68th OREGON LEGISLATIVE ASSEMBLY--1995 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1587
Senate Bill 394
Sponsored by COMMITTEE ON JUDICIARY
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Exempts certain securities from registration when issued by
person, other than individual, wholly owned by physicians for
purpose of providing health care services.
A BILL FOR AN ACT
Relating to securities; amending ORS 59.015 and 59.025.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 59.025 is amended to read:
59.025. The following securities are exempt from ORS 59.055:
(1)(a) A security issued or guaranteed by the United States or
by a state, a political subdivision of a state or an agency or
other instrumentality of any of the foregoing.
(b) Any other security offered in connection with or as part of
the security set forth in paragraph (a) of this subsection if the
security cannot be severed and sold separately from the security
in paragraph (a) of this subsection.
(2) A security issued or guaranteed by a foreign government
with which the United States is at the time of the sale
maintaining diplomatic relations, or by a state, province or
political subdivision thereof having the power of taxation or
assessment, if the security is recognized as a valid obligation
by such foreign government or state, province or political
subdivision thereof.
(3) A security that represents an interest in or a direct
obligation of or is guaranteed by a national bank, federal
savings and loan association, federal credit union or federal
land bank or joint stock land bank or national farm loan
association.
(4) Any of the following securities:
(a) A security listed or approved for listing upon notice of
issuance on the New York Stock Exchange, the American Stock
Exchange, the Midwest Stock Exchange, the Pacific Stock Exchange
or any other exchange recognized by rule of the Director { + of
the Department of Consumer and Business Services + };
(b) A security designated or approved for designation upon
notice of issuance under the National Association of Securities
Dealers Automated Quotation System, Inc. National Market System;
(c) Any other security of the issuer of a security listed or
designated under paragraph (a) or (b) of this subsection, that is
of senior or substantially equal rank to the listed or designated
security;
(d) A security issuable under rights or warrants listed or
approved under paragraph (a), (b) or (c) of this subsection; or
(e) A warrant or right to purchase or subscribe to any security
referred to in paragraph (a), (b), (c) or (d) of this subsection.
(5) A security maintaining a rating approved by the director in
a recognized securities manual.
(6) A security that represents an interest in or a direct
obligation of and that has been or is to be issued by a bank,
trust company, savings and loan association, or credit union,
that is subject to the examination, supervision and control of a
regulatory agency of this state.
(7) Commercial paper issued, given or acquired in a bona fide
way in the ordinary course of legitimate business, trade or
commerce, when the commercial paper is not made the subject of a
public offering.
(8) A security, the issuance of which is under supervision,
regulation or control by the Public Utility Commission of this
state, if the Public Utility Commission is exercising control
over, or is regulating or supervising, the issuer thereof.
(9) Stock or membership certificates issued by an agricultural
cooperative corporation or irrigation association when the stock
is issued to evidence membership in the cooperative or
association or as a patronage dividend and certificates issued to
members or patrons by such a cooperative or association
evidencing their respective interests in reserves or as patronage
dividends. This exemption shall not apply to any cooperative or
association that expects to engage in or is engaged in the
production, processing or marketing of forest products.
(10) Stock or membership certificates issued by a fishing
cooperative corporation, when the stock or certificates are
issued to members of the cooperative corporation either for the
purpose of showing membership in the cooperative corporation or
for the purpose of showing their respective interests in reserves
or patronage dividends. For purposes of this subsection, a
fishing cooperative corporation is an association of persons
engaged commercially in harvesting, marketing or processing
products of aquatic life from fresh and salt water, that is
formed or operated under ORS chapter 62 with the purpose of
commercially harvesting, marketing or processing such products or
engaging in group bargaining with respect to the sale of such
products.
(11) Stock or membership certificates issued by an association
of consumers formed or operated under ORS chapter 62 with the
purpose of providing groceries to its consumer members, when the
stock or certificates are issued to members either for the
purpose of showing membership in the association or for the
purpose of showing their respective interests in patronage
dividends or reserves. For purposes of the exemption under this
subsection:
(a) The price of stock or a membership certificate may not
exceed $300.
(b) The benefits shall be limited to discounts on purchases or
patronage dividends, or any combination of such discounts and
dividends.
