Chapter 785 Oregon Laws 2003

AN ACT

HB 3656

Relating to fees; creating new provisions; amending ORS 56.041, 56.140, 59.049, 59.065, 59.070, 59.165 and 59.175; prescribing an effective date; and providing for revenue raising that requires approval by a three-fifths majority.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 59.049 is amended to read:

59.049. Federal covered securities may be offered and sold in this state without registration, subject to the following:

(1) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(2) of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the Director of the Department of Consumer and Business Services. In lieu of the notice, an issuer may file a copy of its registration statement as filed with the Securities and Exchange Commission together with fees required under this subsection. The form of notice shall be prescribed by the director. [The required fee shall be $350 for all investment companies other than unit investment trusts, or $150 for unit investment trusts.] The director shall set the amount of the fee by rule. The fee [shall not be] is not refundable. The effective date of the notice [shall be] is the later of the date the notice is received by the director or the date specified by the filer of the notice.

(2) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(3) or (4), other than section 18(b)(4)(D), of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the director. The form of notice shall be prescribed by the director. [The required fee shall be equal to $1] The director shall set the fee by rule in an amount per $1,000 of the aggregate price of the securities which are to be offered in this state [on the first $100,000 or fraction thereof, 50 cents per $1,000 on the next $200,000 or fraction thereof and $25 per $100,000 for each additional $100,000 or fraction thereof, but in no case shall the fee be less than $25 or more than $500]. The fee [shall not be] is not refundable. The effective date of the notice [shall be] is the later of the date the notice is received by the director or the date specified by the filer of the notice.

(3) Unless otherwise exempt from registration under ORS 59.025 or 59.035, any federal covered security that is subject to section 18(b)(4)(D) of the Securities Act of 1933, as amended, may be offered and sold only upon a filing of a notice with, and the payment of the required fee to, the director, not later than 15 days after the first sale of such federal covered security in this state. The notice shall be filed on Securities and Exchange Commission Form D or on a form of notice prescribed by the director. [The required fee shall be equal to $1] The director shall set the fee by rule in an amount per $1,000 of the aggregate price of the securities which are to be offered in this state [on the first $100,000 or fraction thereof, 50 cents per $1,000 on the next $200,000 or fraction thereof and $25 per $100,000 for each additional $100,000 or fraction thereof, but in no case shall the fee be less than $25 or more than $500]. The fee [shall not be] is not refundable. The effective date of the notice [shall be] is the later of the date the notice is received by the director or the date specified by the filer of the notice.

(4)(a) The director shall set the fees described in subsections (1) to (3) of this section in an amount that the director determines is equal as nearly as possible to the national midpoint for similar fees charged by all other state regulatory agencies within the United States responsible for regulating securities.

(b) The director may adjust the amount of a fee described in subsections (1) to (3) of this section every two years to reflect changes in the national midpoint for a similar fee.

(c) In determining the national midpoint for similar fees under this section, the director may consider national midpoints determined by the North American Securities Administrators Association, the National Association of Securities Dealers or the United States Securities and Exchange Commission.

[(4)] (5) The director may issue an order suspending the offer and sale of a federal covered security if the director finds that there is a failure to comply with any requirement under this section.

[(5) Notwithstanding the provisions of this section, until October 10, 1999, the director may require the registration of any federal covered security for which the fees required by this section have not been promptly paid following written notification from the director to the issuer of the nonpayment or underpayment of such fees. An issuer shall be considered to have promptly paid the fees if they are remitted to the director within 15 days following the delivery of written notification by the director.]

(6)(a) The filer of a notice under subsections (1) to (3) of this section shall amend the notice when there is a change in the name of the offering or, in the case of offerings for which notice is filed pursuant to subsection (2) or (3) of this section, when there is an increase in the aggregate price of the securities which are to be offered in this state. There is no fee required for an amendment that does not increase the aggregate offering amount. Notices amending the aggregate offering amount shall include [fees] the fee calculated in accordance with subsection (2) or (3) of this section, less amounts previously paid under the prior notice filing, but [in no event shall] the fee may not be less than [$25] $100. The fee [shall not be] is not refundable.

