005.054 [§6.F
], or on an exchange listed in subsection (b) of this section.
(b) Approved exchanges. The Securities Commissioner
has approved the following exchanges, by written order, as satisfying
the requirements of the Texas Securities Act, Chapter 4005, Subchapter
C [§6.F], for eligibility:
(1) - (2) (No change.)
(c) Warrants for listed securities. In addition to
sales made under the Texas Securities Act, §4005.054 [§6.F], the Board, pursuant to the Act, §4005.024 [§5.T], exempts from the registration requirements of the
Act, Chapter 4003, Subchapters A, B, and C [§7],
the offer and sale by the issuer itself, or by a registered dealer,
of warrants to purchase securities of the issuer which at the time
of sale of the warrants are exempt pursuant to the Act, §4005.054
[§6.F].
(d) Recognized and responsible stock exchange. In order
to implement the general purposes of the Texas Securities Act declared
in §4001.002(a)(2) [§10-1.A] to maximize
coordination with federal and other states law and administration,
particularly with respect to exemptions, the Board hereby defines
the term "recognized and responsible stock exchange," as used in the
Act, §4005.054(a)(1)(E) [§6.F], not
to include any organization which is not registered with the SEC [United States Securities and Exchange Commission] as a national
securities exchange pursuant to the Securities Exchange Act of 1934, §6.
(e) Who may sell. Securities described in the Act, §4005.054
[§6.F], may be sold by or through a registered
securities dealer acting either as a principal or agent.
(f) National market system of the NASDAQ stock market.
The "national market system of the NASDAQ stock market," as used in
the Act, §4005.054(a)(2) [§6.F], includes
NASDAQ Global Select Market, NASDAQ Global Market, and NASDAQ Capital Market.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402889
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
The Texas State Securities Board proposes an amendment to §113.14, concerning Statements of Policy. The amendment would adopt by reference certain updated North American Securities Administrators Association ("NASAA") statements of policy ("SOPs") that were amended by NASAA on September 12, 2023.
Clint Edgar, Deputy Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division; have determined that for the first five-year period the rule is in effect there will be no foreseeable fiscal implications for the state or local government as a result of enforcing or administering the proposed amendment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll also have determined that for each year of the first five years the rule is in effect the public benefit expected as a result of adoption of the proposed amendment will be to increase uniformity with other states when reviewing applications to register securities. There will be no adverse economic effect on micro or small businesses or rural communities. Since the rule will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the rule as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have determined that for the first five-year period the rule is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. The rule as proposed does not create a new regulation, and it does not expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Comments should be sent to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under the authority of the Texas Government Code, §4002.151, as adopted by HB 4171, 86th Legislature, 2019 Regular Session, effective January 1, 2022. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C.
§113.14.Statements of Policy.
(a) (No change.)
(b) In order to promote uniform regulation, the following NASAA Statements of Policy shall apply to the registration of securities:
(1) (No change.)
(2) Impoundment of Proceeds, as amended by NASAA on September
12, 2023 [March 31, 2008];
(3) (No change.)
(4) Options and Warrants, as amended by NASAA on September
12, 2023 [March 31, 2008];
(5) - (6) (No change.)
(7) Promotional Shares, as amended by NASAA on September
12, 2023 [March 31, 2008];
(8) - (11) (No change.)
(12) Debt Securities, as amended by NASAA on September
12, 2023 [April 25, 1993];
(13) - (21) (No change.)
(c) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402890
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
The Texas State Securities Board proposes an amendment to §114.4, concerning Filings and Fees. Section 114.4(b) would be amended to add a new paragraph (6) to specifically address federal covered securities offered pursuant to Securities and Exchange Commission (SEC) Federal Crowdfunding. Currently these offerings fall within the catch-all for federal covered securities provided by subsection (a). To assist issuers in more readily locating the filing and fee requirements for SEC Federal crowdfunding offerings, a specific provision covering these offerings would be provided in new subsection (b)(6). No change would be made to the filing or fee requirements of this rule, other than to permit a filer to use the Uniform Notice Filing of Federal Crowdfunding form instead of page 1, Items 1-6 of the Form U-1. The Federal Crowdfunding form includes a consent to service of process. The nonsubstantive amendment is being made pursuant to the Agency's periodic review of its rules.
Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be to provide more efficiency for Federal Crowdfunding filings by setting forth a specific filing requirement for Federal Crowdfunding filings and by permitting Federal Crowdfunding filers to use a different form for these filings. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under the authority of the Texas Government Code, §§4002.151 and 4005.024, as adopted by HB 7171, 86th Legislature, 2019 Regular Session, effective January 1, 2022. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 4005.024 provides that the Board may prescribe new exemptions by rule.
The proposal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C; Chapter 4005, Subchapters A and B; and Chapter 4006.
§114.4.Filings and Fees.
(a) (No change.)
(b) Special circumstances.
(1) - (5) (No change.)
