Florida Senate - 2016                              CS for SB 286
       
       
        
       By the Committee on Banking and Insurance; and Senator Brandes
       
       
       
       
       
       597-01757-16                                           2016286c1
    1                        A bill to be entitled                      
    2         An act relating to merger and acquisition brokers;
    3         amending s. 517.061, F.S.; providing an exemption from
    4         certain registration requirements with the Office of
    5         Financial Regulation for a specified offer or sale of
    6         securities; amending s. 517.12, F.S.; defining terms;
    7         requiring a merger and acquisition broker to receive
    8         certain written assurances from a specified person
    9         prior to the completion of specified securities
   10         transactions; providing an exemption from certain
   11         registration requirements with the office for a merger
   12         and acquisition broker under certain circumstances;
   13         specifying disqualifying conditions for the exemption;
   14         providing an effective date.
   15          
   16  Be It Enacted by the Legislature of the State of Florida:
   17  
   18         Section 1. Subsection (22) is added to section 517.061,
   19  Florida Statutes, to read:
   20         517.061 Exempt transactions.—Except as otherwise provided
   21  in s. 517.0611 for a transaction listed in subsection (21), the
   22  exemption for each transaction listed below is self-executing
   23  and does not require any filing with the office before claiming
   24  the exemption. Any person who claims entitlement to any of the
   25  exemptions bears the burden of proving such entitlement in any
   26  proceeding brought under this chapter. The registration
   27  provisions of s. 517.07 do not apply to any of the following
   28  transactions; however, such transactions are subject to the
   29  provisions of ss. 517.301, 517.311, and 517.312:
   30         (22) The offer or sale of securities, solely in connection
   31  with the transfer of ownership of an eligible privately held
   32  company, through a merger and acquisition broker in accordance
   33  with s. 517.12(22).
   34         Section 2. Subsection (22) is added to section 517.12,
   35  Florida Statutes, to read:
   36         517.12 Registration of dealers, associated persons,
   37  intermediaries, and investment advisers.—
   38         (22)(a) As used in this subsection, the term:
   39         1. “Broker” has the same meaning as “dealer” as defined in
   40  s. 517.021.
   41         2. “Control person” means an individual or entity that
   42  possesses the power, directly or indirectly, to direct the
   43  management or policies of a company through ownership of
   44  securities, by contract, or otherwise. A person is presumed to
   45  be a control person of a company if, with respect to a
   46  particular company, the person:
   47         a. Is a director, a general partner, a member, or a manager
   48  of a limited liability company, or is an officer who exercises
   49  executive responsibility or has a similar status or function;
   50         b. Has the power to vote 20 percent or more of a class of
   51  voting securities or has the power to sell or direct the sale of
   52  20 percent or more of a class of voting securities; or
   53         c. In the case of a partnership or limited liability
   54  company, may receive upon dissolution, or has contributed, 20
   55  percent or more of the capital.
   56         3.“Eligible privately held company” means a company that
   57  meets all of the following conditions:
   58         a. The company does not have any class of securities which
   59  is registered, or which is required to be registered, with the
   60  United States Securities and Exchange Commission under the
   61  Securities Exchange Act of 1934, 15 U.S.C. ss. 78a et seq., or
   62  with the office under s. 517.07, or for which the company files,
   63  or is required to file, summary and periodic information,
   64  documents, and reports under Section 15(d) of the Securities
   65  Exchange Act of 1934, 15 U.S.C. s. 78o(d).
   66         b. In the fiscal year immediately preceding the fiscal year
   67  during which the merger and acquisition broker begins to provide
   68  services for the securities transaction, the company, in
   69  accordance with its historical financial accounting records, has
   70  earnings before interest, taxes, depreciation, and amortization
   71  of less than $25 million or has gross revenues of less than $250
   72  million. On July 1, 2016, and every 5 years thereafter, each
   73  dollar amount in this sub-subparagraph shall be adjusted by
   74  dividing the annual value of the Employment Cost Index for wages
   75  and salaries for private industry workers, or any successor
   76  index, as published by the Bureau of Labor Statistics, for the
   77  calendar year preceding the calendar year in which the
   78  adjustment is being made, by the annual value of such index or
   79  successor index for the calendar year ending December 31, 2012,