(b) If an issuer or person sells federal covered securities in this state for a price in excess of the aggregate price for which fees were initially paid under this section, the seller shall pay a fee of three times the difference between the initial fee paid and the fee required under this section for the federal covered securities sold in this state. [However,] The additional fee [shall] may not be less than [$25] $100. The fee [shall not be] is not refundable.

(7) The director, by rule or otherwise, may waive any or all of the provisions of this section.

SECTION 2. ORS 59.065 is amended to read:

59.065. (1) The Director of the Department of Consumer and Business Services by rule shall establish procedures for registering securities. The director may coordinate registration in this state with any federal securities Act or national registration system.

(2)[(a) Except as provided in paragraph (b) of this subsection,] Every registration application submitted shall be accompanied by a fee. The director shall set the fee by rule in an amount [of $1] per $1,000 of the aggregate price of the securities which are to be offered in this state [on the first $100,000 or fraction thereof, and 50 cents per $1,000 on the next $200,000 or fraction thereof and $25 per $100,000 for each additional $100,000 or fraction thereof, but in no case shall the fee be less than $25 nor more than $500]. The fee is not refundable.

[(b) Every registration application submitted pursuant to the provisions of ORS 59.049 (5) shall be accompanied by a fee equal to three times the amount of the fee otherwise required by ORS 59.049 (1), (2) or (3).]

(3)(a) The director shall set the fee described in subsection (2) of this section in an amount that the director determines is equal as nearly as possible to the national midpoint for similar fees charged by all other state regulatory agencies within the United States responsible for regulating securities.

(b) The director may adjust the amount of the fee described in subsection (2) of this section every two years to reflect changes in the national midpoint for a similar fee.

[(3)] (4) If a registrant sells securities in Oregon in excess of the quantity registered or for a price in excess of the aggregate price for which fees were initially paid, the registrant may obtain registration of the excess securities by paying three times the difference between the initial fee paid and the fee required under subsection (2) of this section for the securities sold in Oregon. [However,] The additional fee [shall] may not be less than [$25] $100. Registration of the excess securities shall be effective retroactively to the date of sale.

SECTION 3. ORS 59.070 is amended to read:

59.070. (1) A registrant under ORS 59.065 shall amend the registration application submitted under ORS 59.065 when there are material changes in the terms and conditions of the original registration. [This shall include] “Material changes in the terms and conditions of the original registration” includes an increase in the aggregate amount of securities to be offered in Oregon, change in the type of securities or change in the identity of the issuer or owner.

(2) Applications for an amendment to increase the aggregate amount of securities to be offered in Oregon shall include [fees] the fee calculated in accordance with ORS 59.065 (2), less amounts previously paid under the prior registration. [but in no event shall] The fee may not be less than [$25] $100.

(3) [Nothing in this section shall] This section does not relieve a registrant from the obligation to notify the director concerning material changes in facts and circumstances concerning the offering.

SECTION 4. ORS 59.175 is amended to read:

59.175. (1) The Director of the Department of Consumer and Business Services by rule shall establish procedures for notice filings required of federal covered investment advisers as well as procedures for licensing broker-dealers, state investment advisers, investment adviser representatives and salespersons. The director may coordinate notice filings or licensing with any national registration, licensing or notice filing system.

(2) The director may require an applicant for a license as a broker-dealer[,] or state investment adviser [or federal covered investment adviser for whom a license is required under ORS 59.165 (8)], including the applicant’s partners, directors, officers or any person occupying a similar status or performing similar functions, and any person directly or indirectly controlling such applicant and a person for whom application for a license as a salesperson or investment adviser representative is made, to pass an examination on such person’s knowledge and understanding of the Oregon Securities Law and the securities business. The director may establish by rule a fee for the examination.

(3) The director may make such further examination of the applicant and the applicant’s affairs as the director deems advisable and may require by rule or order that the applicant publish an announcement of the application in such manner as the director may specify.