(6) SEC Regulation Crowdfunding. If the issuer has its principal place of business in this state, the issuer shall provide to the Securities Commissioner the items required in this paragraph when the issuer makes its initial SEC Form C filing concerning the offering with the SEC. If the issuer does not have its principal place of business in this state but residents of this state have purchased 50% or greater of the aggregate of the offering, the issuer shall provide to the Securities Commissioner the items required in this paragraph when the issuer becomes aware that such purchases have met this threshold and in no event later than thirty (30) days from the date of completion of the offering. For Federal Crowdfunding offerings, an issuer shall provide to the Securities Commissioner:
(A) a notice filing on either:
(i) Uniform Notice of Federal Crowdfunding Offering form (Form U-CF) or copies of all documents filed with the SEC; or
(ii) page 1 of a Form U-1, Uniform Application to Register Securities, with items 1-6 completed, or a document providing substantially the same information;
(B) a consent to service of process signed by the issuer, if required by §114.3 of this title (relating to Consents to Service of Process),and if the notice filing required by subparagraph (A) of this paragraph is not made on Form U-CF;
(C) the fees provided for in the Act, §4006.001(1) and §4006.055; and
(D) a written statement from the issuer of the following:
(i) the aggregate amount of securities proposed to be sold to persons located in this state; and
(ii) either:
(I) the date the issuer made its initial SEC Form C filing concerning the offering with the SEC and the issuer's principal place of business in this state; or
(II) if the issuer does not have its principal place of business in this state, the date the issuer became aware that the issuer met the threshold filing requirement in this state or the date of the completion of the offering.
(c) - (i) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402891
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
The Texas State Securities Board proposes the repeal of §133.7, which adopts by reference a form concerning Securities Application. Form 133.7 refers to a different form that has been repealed and no longer exists. The proposed repeal of the existing rule will allow for the simultaneous adoption of a new rule and a new corrected form by reference, which are being concurrently proposed. The proposed repeal is being made pursuant to the Agency's periodic review its rules.
Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed repeal is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed repeal.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed repeal is in effect the public benefit expected as a result of adoption of the proposed repeal is that a form that is no longer needed would be eliminated. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed repeal will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the repeal as proposed. There is no anticipated impact on local employment.
M. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed repeal is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally the proposed repeal does not create a new regulation; and it does not limit or expand an existing regulation. Although the rulemaking involves repealing an existing form, the net effect is to merely replace the form with a new form that is being concurrently proposed, while leaving the scope and the content of the current regulation that relates to this form unchanged.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The repeal is proposed under the authority of the Texas Government Code, §4002.151, as adopted by HB 4171, 86th Legislature, 2019 Regular Session, effective January 1, 2022. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The repeal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C; and Chapter 4006, Subchapters A, B, and C.
§133.7.Securities Application.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402893
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
The Texas State Securities Board proposes new §133.7, which adopts by reference a form concerning Securities Application. Current §133.7 and the form it adopts by reference, which refers to a different form that has been repealed and no longer exists, would be repealed and replaced with a new rule that would adopt a new corrected form by reference. The new rule is being made pursuant to the Agency’s periodic review its rules.
Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed form is in use there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed form.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed form is in use the public benefit expected as a result of adoption of the proposed form would be improved statutory compliance by ensuring the form is current and accurate which would promote transparency and efficient regulation. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed form will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the form as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed form is in use: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule’s applicability; and it does not positively or negatively affect the state’s economy. Additionally, the proposed form does not limit, expand, or repeal an existing regulation. Although the rulemaking involves the creation of a new form, there would be no new regulation created since the net effect is to merely replace a form that is being concurrently proposed for repeal, while leaving the scope and the content of the current regulation that relates to this form unchanged.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711 3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The new rule is proposed under the authority of the Texas Government Code, §4002.151, as adopted by HB 4171, 86th Legislature, 2019 regular Session, effective January 1, 2022. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C; and Chapter 4006, Subchapters A, B, and C.
§133.7.Securities Application.
This form is available from the State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 and at www.ssb.texas.gov.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402892
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
The Texas State Securities Board proposes an amendment to §133.33, concerning Uniform Forms Accepted, Required, or Recommended, to update the statutory reference to the Texas Securities Act (Act) in §133.33(a)(8) to refer to the correct section in the codified version of the Act in the Texas Government Code. The codification was adopted by HB 4171, 86th Legislature, 2019 Regular Session, and became effective January 1, 2022 (HB 4171).
The section would also be amended to add the Uniform Notice of Federal Crowdfunding (Form U-CF) form and Form U6 to the list in subsection (a) of uniform forms accepted. The Form U-CF is used for making the required notice filings for this type of federal covered securities. A related change to §114.4 has been concurrently proposed for adoption. Form U6 is used by state securities regulators, including the Agency, and by federal securities regulators, for reporting disclosure events and disciplinary actions against individuals and organizations. The proposed addition of Form U6 to the list of uniform forms accepted would acknowledge through formal rulemaking the Agency's current practice of accepting these forms as a means of notifying the Agency of such events disclosed in these forms.