   80  and multiplying such dollar amount by the quotient obtained.
   81  Each dollar amount determined under this sub-subparagraph shall
   82  be rounded to the nearest multiple of $100,000.
   83         4.“Merger and acquisition broker” means any broker and any
   84  person associated with a broker engaged in the business of
   85  effecting securities transactions solely in connection with the
   86  transfer of ownership of an eligible privately held company,
   87  regardless of whether that broker acts on behalf of a seller or
   88  buyer, through the purchase, sale, exchange, issuance,
   89  repurchase, or redemption of, or a business combination
   90  involving, securities or assets of the eligible privately held
   91  company.
   92         5.“Public shell company” means a company that at the time
   93  of a transaction with an eligible privately held company:
   94         a. Has any class of securities which is registered, or
   95  which is required to be registered, with the United States
   96  Securities and Exchange Commission under the Securities Exchange
   97  Act of 1934, 15 U.S.C. ss. 78a et seq., or with the office under
   98  s. 517.07, or for which the company files, or is required to
   99  file, summary and periodic information, documents, and reports
  100  under Section 15(d) of the Securities Exchange Act of 1934, 15
  101  U.S.C. s. 78o(d);
  102         b. Has nominal or no operations; and
  103         c. Has nominal assets or no assets, assets consisting
  104  solely of cash and cash equivalents, or assets consisting of any
  105  amount of cash and cash equivalents and nominal other assets.
  106         (b)Prior to the completion of any securities transaction
  107  described in s. 517.061(22), a merger and acquisition broker
  108  must receive written assurances from the control person with the
  109  largest percentage of ownership for both the buyer and seller
  110  engaged in the transaction that:
  111         a. After the transaction is completed, any person who
  112  acquires securities or assets of the eligible privately held
  113  company, acting alone or in concert, will be a control person of
  114  the eligible privately held company or will be a control person
  115  for the business conducted with the assets of the eligible
  116  privately held company; and
  117         b. If any person is offered securities in exchange for
  118  securities or assets of the eligible privately held company,
  119  such person will, before becoming legally bound to complete the
  120  transaction, receive or be given reasonable access to the most
  121  recent year-end financial statements of the issuer of the
  122  securities offered in exchange. The most recent year-end
  123  financial statements shall be customarily prepared by the
  124  issuer’s management in the normal course of operations. If the
  125  financial statements of the issuer are audited, reviewed, or
  126  compiled, the most recent year-end financial statements must
  127  include any related statement by the independent certified
  128  public accountant; a balance sheet dated not more than 120 days
  129  before the date of the exchange offer; and information
  130  pertaining to the management, business, results of operations
  131  for the period covered by the foregoing financial statements,
  132  and material loss contingencies of the issuer.
  133         (c) A merger and acquisition broker engaged in a
  134  transaction exempt under s. 517.061(22) is exempt from
  135  registration under this section unless the merger and
  136  acquisition broker:
  137         1. Directly or indirectly, in connection with the transfer
  138  of ownership of an eligible privately held company, receives,
  139  holds, transmits, or has custody of the funds or securities to
  140  be exchanged by the parties to the transaction;
  141         2. Engages on behalf of an issuer in a public offering of
  142  any class of securities which is registered, or which is
  143  required to be registered, with the United States Securities and
  144  Exchange Commission under the Securities Exchange Act of 1934,
  145  15 U.S.C. ss. 78a et seq., or with the office under s. 517.07;
  146  or for which the issuer files, or is required to file, periodic
  147  information, documents, and reports under Section 15(d) of the
  148  Securities Exchange Act of 1934, 15 U.S.C. s. 78o(d);
  149         3. Engages on behalf of any party in a transaction
  150  involving a public shell company;
  151         4. Is subject to a suspension or revocation of registration
  152  under Section 15(b)(4) of the Securities Exchange Act of 1934,
  153  15 U.S.C. s. 78o(b)(4);
  154         5. Is subject to a statutory disqualification described in
  155  Section 3(a)(39) of the Securities Exchange Act of 1934, 15
  156  U.S.C. s. 78c(a)(39);
  157         6. Is subject to a disqualification under U.S. Securities
  158  and Exchange Commission Rule 506(d), 17 C.F.R. s. 230.506(d); or
  159         7. Is subject to a final order described in Section
  160  15(b)(4)(H) of the Securities Exchange Act of 1934, 15 U.S.C. s.
  161  78o(b)(4)(H).
  162         Section 3. This act shall take effect July 1, 2016.