(c) The association may issue only one stock or membership
certificate to an individual.
(12) Any security issued in connection with an employee's stock
purchase, savings, pension, profit sharing or similar employee's
benefit plan, provided:
(a) That the plan meets the requirements for qualification
under section 401 of the Internal Revenue Code of 1986; and
(b) That the terms of the plan are fair, just and equitable to
employees under rules of the director.
(13) Any security issued by a person:
(a) Organized and operated exclusively for religious,
educational, benevolent, fraternal, charitable or reformatory
purpose and not for pecuniary profit, and no part of the net
earnings of which inures to the benefit of any person, private
stockholder, or individual; and
(b) Designated by rule of the director.
(14)(a) Any security issued by an issuer registered as an
open-end management investment company or unit investment trust
under Section 8 of the Investment Company Act of 1940 (15 U.S.C.
80a-8) if:
(A)(i) The issuer is advised by an investment adviser that is a
depository institution exempt from registration under the
Investment Advisers Act of 1940 (15 U.S.C. 80a-1 et seq.) or that
is currently registered, as an investment adviser, and has been
registered, or is affiliated with an adviser that has been
registered as an investment adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b-3) for at least three years next
preceding an offer or sale of a security claimed to be exempt
under this subsection and the issuer has acted, or is affiliated
with an investment adviser that has acted, as an investment
adviser to one or more registered investment companies or unit
investment trusts for at least three years next preceding an
offer or sale of a security claimed to be exempt under this
paragraph; or
(ii) The issuer has a sponsor that has at all times throughout
the three years next preceding an offer or sale of a security
claimed to be exempt under this paragraph, sponsored one or more
registered investment companies or unit investment trusts the
aggregate total assets of which have exceeded $100 million; and
(B) The director has received prior to any sale exempted under
this subsection:
(i) Notice of intention to sell setting forth the name and
address of the issuer and the securities to be offered in this
state; and
(ii) A fee of $350 for open-end management companies or a fee
of $150 for unit investment trusts.
(b) An exemption under this subsection does not grant an
exemption from licensing for salespersons under ORS 59.015
(16)(b)(A).
(c) In the event any offer or sale is to be made more than 12
months after the date notice under paragraph (a)(B) of this
subsection is received by the director, another notice and
payment of the applicable fee shall be required.
(d) For purposes of this subsection, an investment adviser is
affiliated with another investment adviser if the investment
advisory controls, is controlled by, or is under common control
with the other investment adviser.
{ + (15) Any security issued by a person, other than an
individual, that is wholly owned by physicians licensed in this
state under ORS chapter 677 and organized for the purpose of
providing or contracting for the provision of health care
services, except that the investment of each individual physician
shall not exceed $25,000. + }
{ - (15) - } { + (16) + } Any other security exempted by
rule of the director.
SECTION 2. ORS 59.015 is amended to read:
59.015. As used in the Oregon Securities Law, unless the
context otherwise requires:
(1) 'Broker-dealer' means a person who engages, all or part of
the time, in effecting transactions in securities for the account
of others or for the person's own account. ' Broker-dealer' does
not include:
(a) An issuer effecting sales in its own securities;
(b) The following institutions:
(A) A banking institution, as defined in ORS 706.005; a
national bank, as defined in ORS 706.005; an extranational
institution, as defined in ORS 706.005 authorized to carry on a
banking or trust business in this state; a foreign institution,
as defined in ORS 706.005 authorized to carry on a banking or
trust business in this state; a federal association, as defined
in ORS 722.004; a savings association, as defined in ORS 722.004
authorized to carry on business in this state; or
(B) A bank holding company, as defined in the federal Bank
Holding Company Act of 1956 as amended, 12 U.S.C. sections
1841-1850 (1982), holding an institution described in
subparagraph (A) of this paragraph; a savings and loan holding
company as defined in section 408 of the National Housing Act, 12
U.S.C. section 1730a, holding an association described in
subparagraph (A) of this paragraph; a credit union, as defined in
ORS 723.006; a federally chartered credit union; the subsidiaries
and affiliates of the bank holding company, savings and loan
holding company, credit union or federally chartered credit
union; or subsidiaries and affiliates of institutions described
in subparagraph (A) of this paragraph, if the appropriate
statutory regulatory authority is exercising control over, or is
regulating or supervising the person in the sale of securities in
accord with the purposes of the Oregon Securities Law;
(c) A person who has no place of business in this state
effecting transactions in this state exclusively with
broker-dealers;
(d) A person effecting sales exempted by ORS 59.035;
(e) A salesperson, as defined in this section;
(f) A person effecting sales of securities owned by the person
registered for sale pursuant to ORS 59.065;
(g) A person effecting sales of securities exempted by ORS
59.025 (7);
(h) A person licensed as a mortgage banker or a mortgage broker
under ORS 41.580, 59.015, 59.115, 59.127, 59.165 to 59.235,
59.265, 59.840 to 59.960, 59.992, 59.996, 166.715, 646.605,
647.010, 697.025 and 705.165 when effecting sales of securities
involving real estate paper registered for sale pursuant to ORS
59.065; or
(i) A person designated by rule or order by the director.
