Senate Bill No. 408

Senate Bill No. 408-Committee on Judiciary

CHAPTER

195

AN ACT relating to securities; defining "commission" for the purpose of determining exemptions from the requirements for licensure and registration; providing a waiver from the examination for licensure as a sales representative or broker-dealer for certain officers and directors of persons who issue securities; and providing other matters properly relating thereto.

[Approved June 26, 1997]

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Chapter 90 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 and 3 of this act.
Sec. 2. 1. "Commission" means:
(a) Any payment of cash, securities or goods for offering to sell or selling a security; or
(b) A promise or commitment to provide any payment of cash, securities or goods in the future for offering to sell or selling a security.
2. The term does not include:
(a) A commission paid to a real estate broker solely for services relating to the sale, purchase, rental or lease of real estate if the commission is commensurate with fees paid in the community for similar services.
(b) Any payment made to an attorney or accountant for any advice or recommendation relating to the purchase, sale or other transfer of securities that is given to a client with whom the attorney or accountant has a professional relationship if the payment and the interest of the attorney or accountant in the transaction or in the issuer or an affiliate of the issuer are disclosed in writing to the client before the sale or transfer of the securities.
Sec. 3. 1. The administrator shall grant to a bona fide officer or director of an issuer a waiver from the examination required for licensure as a sales representative or broker-dealer if:
(a) The securities of the issuer:
(1) Are registered under the Securities Exchange Act of 1934; or
(2) Comply with the requirements of Regulation D of the Securities and Exchange Commission, 17 C.F.R. §§ 230.501 to 230.506, inclusive, except for 17 C.F.R. § 230.504, and are exempt from registration by regulation of the administrator;
(b) The officer or director does not receive a commission or other compensation for the sale of the issuer's securities; and
(c) The officer or director files with the administrator an affidavit which states that he:
(1) Is an officer or director of the issuer;
(2) Will not be receiving a commission or other compensation for the sale of the issuer's securities;
(3) Understands that the waiver applies only to the sale of the issuer's securities; and
(4) Agrees to provide to prospective purchasers of the issuer's securities such pamphlets, circulars, literature or other information as may be required by regulation or order of the administrator.
2. If the officer or director sells or offers to sell any securities other than the securities of the issuer, he must pass the examination for licensure as a sales representative or broker-dealer unless the examination is otherwise waived by the administrator pursuant to NRS 90.370.
Sec. 4. NRS 90.211 is hereby amended to read as follows:
90.211 As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 90.215 to 90.305, inclusive, and section 2 of this act, have the meanings ascribed to them in those sections.
Sec. 5. NRS 90.370 is hereby amended to read as follows:
90.370 1. [The] Except as otherwise provided in section 3 of this act, the administrator by regulation or order may require an examination of an applicant applying for licensing under this chapter, a class of applicants, or a class of persons who will represent an investment adviser in performing an act that requires licensing as an investment adviser in this state.
2. Any examination required must be administered by the administrator or his designee. Examinations may be oral or written, or both, and may differ for each class of applicants.
3. The administrator by order may waive any [examination] requirement for examination imposed pursuant to subsection 1 as to any person or class of persons if he determines that an examination is not necessary for the protection of investors by reason of the training and experience of the applicant or class of applicants.
Sec. 6. NRS 90.520 is hereby amended to read as follows:
90.5201. As used in this section:
(a) "Guaranteed" means guaranteed as to payment of all or substantially all of principal and interest or dividends.
(b) "Insured" means insured as to payment of all or substantially all of principal and interest or dividends.
2. Except as otherwise provided in subsections 4 and 5, the following securities are exempt from NRS 90.460 and 90.560:
(a) A security, including a revenue obligation, issued, insured or guaranteed by the United States, an agency or corporate or other instrumentality of the United States, an international agency or corporate or other instrumentality of which the United States and one or more foreign governments are members, a state, a political subdivision of a state, or an agency or corporate or other instrumentality of one or more states or their political subdivisions, or a certificate of deposit for any of the foregoing, but this exemption does not include a security payable solely from revenues to be received from an enterprise unless the:
(1) Payments are insured or guaranteed by the United States, an agency or corporate or other instrumentality of the United States, an international agency or corporate or other instrumentality of which the United States and one or more foreign governments are members, a state, a political subdivision of a state, or an agency or corporate or other instrumentality of one or more states or their political subdivisions, or by a person whose securities are exempt from registration under paragraphs (b) to (e), inclusive, or (g), or the revenues from which the payments are to be made are a direct obligation of such a person;
(2) Security is issued by this state or an agency, instrumentality or political subdivision of this state; or
(3) Payments are insured or guaranteed by a person who, within the 12 months next preceding the date on which the securities are issued, has received a rating within one of the top four rating categories of either Moody's Investor Service, Inc., or Standard and Poor's Corporation.