(4)(a) Except as otherwise provided in paragraph (b) or (c) of this subsection, every applicant for a license as a broker-dealer or state investment adviser shall file with the director a corporate surety bond or irrevocable letter of credit issued by an insured institution as defined in ORS 706.008 or such other security as the director may approve by rule running to the State of Oregon in a sum to be established by rule of the director, but in no event more than $100,000.

(b) Licensed broker-dealers subject to section 15 of the Securities Exchange Act of 1934, as amended, are not required to comply with paragraph (a) of this subsection, nor are such licensed broker-dealers required to comply with any net capital requirements imposed by the director by rule or otherwise.

(c) A licensed state investment adviser who has its principal place of business in a state other than this state shall be exempt from the requirements of paragraph (a) of this subsection and shall be further exempt from any net capital requirements imposed by the director by rule or otherwise, provided that any such licensed state investment adviser is registered or licensed as a state investment adviser in the state where it maintains its principal place of business and is in compliance with such state’s bonding or net capital requirements.

(5)(a) Subject to paragraph (b) of this subsection, if the application, surety bond, irrevocable letter of credit or other security and fees are in order and the director is satisfied that the application should not be denied upon one or more of the grounds specified in ORS 59.205 to 59.225, the director shall license the broker-dealer, state investment adviser, salesperson or investment adviser representative.

(b) If the director determines under ORS 59.205 or 59.215 that a condition or restriction should apply to the license, the director, at the time the license is issued, shall specify in writing to the licensee the condition or restriction applicable to the license.

(6) A licensee under ORS 59.165 shall amend the license application when there are material changes in the information contained in the original application.

(7) An applicant for or a person holding a license issued under ORS 59.005 to 59.451 may file with the director a trade name, as defined in ORS 647.005, or an assumed business name, as defined in ORS 648.005. The trade name or assumed business name shall be filed in a form and manner established by rule by the director. If the application is complete and the fee [set forth] described in subsection (8) of this section is paid, the director shall issue an order authorizing the licensee to operate under the trade name or assumed business name. The order shall remain in effect until canceled, suspended or revoked.

(8) The director shall charge and collect fees for:

(a) An application for a license as a broker-dealer or state investment adviser[, a fee of $100];

(b) An application to renew a license as a broker-dealer or state investment adviser[, a fee of $50];

(d) An application to renew a license as a salesperson[, a fee of $15];

(e) An application for a license as an investment adviser representative[, a fee of $15];

(f) An application to renew a license as an investment adviser representative[, a fee of $15];

(g) A notice filing for a federal covered investment adviser[, a fee of $100];

(h) A notice filing renewal for a federal covered investment adviser[, a fee of $50]; and

(i) A filing for use of a trade name or an assumed business name[, a fee of $50].

(9)(a) The director shall set the fees described in subsection (8) of this section in an amount that the director determines is equal as nearly as possible to the national midpoint for similar fees charged by all other state regulatory agencies within the United States responsible for regulating securities.

(b) The director may adjust the amount of a fee described in subsection (8) of this section every two years to reflect changes in the national midpoint for a similar fee.

[(9)] (10) Except as provided in this subsection, the fees under this section are not refundable. The director may provide for a method of equitably adjusting the payment of fees for broker-dealers, federal covered investment advisers, state investment advisers, salespersons and investment adviser representatives when the director determines that the changes in filing periods and expiration dates under ORS 59.185 are not equitable for the person making the payment.

SECTION 5. ORS 59.165 is amended to read:

59.165. (1) It is unlawful for any person to transact business in this state as a broker-dealer or salesperson unless the person is licensed under the Oregon Securities Law.

(2) [No] A broker-dealer or state investment adviser [shall] may not be licensed in this state unless the broker-dealer or state investment adviser has at least one salesperson licensed in this state.