The amendments to this section are being made pursuant to the Agency's periodic review of its rules.
Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment to this section is in effect the public benefits expected as a result of adoption of the proposed amendment will be to (1) provide for more efficiency for Federal Crowdfunding filings by permitting these filers to use a different form for these filings, and (2) statutory compliance by ensuring the rule is current, accurate, and reflects an existing practice, and that it conforms to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under the authority of the Texas Government Code, §4002.151, as adopted by HB 4171. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4005, Subchapter A; and §4007.105.
§133.33.Uniform Forms Accepted, Required, or Recommended.
(a) Assuming the appropriate exhibits and supplements are filed, the State Securities Board will accept for filing the following "Uniform Forms" in lieu of the requisite Texas form, if any.
(1) - (7) (No change.)
(8) U-7. Small Company Offerings Registration Form
may be used as a disclosure guide when making a small company offering
of securities pursuant to an exemption under the Act or when making
small public offerings pursuant to the Act, Chapter 4003, Subchapter
A [§7.A].
(9) - (12) (No change.)
(13) Uniform Notice of Federal Crowdfunding Offering (Form U-CF) form.
(14) U-6. Regulator Form U6 Filing.
(b) - (c) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402894
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303
7 TAC §§139.1, 139.2, 139.7 - 139.16, 139.18 - 139.24, 139.26, 139.27
The Texas State Securities Board proposes amendments to 21 rules in this chapter, to make nonsubstantive changes. Specifically, the Board proposes amendments to §139.1, concerning Policies; §139.2, concerning Professional Associations; §139.7, concerning Sale of Securities to Nonresidents; §139.8, concerning Sales to Underwriters; §139.9, concerning Bank Holding Companies; §139.10, concerning Exchange Offers; §139.11, concerning Transactions in United States Savings Bonds; §139.12, concerning Oil and Gas Auction Exemption; §139.13, concerning Resales under SEC Rule 144 and Rule 145(d); §139.14, concerning Non-Issuer Sales; §139.15, concerning Credit Enhancements; §139.16, concerning Sales to Individual Accredited Investors; §139.18, concerning Dealer and Investment Adviser Use of the Internet To Disseminate Information on Products and Services; §139.19, concerning Accredited Investor Exemption; §139.20, concerning Third Party Brokerage Arrangements on Financial Entity Premises; §139.21, concerning Dealer, Agent, and Securities Exemptions for Canadian Accounts; §139.22, concerning Exemption for Investment Adviser to a High Net Worth Family Entity; §139.23, concerning Registration Exemption for Investment Advisers to Private Funds; §139.24, concerning Charitable Organizations Assisting Economically Disadvantaged Clients with Texas Qualified Tuition Program Plans; §139.26, concerning Intrastate Crowdfunding Exemption for SEC Rule 147A Offerings; and §139.27, concerning Mergers and Acquisitions Dealer Exemption. The amendments would be made pursuant to the agency's periodic review of its rules and make no substantive changes.
The references to sections of the Texas Securities Act (Act) in §§139.1, 139.8 - 139.16, 139.18 - 139.24, 139.26, and 139.27 would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code. The codification was adopted by HB 4171, 86th Legislature, 2019 Regular Session, and became effective January 1, 2022 (HB 4171). The rest of the amendments would make other nonsubstantive and cleanup changes.
Section 139.2 would be amended to capitalize "Board" and "Commissioner" for consistency. Section 139.2 would also be amended to reference the section of the Texas Business Organizations Code where the existing cite in the rule concerning professional associations has been moved.
Sections 139.10, 139.13, 139.16, 139.19, 139.23, and 139.26 would be amended to replace the references in those sections to the term "Securities and Exchange Commission" with the term "SEC." SEC is already a defined term in §107.2, concerning Definitions.
Section 139.7(b) would be amended to add the word "internet" to the means that an offer or sale can be made under this rule. In addition, the words "or her" would be added to §139.7 for consistency.
The language in subsection §139.16(e), which sets forth the content of the rule's limited use advertisement requirement, would be updated to reflect the current SEC definition of "individual accredited investor." A parenthetical in subsection (g) would be deleted to conform to the preferred format for multiple references to a rule within a rule.
Section 139.18 would also be amended to replace the outdated term "dealer agent" with "agent."
Section 139.20 contains a cross reference to §109.17 of this title (relating to Banks under the Securities Act, §5.L). This caption of this cross reference to §109.17 would be renamed, and the incorrect capitalization of "under" and "the" in the caption would be corrected. The Board has adopted an amendment to §109.17 to rename the section, and the adoption notice for that amendment was submitted to the Texas Register concurrently with this proposal notice.
Sections 139.23, 139.26, and 139.27 would also be amended for consistency to reformat the citations in these sections to the SEC rules and to add a missing "--" to §139.23(a)(6).
Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendments.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendments are in effect the public benefit expected as a result of adoption of the proposed amendments will be (1) improved readability and clarity by updating terminology and references; and (2) statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro or small businesses or rural communities. Since the proposed amendments will have no adverse economic effect on micro or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendments are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; and they do not positively or negatively affect the state's economy. Additionally, the proposed amendments do not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed sections in the Texas Register. Written comments should be submitted to Cheryn Netz, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendments are proposed under the authority of the Texas Government Code, §§4002.151, 4004.001, and 4005.024, as adopted by HB 4171. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 4004.001 provides the Board with the authority to prescribe new dealer, agent, investment adviser, or investment adviser representative registration exemptions by rule. Section 4005.024 provides that the Board may prescribe new exemptions by rule.
The proposed amendments affect the Texas Securities Act, Texas Government Code Chapter 4003, Subchapters A, B, and C; Chapter 4004; and Chapter 4005, Subchapters A and B.
§139.1.Policies.
(a) It is the policy of the State Securities Board
to refuse to grant any exemptions by order under §4005.024 [§5.T] of the Securities Act for specific individual transactions
or issuers.
(b) The company or person engaged in a transaction
exempt under a rule adopted pursuant to the Securities Act, §4005.024
[§5.T], shall not be deemed a dealer within
the meaning of the Act unless the rule by its terms indicates otherwise.
§139.2.Professional Associations.
The sale, issuance, or offering of any securities of a professional
association organized pursuant to Texas Business Organizations
Code, §301.011 [Texas Civil Statutes, Article 1528(f)],
to persons permitted by the provisions of such article to own such
securities are hereby exempted from the securities registration and
dealer registration requirements of the Act; and the sale, issuance,
or offering of any such securities to such persons shall be legal
without any action or approval whatsoever on the part of the Board [board] or the Commissioner
[commissioner].
§139.7.Sale of Securities to Nonresidents.
(a) (No change.)
(b) An issuer or selling agent who makes an offer or
sale from Texas, by any means, including use of the mail, [or] telephone, or internet, is a dealer and must
comply with the dealer registration requirements of the Securities
Act. (The Securities Act provides exemptions from the dealer registration
requirements which might be available to some issuers or selling agents.)
An offer is not deemed to be made from Texas merely because offering
material is prepared in Texas, if such material is still in the possession
of the issuer or its selling agent when it leaves the state. A sale
is not deemed to be made in Texas merely because a purchaser sends
his or her purchase money to Texas, or because clerical
functions connected with the closing of a sale are performed in Texas.
§139.8.Sales to Underwriters.
Any transaction between the issuer, or other person on whose
behalf the offering is made, and an underwriter, or among underwriters,
is hereby exempted from the securities registration requirements of
the Securities Act, Chapter 4003, Subchapters A, B, and C
[§7].
§139.9.Bank Holding Companies.
A bank holding company with fewer than 500 shareholders that
owns the majority of the voting shares of a bank domiciled in Texas
is hereby exempted from the dealer registration requirements of the
Securities Act, §4004.051 [§12], with
respect to its participation in a sale or other transaction involving
its own securities or the securities of a bank where the bank holding
company owns a majority of the voting shares of such bank.
§139.10.Exchange Offers.
The offer or sale by the issuer of common stock in exchange
for units of limited partnership or interests in oil, gas, or mineral
leases, fees, or titles is hereby exempted from the securities registration
requirements of the Securities Act, Chapter 4003, Subchapters
A, B, and C [§7], if all of the following conditions
are met:
(1) (No change.)
(2) the shares of common stock to be exchanged are
registered for sale with the SEC [Securities and Exchange
Commission];
(3) - (6) (No change.)
§139.11.Transactions in United States Savings Bonds.
The State Securities Board, pursuant to the Securities Act, §4004.001
and §4005.024 [§5.T and §12.B], exempts
from the securities and dealer registration requirements of the Act,
the sale of any United States Series EE Savings Bond if no commission
or other remuneration is paid or given or is to be paid or given,
directly or indirectly, in connection with the sale. For purposes
of this section, "commission or other remuneration" does not include
a fee paid by the United States Treasury.
§139.12.Oil and Gas Auction Exemption.
For purposes of this rule only, the term "mineral interest"
means an interest in or under an oil, gas, or mining lease, fee, or
title, including real property from which the minerals have not been
severed, or contracts relating thereto. The offer and sale of a mineral
interest, at an auction, by the seller itself, or a registered dealer
or agent acting on behalf of the seller, is exempt from the securities
registration requirements of the Texas Securities Act, Chapter
4003, Subchapters A, B, and C [Section 7], if all
of the following conditions are met.
(1) - (6) (No change.)
§139.13.Resales under SEC Rule 144 and Rule 145(d).
