TITLE 7. BANKING AND SECURITIES
PART 7. STATE SECURITIES BOARD
CHAPTER 115. SECURITIES DEALERS AND AGENTS
7 TAC §115.20
The Texas State Securities Board adopts new §115.20, concerning Texas crowdfunding portal registration and activities of small business development entities, without changes to the proposed text as published in the February 19, 2016, issue of the Texas Register (41 TexReg 1192).
New §115.20 implements Section 44 of the Texas Securities Act, which was added by House Bill 1629 passed during the last legislative session. The bill permits an authorized small business development entity to register and operate a Texas crowdfunding portal ("Section 44 portal").
Section 44 portals are generally subject to the same conditions and requirements as other Texas crowdfunding portals with a few exceptions. As a registered Texas crowdfunding portal, an authorized small business development entity can facilitate the capital raising efforts of local small business issuers who want to utilize the Texas intrastate crowdfunding exemption.
An authorized small business development entity desiring to act as a Texas crowdfunding portal pursuant to Section 44 will be able to use a simplified registration process. To register as a Texas crowdfunding portal, an authorized small business development entity files new Form 133.20, which is being concurrently adopted.
A comment letter was received from texascrowdfundboard.com. The letter questioned what portal an issuer would use if it is located in an area where no authorized small business development entity has registered as a Texas crowdfunding portal pursuant to §115.20. The Staff responded that the issuer would need to use a portal registered under existing §115.19 as that rule does not have a similar restrictive geographic service area requirement relating to issuers other than the issuer must be a Texas entity. A Texas crowdfunding portal registered under §115.20 is not permitted to list offerings from issuers outside its service area because to do so would be in violation of Section 44 of the Texas Securities Act. The Board agreed with Staff and adopted the rule as published.
The new rule is adopted under Texas Civil Statutes, Articles 581-28-1 and 581-44. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 44 provides the Board with the authority to adopt rules to regulate and facilitate online intrastate crowdfunding by authorized small business development entities.
The new rule affects Texas Civil Statutes, Articles 581-12, 581-13, 581-14, 581-15, 581-18, and 581-44.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2016.
TRD-201602625
John Morgan
Securities Commissioner
State Securities Board
Effective date: June 14, 2016
Proposal publication date: February 19, 2016
For further information, please call: (512) 305-8301
CHAPTER 123. ADMINISTRATIVE GUIDELINES FOR REGISTRATION OF OPEN-END INVESTMENT COMPANIES
7 TAC §123.3
The Texas State Securities Board adopts an amendment to §123.3, concerning conditional exemption for money market funds, without changes to the proposed text as published in the February 19, 2016, issue of the Texas Register (41 TexReg 1195).
The amendment aligns the Texas rule for money market funds to the federal definition of money market fund in SEC Rule 2a-7 under the Investment Company Act of 1940. The federal rule was updated as part of the SEC's money market fund reforms enacted in July 2014 in Release IC-31166.
Money market funds meeting SEC Rule 2a-7 may continue to take advantage of the fee relief provided by the Texas rule.
A comment letter was received from the Investment Company Institute in support of the proposal. The letter noted that the revision is important to ensure that money market funds that are not in compliance with the SEC's rules cannot rely on Texas's conditional exemption. The Board agreed and adopted the rule as published.
The amendment is adopted under Texas Civil Statutes, Articles 581-5.T and 581-28-1. Section 5.T provides that the Board may prescribe new exemptions by rule. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The adopted amendment affects Texas Civil Statutes, Articles 581-5, 581 7, and 581-35.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2016.
TRD-201602628
John Morgan
Securities Commissioner
State Securities Board
Effective date: June 14, 2016
Proposal publication date: February 19, 2016
For further information, please call: (512) 305-8301
CHAPTER 133. FORMS
7 TAC §133.20
The Texas State Securities Board adopts new §133.20, which adopts by reference a form concerning Texas crowdfunding portal registration by an authorized small business development entity, without changes to the proposed text as published in the February 19, 2016, issue of the Texas Register (41 TexReg 1195). The form would be used by an authorized small business development entity to apply for and amend its registration as a Texas crowdfunding portal under new §115.20, which is being concurrently adopted.
As a registered Texas crowdfunding portal, an authorized small business development entity can facilitate the capital raising efforts of local small business issuers who want to utilize the Texas intrastate crowdfunding exemption.
Authorized small business development entities can use a simplified form to register and amend their registration as Texas crowdfunding portals.
No comments were received regarding adoption of the new rule.
The new rule is adopted under Texas Civil Statutes, Articles 581-28-1 and 581-44. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 44 provides the Board with the authority to adopt rules to regulate and facilitate online intrastate crowdfunding by authorized small business development entities.
The new rule affects Texas Civil Statutes, Articles 581-12, 581-13, 581-14, 581-15, 581-18, and 581-44.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2016.
TRD-201602643
John Morgan
Securities Commissioner
State Securities Board
Effective date: June 14, 2016
Proposal publication date: February 19, 2016
For further information, please call: (512) 305-8301
CHAPTER 139. EXEMPTIONS BY RULE OR ORDER
7 TAC §139.25
The Texas State Securities Board adopts an amendment to §139.25, concerning intrastate crowdfunding exemption, without changes to the proposed text as published in the February 19, 2016, issue of the Texas Register (41 TexReg 1196).
Subsection (l) of the intrastate crowdfunding exemption is being amended to implement new Section 44 of the Texas Securities Act.
The amendment to §139.25 and new §115.20, which is being concurrently adopted, permit certain small business development entities registered as Texas crowdfunding portals to have a financial interest in an issuer listed on its Internet website.
No comments were received regarding adoption of the amendment.
The amendment is adopted under Texas Civil Statutes, Articles 581-5.T, 581-12.C, 581-28-1, and 581-44. Section 5.T provides that the Board may prescribe new exemptions by rule. Section 12.C provides the Board with the authority to prescribe new dealer, agent, investment adviser, or investment adviser representative registration exemptions by rule. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 44 provides the Board with the authority to adopt rules to regulate and facilitate online intrastate crowdfunding by authorized small business development entities.
The adopted amendment affects Texas Civil Statutes, Articles 581-7, 581-12, 581-13, 581-14, 581-15, 581-18, and 581-44.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2016.
TRD-201602647
John Morgan
Securities Commissioner
State Securities Board
Effective date: June 14, 2016
Proposal publication date: February 19, 2016
For further information, please call: (512) 305-8301