(3) It is unlawful for a broker-dealer, state investment adviser, mortgage banker, mortgage broker or issuer or owner of securities to employ a salesperson or investment adviser representative to act in this state unless the salesperson or investment adviser representative is licensed under the Oregon Securities Law to the broker-dealer, state investment adviser, mortgage banker, mortgage broker or issuer or owner of securities. Only a natural person may be licensed as a salesperson or investment adviser representative.

(4) It is unlawful for a federal covered investment adviser to employ an investment adviser representative who has a place of business in this state to act in this state unless the investment adviser representative is licensed under the Oregon Securities Law to the federal covered investment adviser. Only a natural person may be licensed as an investment adviser representative.

(5) [No person] A person may not be licensed as:

(a) [May be licensed as] A salesperson or investment adviser representative for more than one broker-dealer, federal covered investment adviser, state investment adviser, mortgage banker, mortgage broker, issuer or owner of securities at the same time, except as may be allowed by rule or order of the Director of the Department of Consumer and Business Services.

(b) [May be licensed as] A salesperson or investment adviser representative unless the person is employed by a broker-dealer, federal covered investment adviser, state investment adviser, mortgage banker, mortgage broker, or issuer or owner of securities.

(6) It is unlawful for any person to transact business in this state as a state investment adviser unless the person:

(a) Is licensed as such under the Oregon Securities Law; or

(b) Is licensed as a broker-dealer without the imposition of a condition under ORS 59.215 (4).

(7) Except for federal covered investment advisers whose activities are described by ORS 59.015 (20)(b) and licensed broker-dealers transacting business as federal covered investment advisers in this state, it is unlawful for any federal covered investment adviser to conduct an advisory business in this state unless such person makes notice filings with the director of such documents filed with the Securities and Exchange Commission as the director may by rule or otherwise require and pays the fee, including the notice filing fee, [specified] described in ORS 59.175. The director may issue an order suspending the conduct of an investment advisory business in this state if the director finds that there is a failure to comply with any requirement under this section.

[(8)(a) Notwithstanding any other provision of this section, until October 10, 1999, the director may require the licensing as a state investment adviser of any person, otherwise meeting the definition of federal covered investment adviser, who has failed to promptly pay the fees required by ORS 59.175 (8)(g) and (h) after being notified in writing by the director of the nonpayment or underpayment of such fees. A person shall be considered to have promptly paid such fees if the fees are remitted to the director within 15 days following the delivery of written notification by the director.]

[(b) It is unlawful for any federal covered investment adviser to conduct an investment advisory business in this state if such person fails to obtain the license required by the director under paragraph (a) of this subsection.]

[(9)] (8) Notwithstanding any other provision of this section, an individual performing the activities of an investment adviser representative and who would otherwise be required to be licensed as an investment adviser representative [shall not be] is not required to be separately licensed as an investment adviser representative if:

(a) The individual is licensed to a licensed broker-dealer, the broker-dealer is transacting business as a federal covered investment adviser or a state investment adviser under the provisions of subsection (6)(b) of this section and the person is performing investment adviser activities on behalf of the broker-dealer; or

(b) The individual is licensed to a licensed broker-dealer and the broker-dealer directly receives all compensation otherwise earned by the person in connection with the investment advisory activities being transacted in this state. The broker-dealer may or may not further distribute any or all compensation received to the licensed salesperson.

SECTION 6. ORS 56.140 is amended to read:

56.140. (1) The Secretary of State shall collect a nonrefundable fee of [$20] $50 for each document delivered for filing to the Secretary of State as part of the secretary’s business registry functions described in ORS 56.022.

(2) The Secretary of State by rule may establish fees, in addition to those provided for in subsection (1) of this section, for:

(a) Copying any public record maintained by the secretary and relating to the secretary’s business registry functions, and for certifying the copy; and

(b) Certifying to other facts of record, including certificates of existence, relating to the secretary’s business registry functions.

(3) The Secretary of State shall collect a nonrefundable fee of $20 each time process is served on the Secretary of State and the process relates to the secretary’s business registry functions.

(4) The Secretary of State may waive collection of any fee, charge or interest, or portion of a fee, charge or interest, that is collectible by the Secretary of State as part of the secretary’s business registry functions.