(a) Exemption from securities registration. Offers
to resell and resales of any security by the owner thereof, or any
person acting on behalf of the owner, shall be exempt from the securities
registration requirements of the Texas Securities Act, Chapter
4003, Subchapters A, B, and C [§7], pursuant
to §4005.024 [§5.T], if the offers
to resell and resales of securities are made in compliance with either:
(1) Rule 144 promulgated by the SEC [Securities
and Exchange Commission (SEC)] under the Securities Act of 1933,
as amended (1933 Act), as made effective in SEC Release Number 33-5223,
as amended in Release Numbers 33-5307, 33-5452, 33-5452A, 33-5560,
33-5613, 33-5717, 33-5979, 33-5995, 33-6032, 33-6180, 34-16589, 33-6286,
33-6389, 33-6488, 33-6768, 33-6862, 33-7285, and 33-7390; or
(2) (No change.)
(b) (No change.)
§139.14.Non-Issuer Sales.
The State Securities Board, pursuant to the Securities Act, §4005.024
[§5.T], exempts from the securities registration
requirements of the Securities Act, Chapter 4003, Subchapters
A, B, and C [§7], the offer and sale of any
securities, provided the following conditions are met.
(1) - (3) (No change.)
(4) Number of sales.
(A) Except as the allowable number of sales may be increased as provided in subparagraph (B) of this paragraph, the owner, together with any persons acting in concert with the owner, may make no more than 15 sales in any 12-month period under and in reliance on this section, exclusive of sales made:
(i) (No change.)
(ii) in compliance with the Act, Chapter 4005,
Subchapters A and B [§§5.O, 6.F, or 5.H]; or
(iii) (No change.)
(B) (No change.)
(C) The exemption provided by this section may not
be combined with sales made pursuant to the Act, §4005.004 [§5.C(1)], to exceed sales otherwise allowable under this
section.
(5) - (6) (No change.)
§139.15.Credit Enhancements.
(a) Any "qualified credit enhancement" need not be registered as a separate security when no additional consideration is required to receive the enhancement and the enhancement is offered and sold in conjunction with, and is not tradeable separately from, securities that are:
(1) registered pursuant to the Securities Act, Chapter
4003, Subchapters A, B, or C [§7];
(2) exempt under the Securities Act, Chapter 4005,
Subchapter B [§6]; or
(3) included within a transaction exempt under the
Securities Act, Chapter 4005, Subchapter A [§5].
(b) (No change.)
§139.16.Sales to Individual Accredited Investors.
(a) In general. The State Securities Board, pursuant
to the Securities Act, §4005.024 [§5.T],
exempts from the securities registration requirements of the Securities
Act, Chapter 4003, Subchapters A, B, and C [§7],
the offer and sale by the issuer or a registered dealer without advertising
of any security to an individual accredited investor, or to any purchaser
who the issuer has reasonable grounds to believe and after making
reasonable inquiry shall believe to be an individual accredited investor,
provided that such security is not part of the same distribution or
offering as securities of the same issuer which have been registered
or are proposed to be registered by pending application under the
Securities Act, Chapter 4003 [§7]. "Advertising,"
as used in this subsection, does not include the use of limited use
advertisements under subsection (e) of this section or the use of
the type of printed material as permitted by §109.13(b) of this
title (relating to Limited Offering Exemptions) in connection with
an offering under §4005.012 or §4005.013 of the
Act [, §5.I].
(b) (No change.)
(c) Disqualifications.
(1) No exemption under this section shall be available for the securities of any issuer if the issuer or registered dealer:
(A) within the last five years, has filed a registration
statement which is the subject of a currently effective registration
stop order entered by the SEC [United States Securities
and Exchange Commission] or any state securities administrator;
(B) - (D) (No change.)
(2) - (3) (No change.)
(d) (No change.)
(e) Limited use advertisements. Any limited use advertisement used in connection with an offering under this section must be filed with the Securities Commissioner ten days prior to use in this state. A limited use advertisement may be disseminated by any means, direct or indirect. A limited use advertisement shall contain only the statements required or permitted to be included therein by this subsection.
(1) A limited use advertisement shall contain the following items of information:
(A) - (C) (No change.)
(D) the following statement: "The securities have not
been registered with or approved by the Texas Securities Commissioner
and are being offered and sold pursuant to the exemption provided
by §139.16 of the Rules and Regulations of the State Securities
Board. This advertisement was filed with the Texas Securities Commissioner
on or about (fill in date). The securities are being offered to, and
may be purchased by, only those natural persons who are accredited
investors as described in Rule 501(a), promulgated by the Securities
and Exchange Commission under the Securities Act of 1933 (17 CFR §230.501,
as amended) [whose individual net worth, or joint net worth
with that person's spouse, at the time of purchase of the securities,
exceeds $1 million, excluding the value of the person's primary residence,
or natural persons who have an individual income in excess of $200,000
in each of the two most recent years, or joint income with that person's
spouse in excess of $300,000 in each of those years, and who have
a reasonable expectation of reaching that same income level in the
current year]."
(2) (No change.)
(f) (No change.)