(b) A security issued, insured or guaranteed by Canada, a Canadian province or territory, a political subdivision of Canada or of a Canadian province or territory, an agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government or governmental combination or entity with which the United States maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer, insurer or guarantor.
(c) A security issued by and representing an interest in or a direct obligation of a depository institution if the deposit or share accounts of the depository institution are insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund or a successor to an applicable agency authorized by federal law.
(d) A security issued by and representing an interest in or a direct obligation of, or insured or guaranteed by, an insurance company organized under the laws of any state and authorized to do business in this state.
(e) A security issued or guaranteed by a railroad, other common carrier, public utility or holding company that is:
(1) Subject to the jurisdiction of the Interstate Commerce Commission;
(2) A registered holding company under the Public Utility Holding Company Act of 1935 or a subsidiary of a registered holding company within the meaning of that act;
(3) Regulated in respect to its rates and charges by a governmental authority of the United States or a state; or
(4) Regulated in respect to the issuance or guarantee of the security by a governmental authority of the United States, a state, Canada, or a Canadian province or territory.
(f) Equipment trust certificates in respect to equipment leased or conditionally sold to a person, if securities issued by the person would be exempt under this section.
(g) 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 other exchange designated by the administrator, any other security of the same issuer which is of senior or substantially equal rank, a security called for by subscription right or warrant so listed or approved, or a warrant or right to purchase or subscribe to any of the foregoing.
(h) A security designated or approved for designation upon issuance or notice of issuance for inclusion in the national market system by the National Association of Securities Dealers, Inc., any other security of the same issuer which is of senior or substantially equal rank, a security called for by subscription right or warrant so designated, or a warrant or a right to purchase or subscribe to any of the foregoing.
(i) An option issued by a clearing agency registered under the Securities Exchange Act of 1934, other than an off-exchange futures contract or substantially similar arrangement, if the security, currency, commodity, or other interest underlying the option is:
(1) Registered under NRS 90.470, 90.480 or 90.490;
(2) Exempt under this section; or
(3) Not otherwise required to be registered under this chapter.
(j) A security issued by a person organized and operated not for private profit but exclusively for a religious, educational, benevolent, charitable, fraternal, social, athletic or reformatory purpose, or as a chamber of commerce or trade or professional association if at least 10 days before the sale of the security the issuer has filed with the administrator a notice setting forth the material terms of the proposed sale and copies of any sales and advertising literature to be used and the administrator by order does not disallow the exemption within the next 5 full business days.
(k) A promissory note, draft, bill of exchange or banker's acceptance that evidences an obligation to pay cash within 9 months after the date of issuance, exclusive of days of grace, is issued in denominations of at least $50,000 and receives a rating in one of the three highest rating categories from a nationally recognized statistical rating organization, or a renewal of such an obligation that is likewise limited, or a guarantee of such an obligation or of a renewal.
(l) A security issued in connection with an employees' stock purchase, savings, option, profit-sharing, pension or similar employees' benefit plan.
(m) A membership or equity interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of any state if not traded to the public.
(n) A 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 if:
(1) The issuer is advised by an investment adviser that is a depository institution exempt from registration under the Investment Adviser Act of 1940 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 for at least 3 years next preceding an offer or sale of a security claimed to be exempt under this paragraph, and the issuer has acted, or is affiliated with an investment adviser that has acted, as investment adviser to one or more registered investment companies or unit investment trusts for at least 3 years next preceding an offer or sale of a security claimed to be exempt under this paragraph; or
(2) The issuer has a sponsor that has at all times throughout the 3 years before 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 $100,000,000.
3. For the purpose of paragraph (n) of subsection 2, an investment adviser is affiliated with another investment adviser if it controls, is controlled by, or is under common control with the other investment adviser.
4. The exemption provided by paragraph (n) of subsection 2 is available only if the person claiming the exemption files with the administrator a notice of intention to sell which sets forth the name and address of the issuer and the securities to be offered in this state and pays a fee of:
(a) Two hundred and fifty dollars for the initial claim of exemption and the same amount at the beginning of each fiscal year thereafter in which securities are to be offered in this state, in the case of an open-end management company; or
(b) One hundred and fifty dollars for the initial claim of exemption in the case of a unit investment trust.
5. An exemption provided by paragraph (c), (e) [to (i), inclusive,] , (f), (i) or (k) of subsection 2 is available only if, within the 12 months immediately preceding the use of the exemption, a notice of claim of exemption has been filed with the administrator and a nonrefundable fee of $150 has been paid.
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