(5) The Secretary of State by rule shall establish and collect reasonable fees for the following services relating to the secretary’s business registry functions:

(a) Computer generated lists on [paper and] electronic data processing media.

(b) Terminal access to the files of the office.

(d) Microfilm processing and development services.

(e) Copies of the programs and files on paper or electronic data processing media.

SECTION 7. ORS 56.041 is amended to read:

56.041. (1) The Operating Account is established in the General Fund of the State Treasury.

(2) The net amount accruing to the Secretary of State from all fees, charges, interest, fines, penalties and miscellaneous revenues from all sources relating to business registry functions, and moneys received by the Secretary of State under ORS chapters 79 and 194 and ORS 80.100 to 80.130, 87.246, 87.767 and 87.806 to 87.831 shall, after deduction of refunds, be paid over to the State Treasurer and deposited at least monthly in the Operating Account.

(3) Moneys deposited to the credit of the Operating Account are continuously appropriated for the expenses of carrying out the functions and duties of the Secretary of State relating to business registry, and the functions and duties of the Secretary of State under ORS chapters 79 and 194 and ORS 80.100 to 80.130, 87.246, 87.767 and 87.806 to 87.831.

(4) At the end of each month:

(a) The Secretary of State shall determine for that month the number of business registry filings for which the Secretary of State collected the fee described in ORS 56.140; and

(b) An amount equal to $30 for each business registry filing described in paragraph (a) of this subsection shall be transferred to the General Fund and shall become available for general governmental expenses.

(5) As of July 1 of each year, any unexpended and unobligated balance in the Operating Account that is in excess of the amount that is necessary to administer the functions and duties of the Secretary of State as described in subsection (3) of this section for two months, as certified by the Secretary of State, shall be transferred to the General Fund and shall become available for general governmental expenses.

SECTION 8. (1) The amendments to ORS 59.049 by section 1 of this 2003 Act apply to notice filings made on or after the effective date of this 2003 Act.

(2) The amendments to ORS 59.065 and 59.070 by sections 2 and 3 of this 2003 Act apply to registration applications and registration amendment applications submitted on or after the effective date of this 2003 Act.

(3) The amendments to ORS 59.165 and 59.175 by sections 4 and 5 of this 2003 Act apply to applications or filings made on or after the effective date of this 2003 Act.

(4) The amendments to ORS 56.140 by section 6 of this 2003 Act apply to:

(a) Documents, other than renewal documents, first delivered for filing to the Secretary of State on or after the operative date of the amendments to ORS 56.140 by section 6 of this 2003 Act; and

(b) Documents delivered for filing to the Secretary of State for renewal purposes on or after the operative date of the amendments to ORS 56.140 by section 6 of this 2003 Act, when the anniversary date for renewal occurs on or after the operative date of the amendments to ORS 56.140 by section 6 of this 2003 Act.

(5) The amendments to ORS 56.041 by section 7 of this 2003 Act apply to amounts deposited in the Operating Account on and after the operative date of the amendments to ORS 56.041 by section 7 of this 2003 Act.

SECTION 9. (1) The amendments to ORS 56.041 and 56.140 by sections 6 and 7 of this 2003 Act become operative on January 1, 2004.

(2) The Secretary of State and the State Treasurer may take any action before the operative date of the amendments to ORS 56.041 and 56.140 by sections 6 and 7 of this 2003 Act that is necessary to enable the secretary and the treasurer to exercise, on and after the operative date of the amendments to ORS 56.041 and 56.140 by sections 6 and 7 of this 2003 Act, all the duties, functions and powers conferred upon the secretary and the treasurer by the amendments to ORS 56.041 and 56.140 by sections 6 and 7 of this 2003 Act.

SECTION 10. This 2003 Act takes effect on the 91st day after the date on which the regular session of the Seventy-second Legislative Assembly adjourns sine die.

Approved by the Governor September 17, 2003

Filed in the office of Secretary of State September 18, 2003

Effective date November 26, 2003

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