(g) Transactions exempt under this section may be combined
with offers and sales exempt under the Securities Act, §4005.011
[§5.H], and §109.4 of this title (relating
to Securities Registration Exemption for Sales to Financial Institutions
and Certain Institutional Investors). In this event, the statement
required by subsection (e)(1)(D) of this section may be modified to
indicate that the securities are also being offered to eligible purchasers
under §4005.011 [§5.H] and §109.4
of this title [(relating to Securities Registration Exemption
for Sales to Financial Institutions and Certain Institutional Investors)].
(h) - (k) (No change.)
§139.18.Dealer and Investment Adviser Use of the Internet To Disseminate Information on Products and Services.
(a) Dealers, investment advisers, [dealer]
agents, and investment adviser representatives who use the Internet,
the World Wide Web, and similar proprietary or common carrier electronic
systems (collectively, the "Internet") to distribute information on
available products and services through certain communications made
on the Internet directed generally to anyone having access to the
Internet, and transmitted through postings on Bulletin Boards, displays
on "Home Pages" or similar methods ("Internet Communications") shall
not be deemed to be a "dealer" in this state for purposes of the Act, §4001.056 [§4.D], based solely on that
fact if the following conditions are observed:
(1) The Internet Communication contains a legend in which it is clearly stated that:
(A) the dealer, investment adviser, [dealer]
agent, or investment adviser representative in question may only transact
business in this state if first registered, excluded, or exempted
from Texas dealer, investment adviser, [dealer] agent,
or investment adviser representative registration requirements, as
may be; and
(B) follow-up, individualized responses to persons
in Texas by such dealer, investment adviser, [dealer] agent,
or investment adviser representative that involve either the effecting
or attempting to effect transactions in securities, or the rendering
of personalized investment advice for compensation, as may be, will
not be made absent compliance with Texas dealer, investment adviser,
[dealer] agent, or investment adviser representative registration
requirements, or an applicable exemption or exclusion;
(2) The Internet Communication contains a mechanism,
including and without limitation, technical "firewalls" or other implemented
policies and procedures, designed reasonably to ensure that prior
to any subsequent, direct communication with prospective customers
or clients in Texas, said dealer, investment adviser, [dealer]
agent, or investment adviser representative is first registered in
Texas or qualifies for an exemption or exclusion from such requirement.
Nothing in this section shall be construed to relieve a Texas registered
dealer, investment adviser, [dealer] agent, or investment
adviser representative from any applicable securities registration
requirement in Texas;
(3) (No change.)
(4) In the case of an [a dealer]
agent or investment adviser representative:
(A) the affiliation with the dealer or investment adviser
of the [dealer] agent or investment adviser representative
is prominently disclosed within the Internet Communication;
(B) the dealer or investment adviser with whom the
[dealer] agent or investment adviser representative is
associated retains responsibility for reviewing and approving the
content of any Internet Communication by an [a dealer]
agent or investment adviser representative;
(C) the dealer or investment adviser with whom the
[dealer] agent or investment adviser representative is
associated first authorizes the distribution of information on the
particular products and services through the Internet Communication; and
(D) in disseminating information through the Internet
Communication, the [dealer] agent or investment adviser
representative acts within the scope of the authority granted by the
dealer or investment adviser.
(b) The position expressed in this section extends
to state dealer, investment adviser, [dealer] agent, and
investment adviser representative registration requirements only,
and does not excuse compliance with applicable securities registration,
antifraud, or related provisions.
(c) Nothing in this section shall be construed to affect
the activities of any dealer, investment adviser, [dealer]
agent, or investment adviser representative engaged in business in
this state that is not subject to the jurisdiction of the Securities
Commissioner as a result of the National Securities Markets Improvement
Act of 1996, as amended.
§139.19.Accredited Investor Exemption.
Any offer or sale of a security by an issuer in a transaction
that meets the requirements of this section is exempted from the securities
registration requirements of the Texas Securities Act and exempted
from the filing requirements contained in the Texas Securities Act, §4003.203 [§22.A], and Chapter 137 of this
title (relating to Administrative Guidelines for Regulation of Offers).
(1) - (2) (No change.)
(3) Investment intent; resales. The issuer reasonably
believes that all purchasers are purchasing for investment and not
with the view to or for sale in connection with a distribution of
the security. Any resale of a security sold in reliance on this exemption
within 12 months of sale shall be presumed to be with a view to distribution
and not for investment, except a resale pursuant to a registration
statement effective under the Texas Securities Act, Chapter 4003 [§7], or to an accredited investor pursuant to an exemption
available under the Texas Securities Act or Board rules.
(4) Disqualifications.
(A) The exemption is not available to an issuer if the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director, or officer of such underwriter:
(i) within the last five years, has filed a registration
statement which is the subject of a currently effective registration
stop order entered by any state securities administrator or the SEC [United States Securities and Exchange
Commission];
(ii) - (iv) (No change.)
(B) (No change.)
(5) General announcement.
(A) (No change.)
(B) The general announcement shall include only the following information, unless additional information is specifically permitted by the Securities Commissioner:
(i) - (v) (No change.)
(vi) a statement that:
(I) - (II) (No change.)
(III) the securities have not been registered with
or approved by any state securities agency or the SEC [U.S.