(2) 'Control' means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
(3) 'Director' means the Director of the Department of Consumer
and Business Services.
(4) 'Fraud,' 'deceit' and 'defraud' are not limited to
common-law deceit.
(5) 'Guaranteed' means guaranteed as to payment of principal,
interest or dividends.
(6)(a) 'Investment adviser' means a person who, for
compensation:
(A) Engages, all or part of the time of the person, in this
state, in the business of advising others, either directly or by
mail or through publication or writing, as to the value of
securities or as to the advisability of investing in, purchasing
or selling securities;
(B) Engages, all or part of the time of the person, in this
state, in the business of managing an investment or trading
account in securities for other persons; or
(C) As part of a regular business, issues or promulgates, in
this state, analyses or reports concerning securities.
(b) 'Investment adviser' does not include:
(A) An institution or organization described in subsection
(1)(b) of this section;
(B) A person giving investment advice in isolated instances
only, if such person does not purport to be in any manner in the
business of an investment adviser, counselor or manager in this
state;
(C) A licensed broker-dealer whose performance of these
services is solely incidental to the conduct of business as a
broker-dealer and who receives no special compensation for such
services;
(D) A salesperson licensed to a broker-dealer, whose
performance of these services is solely incidental to that
person's activities as a salesperson and who receives no special
compensation for such services;
(E) A publisher of or contributor to a bona fide newspaper,
news magazine, investment manual or service or business or
financial publication of general, regular and paid circulation;
(F) A person whose only clients are investment advisers,
broker-dealers, mortgage bankers, mortgage brokers, banks,
savings institutions or trust companies, insurance companies,
investment companies as defined in the Investment Company Act of
1940, as amended, pension or profit-sharing trusts, or other
financial institutions or institutional buyers, whether acting
for themselves or as trustees;
(G) A duly licensed lawyer, engineer or accountant whose
performance of these services is solely incidental to the
practice of the profession;
(H) A person whose advice, analyses or reports relate only to
securities exempted by ORS 59.025 (1); or
(I) Such other persons as the director may by rule or order
designate.
(7) 'Issuer' means a person who issues, proposes to issue or
has issued a security and includes an issuer to be formed. With
respect to certificates of deposit, voting-trust certificates or
collateral-trust certificates, or with respect to certificates of
interest or shares in an unincorporated investment trust not
having a board of directors or persons performing similar
functions or of the fixed, restricted management or unit type,
the ' issuer' is the person or persons performing the acts and
assuming the duties of depositor or manager pursuant to the
provisions of the trust or other instrument or agreement under
which the security is issued.
(8) 'License' means a license issued to a broker-dealer,
investment adviser or salesperson under the Oregon Securities
Law.
(9) 'Mortgage banker' means a mortgage banker as defined in ORS
59.840.
(10) 'Mortgage broker' means a mortgage broker as defined in
ORS 59.840.
(11) 'Offer' or 'offer to sell' includes every attempt or offer
to dispose of, or solicitation of an offer to buy, a security or
interest in a security for value. Every sale or offer of a
warrant or right to purchase or subscribe to another security of
the same or another issuer, as well as every sale or offer of a
security which gives the holder a present or future right or
privilege to convert into another security of the same or another
issuer, is considered to include an offer of the other security.