Securities and Exchange Commission] and are being offered and
sold pursuant to an exemption from registration.
(6) - (10) (No change.)
§139.20.Third Party Brokerage Arrangements on Financial Entity Premises.
(a) The State Securities Board, pursuant to the Texas
Securities Act, §4004.001 [§12.B],
exempts a financial entity from the dealer registration requirements
of the Texas Securities Act, when such financial entity is engaging
in securities-related activity consisting solely of acting as a correspondent
in a third party brokerage arrangement coordinated with a registered
dealer on the premises of the financial entity. A financial entity
may receive compensation for such an arrangement based on a percentage
of commissions generated by the arrangement or on the basis of leased
space of the premises; officers and employees of the financial entity
may receive compensation as set forth in subsection (b) of this section.
For purposes of this section, the following words and terms shall
have the following meanings:
(1) "financial entity" shall include any state or national
bank, any federal savings and loan association or savings and loan
association organized and subject to the laws and regulation of this
State as defined in §109.17 of this title (relating to Banks under
the [Under The] Securities Act, §4005.016 [§5.L]), or any credit union, insurance company, bank holding
company, or financial holding company organized and subject to functional
regulation under the laws of the United States or under the laws of
any State or territory of the United States;
(2) - (3) (No change.)
(b) The State Securities Board, pursuant to the Texas
Securities Act, §4004.001 [§12.B],
exempts officers and employees of a financial entity from the agent
registration requirements of the Texas Securities Act, when such employee
or officer is engaging in securities-related activity consisting solely
of referring customers to a representative of the registered dealer.
For the purposes of this subsection, the officers and employees of
a financial entity may receive a referral fee for this activity provided that:
(1) - (3) (No change.)
(c) The filing and fee requirements for dealers and agents exempted from registration pursuant to this section are preserved.
(1) (No change.)
(2) Upon amendment to its Form 133.9, the financial
entity files an amended Form 133.9 and an amendment fee as provided
in the Texas Securities Act, §4006.054 [§35.B(1)].
(3) (No change.)
(d) (No change.)
§139.21.Dealer, Agent, and Securities Exemptions for Canadian Accounts.
(a) The State Securities Board, pursuant to the Texas
Securities Act, §4004.001 [§§5.T and
12.C], exempts Canadian dealers and agents from the registration
requirements of the Texas Securities Act, when such dealers and agents
comply with subsections (b) and (c) of this section and are conducting
a transaction in a Canadian self-directed tax advantaged retirement
plan of which the holder or contributor is a person from Canada who
is present in this state or when conducting a transaction in the Canadian
securities account of a Canadian citizen who is temporarily present
in this state and with whom the dealer or agent has a preexisting
client relationship.
(b) - (c) (No change.)
(d) The State Securities Board, pursuant to the Texas
Securities Act, §4005.024 [§5.T],
exempts from the securities registration requirements of the Texas
Securities Act, Chapter 4003, Subchapters A, B, and C [§7
], the offer and sale of any securities effected by a Canadian
dealer pursuant to this section.
(e) (No change.)
§139.22.Exemption for Investment Adviser to a High Net Worth Family Entity.
(a) The State Securities Board, pursuant to the Texas
Securities Act, §4004.001 [§5.T and §12.C],
exempts an investment adviser and its investment adviser representatives
from the registration requirements of the Act, §4004.052
and §4004.102 [§12], when such adviser:
(1) - (2) (No change.)
(b) - (c) (No change.)
§139.23.Registration Exemption for Investment Advisers to Private Funds.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:
(1) - (5) (No change.)
(6) Venture Capital Fund--A Private Fund
that meets the definition of a venture capital fund in SEC Rule 203(l)-1 (17 CFR §275.203(l)-1, as amended) [, 17 CFR §275.203(l)-1].
(b) Exemption for Private Fund Advisers. Subject to
the additional requirements of this section, the State Securities
Board, pursuant to the Texas Securities Act, §4004.001 [§5.T and §12.C], exempts from the investment adviser
registration requirements of the Texas Securities Act, §4004.052
[§12], a Private Fund Adviser satisfying each
of the following conditions and limitations:
(1) The Private Fund Adviser files with the Securities
Commissioner each report and amendment thereto that an exempt reporting
adviser is required to file with the SEC [Securities
and Exchange Commission] pursuant to SEC Rule 204-4 (17
CFR §275.204-4, as amended)[, 17 CFR §275.204-4].
These filings are to be made electronically through the Investment
Adviser Registration Depository (IARD). A report shall be deemed filed
when the report required by subsection (b) of this section is filed
and accepted by the IARD on the state's behalf.
(2) Except as provided in paragraph (3) of this subsection, neither the Private Fund Adviser, nor any of its advisory affiliates, as that term is defined in the Instructions to Part 1A of Form ADV, are subject to the following disqualifications:
(A) any of those described in Rule 262 of SEC Regulation
A (17 CFR §230.262, as amended)[, 17 CFR §230.262];
(B) - (G) (No change.)