(12) 'Person' includes an individual, a joint venture, a
partnership, a cooperative, an association, a joint stock
company, a corporation, a trust, an unincorporated organization
or a government or political subdivision of a government.
(13) 'Real estate paper' means any obligation secured or
purportedly secured by an interest in real property. Real estate
paper includes, but is not limited to, mortgage-backed
securities, collateralized mortgage obligations, and real estate
mortgage investment conduits.
(14) 'Registered' means registered as provided in the Oregon
Securities Law.
(15)(a) 'Sale' or 'sell' includes every contract of sale of,
contract to sell, or disposition of, a security or interest in a
security for value. Any security given or delivered with, or as a
bonus on account of, a purchase of securities or any other thing
shall constitute a part of the subject of the purchase and shall
have been offered and sold for value. A gift of assessable stock
by or for any issuer or promoter shall constitute a sale.
(b) 'Sale' and 'sell' do not include:
(A) A bona fide pledge or loan of securities;
(B) A bona fide security dividend, whether the corporation
distributing the dividend is the issuer of the security or not,
if nothing of value is given by the recipients for the dividend
other than payments in connection with the elimination of
fractional shares; or
(C) An act incident to a judicially approved reorganization in
which a security is issued in exchange for one or more
outstanding securities, claims or property interests, or partly
in such exchange and partly for cash.
(16)(a) 'Salesperson' means:
(A) A person, other than a broker-dealer, who represents or
purports to represent a broker-dealer, issuer or owner of
securities in effecting or attempting to effect in any manner
transactions in securities.
(B) A person, other than an investment adviser, who represents
or purports to represent an investment adviser in doing any of
the acts enumerated in subsection (6) of this section.
(C) A person, other than a person licensed as a mortgage banker
or mortgage broker under ORS 41.580, 59.015, 59.115, 59.127,
59.165 to 59.235, 59.265, 59.840 to 59.960, 59.992, 59.996,
166.715, 646.605, 647.010, 697.025 and 705.165, who represents or
purports to represent the issuer, owner, or mortgage banker or
mortgage broker licensed under ORS 41.580, 59.015, 59.115,
59.127, 59.165 to 59.235, 59.265, 59.840 to 59.960, 59.992,
59.996, 166.715, 646.605, 647.010, 697.025 and 705.165, in
effecting sales of securities or involving real estate paper
registered for sale pursuant to ORS 59.065.
(b) 'Salesperson' does not include:
(A) Except as provided in ORS 59.025 (14)(b) and { - (15) - }
{ + (16) + }, a person who represents an issuer in effecting
sales in a security exempted by ORS 59.025;
(B) A person who represents an issuer in effecting sales
exempted by ORS 59.035;
(C) A person who represents an issuer in effecting sales with
existing partners or directors of the issuer, if no commission or
other remuneration is paid or given directly or indirectly for
soliciting any person in this state;
(D) An employee of an institution or organization described in
subsection (1)(b) of this section to the extent the employee is
not a dual employee of the institution and a broker-dealer; or
(E) A person designated by rule or order by the director.
(c) A person who is a partner, director or officer of a
broker-dealer, investment adviser, issuer or owner of securities,
or a person who occupies a similar status or performing similar
functions, is a 'salesperson' only if the person otherwise comes
within this definition.
(17)(a) 'Security' means a note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in a pension plan or profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security,
certificate of interest or participation in an oil, gas, or
mining title or lease or in payments out of production under such
title or lease, real estate paper sold by a broker-dealer,
mortgage banker, mortgage broker or a person described in
subsection (1)(b) of this section to persons other than persons
enumerated in ORS 59.035 (4), or, in general, any interest or
instrument commonly known as a 'security,' or any certificate of
interest or participation in, temporary or interim certificates
for, receipt for, guarantee of, or warrant or right to subscribe
to or purchase any of the foregoing.
(b) 'Security' does not include:
(A) An insurance or endowment policy or annuity contract under
which an insurance company promises to pay a fixed or variable
sum of money either in a lump sum or periodically for life or
some other specified period;
(B) A beneficial interest in a voluntary inter vivos trust
unless the trust is created solely for the purpose of voting or
is part of an attempt to evade the provisions of ORS 59.005 to
59.370; or
(C) A beneficial interest in a testamentary trust.
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