(3) (No change.)
(c) Additional requirements for Private Fund Advisers to certain 3(c)(1) Funds. In order to qualify for an exemption pursuant to this section, a Private Fund Adviser who advises at least one 3(c)(l) Fund that is not a Private Equity Fund, Real Estate Fund, or Venture Capital Fund shall comply with the following additional requirements:
(1) the Private Fund Adviser shall advise only those
3(c)(1) Funds (other than Private Equity Funds, Real Estate Funds,
and Venture Capital Funds) whose outstanding securities (other than
short-term paper) are beneficially owned entirely by persons who would
each meet the definition of a qualified client in SEC Rule 205-3 (17
CFR §275.205-3, as amended)[, 17 CFR §275.205-3],
at the time the securities are purchased from the issuer; provided
that if an entity was organized and exists only for the purpose of
acquiring an interest in the 3(c)(1) Fund, each beneficial owner of
such entity must be a qualified client; and
(2) (No change.)
(d) Federal covered investment advisers. If a Private
Fund Adviser is registered with the SEC [Securities
and Exchange Commission], the adviser shall not be eligible
for this exemption and shall comply with the state notice filing requirements
applicable to federal covered investment advisers in the Texas Securities
Act, Chapter 4004, Subchapter G [§12-1].
(e) Investment adviser representatives. An investment
adviser representative is exempt from the registration requirements
of the Texas Securities Act, §4004.102 [§12],
if he or she is employed by or associated with an investment adviser
that is exempt from investment adviser registration in this state
pursuant to this section and does not otherwise act as an investment
adviser representative.
(f) (No change.)
§139.24.Charitable Organizations Assisting Economically Disadvantaged Clients with Texas Qualified Tuition Program Plans.
(a) (No change.)
(b) Exemption from dealer, agent, investment adviser,
and investment adviser representative registration. The State Securities
Board, pursuant to the Texas Securities Act, §4004.001 [§12.C], exempts a charitable organization and its financial
coaches and counselors from the dealer, agent, investment adviser,
and investment adviser representative registration requirements of
the Texas Securities Act, when their securities-related activities
are limited to:
(1) - (2) (No change.)
(c) (No change.)
§139.26.Intrastate Crowdfunding Exemption for SEC Rule 147A Offerings.
(a) General. The State Securities Board, pursuant to
the Texas Securities Act (Act), §4005.024 [Section
5.T], exempts from the securities registration requirements
of the Act, any offer or sale of securities of an issuer made in compliance
with SEC [Securities and Exchange Commission (SEC)]
Rule 147A (17 CFR §230.147A, as amended)[, 17
CFR §230.147A], through a registered general dealer or
a registered Texas crowdfunding portal, provided that all the requirements
of this section are satisfied.
(b) - (j) (No change.)
(k) Disqualifications.
(1) (No change.)
(2) This exemption is not available if the issuer, the issuer's predecessors, any affiliated issuer, or any control person of the issuer:
(A) within the last five years, has filed a registration
statement which is the subject of a currently effective registration
stop order entered by any state securities administrator or the SEC [United States Securities and Exchange
Commission];
(B) - (D) (No change.)
(3) - (4) (No change.)
§139.27.Mergers and Acquisitions Dealer Exemption.
(a) Dealer and agent exemption. The State Securities
Board, pursuant to the Texas Securities Act, §4004.001 [Section 12.C], exempts a Mergers and Acquisitions (M&A)
Dealer from registration as a dealer provided the conditions set forth
in this section are met. The agents for the M&A Dealer are also
exempt from registration provided the conditions set forth in this
section are met.
(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) - (4) (No change.)
(5) Business Combination Related Shell Company--a Shell Company (as defined in SEC Rule 405) (17 CFR §230.405, as amended) that is:
(A) (No change.)
(B) formed by an entity that is not a Shell Company solely for the purpose of completing a business combination transaction (as defined in SEC Rule 165(f)) (17 CFR §230.165(f), as amended) among one or more entities other than the Shell Company, none of which is a Shell Company.
(c) Qualifying M&A Transactions. To be a Qualifying M&A Transaction, the transaction must meet all the following requirements.
(1) - (6) (No change.)
(7) Any securities received by the buyer or M&A Dealer in a Qualifying M&A Transaction are restricted securities within the meaning of the Securities Act of 1933, Rule 144(a)(3) (17 CFR §230.144(a)(3), as amended).
(d) - (f) (No change.)
(g) Disqualifications.
(1) Except as provided in paragraph (2) of this subsection, the exemption in this section is not available if the M&A Dealer, or an officer, director, or employee of the M&A Dealer are subject to any of the following disqualifications:
(A) any of those described in Rule 262 of SEC Regulation
A (17 CFR §230.262, as amended)[, 17 CFR §230.262];
(B) - (G) (No change.)
(2) (No change.)
(h) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on June 28, 2024.
TRD-202402897
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: August 11, 2024
For further information, please call: (512) 305-8303