Sec. A-2. 32 MRSA §10305, sub-§1, as amended by PL 1989, c. 542, §13, is further amended to read:

1. Consent to service of process. An applicant for licensing as a broker-dealer, sales representative or, investment adviser or investment adviser representative shall file with the administrator or the designee of the administrator an application for licensing, together with a consent to service of process pursuant to section 10704. The application for licensing must contain such information as the administrator determines, by rule, is necessary or appropriate to facilitate the administration of this Act.

Sec. A-3. 32 MRSA §10306, sub-§1, ¶B, as amended by PL 1991, c. 591, Pt. M, §1 and affected by §5, is further amended to read:

B. Sales representative, $40; and

Sec. A-4. 32 MRSA §10306, sub-§1, ¶C, as amended by PL 1993, c. 410, Pt. K, §3, is further amended to read:

C. Investment adviser, $200.; and

Sec. A-5. 32 MRSA §10306 , sub-§1, ¶D is enacted to read:

D.__Investment adviser representative, $40.

Sec. A-6. 32 MRSA §10306, sub-§2, ¶B, as amended by PL 1991, c. 591, Pt. M, §2 and affected by §5, is further amended to read:

B. Sales representative, $40; and

Sec. A-7. 32 MRSA §10306, sub-§2, ¶C, as amended by PL 1993, c. 410, Pt. K, §4, is further amended to read:

C. Investment adviser, $100.; and

Sec. A-8. 32 MRSA §10306 , sub-§2, ¶D is enacted to read:

D.__Investment adviser representative, $40.

Sec. A-9. 32 MRSA §10307, sub-§1, ¶C, as amended by PL 1997, c. 168, §12, is further amended to read:

C. Any class of employees of applicants for licensing as to whom the administrator determines that an examination requirement is necessary for the protection of investors; and

Sec. A-10. 32 MRSA §10307, sub-§1, ¶D, as amended by PL 1997, c. 168, §13, is repealed.

Sec. A-11. 32 MRSA §10501, sub-§8-A is enacted to read:

8-A.__Investment adviser representative.__"Investment adviser representative" means an individual employed by or associated with an investment adviser and who acts on behalf of an investment adviser in performing any of the following activities:

A.__Making recommendations or otherwise rendering advice regarding securities to clients;

B.__Managing client accounts or portfolios that include or may include securities;

C.__Determining, either individually or as a member of the investment advisor's investment committee, which recommendations or advice regarding securities should be given to clients;

D.__Soliciting, offering and negotiating for the sale of or selling investment advisory services; or

E.__Supervising employees in performing any of the activities described in this subsection.

Sec. A-12. Effective date. This Part takes effect January 1, 2002.

PART B

Sec. B-1. 32 MRSA §10502, sub-§2, ¶C, as amended by PL 1989, c. 542, §42, is repealed and the following enacted in its place:

C.__Any nonissuer transaction in a security that has been outstanding in the hands of the public for at least 90 days if at the time of the transaction:

(1)__The issuer of the security is:

(a)__Actually engaged in business;

(b)__Not in the organizational stage;

(c)__Not a development stage company, a blank check, blind pool or shell company, the primary plan of business of which is to engage in a merger or combination with, or an acquisition of, an unidentified person or persons; and

(d)__Not in bankruptcy or receivership;

(2)__A licensed agent of a licensed broker-dealer effects the transaction;

(3)__The security is sold at a price reasonably related to the current market price of the security;

(4)__The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, a broker-dealer as an underwriter of the security;

(5)__A nationally recognized securities manual designated by order of the administrator or a document filed with the United States Securities and Exchange Commission that is publicly available through the United States Securities and Exchange Commission's Electronic Data Gathering and Retrieval system contains:

(a)__A description of the issuer's business and operations;

(b)__The names of the issuer's officers and directors or, in the case of a non-United States issuer, the corporate equivalents of such persons in the issuer's country of domicile;

(c)__An audited balance sheet of the issuer as of a date within the last 18 months or, in the case of a reorganization or merger where the parties had audited balance sheets, a pro forma balance sheet; and

(d)__An audited income statement for each of the issuer's immediately preceding 2 fiscal years or for the issuer's period of existence if less than 2 years or, in the case of a reorganization or merger where the parties had audited income statements, a pro forma income statement; and

(6)__The issuer of the security has a class of equity securities listed on a national securities exchange

registered under the United States Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless:

(a)__The issuer of the security has been engaged in continuous business, including predecessors, for at least 3 years; or

(b)__The issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within the last 18 months or, in the case of a reorganization or merger where the parties had audited balance sheets, a pro forma balance sheet;

Sec. B-2. 32 MRSA §10502, sub-§2, ¶D, as amended by PL 1989, c. 542, §42, is further amended to read:

D. Any nonissuer transaction effected by or through a licensed broker-dealer pursuant to an unsolicited order or offer to buy; but the administrator, by rule, may require that the broker-dealer must make a good faith effort to have the customer acknowledge upon a specified form that the sale was unsolicited and that must preserve a signed copy of each such acknowledgment form be preserved by that broker-dealer for a specified period 6 years;

Sec. B-3. 32 MRSA §10502, sub-§2, ¶P, as enacted by PL 1985, c. 400, §2, is amended to read:

P. Any offer or sale of securities of a corporation, limited partnership or limited liability company organized under the laws of this State or any issuer determined by the administrator by order to have its principal executive office in this State, if the number of holders of securities of the corporation entity does not at the time of the sale, and will not in consequence of the sale, exceed 10 in number exclusive of persons specified in section 10501, subsection 4, and if the securities sold in reliance on this subsection have not been offered to the public by general advertisement or general solicitation;

Sec. B-4. 32 MRSA §10502, sub-§2, ¶Q, as amended by PL 1999, c. 279, §5, is further amended to read:

Q. Any offer or sale of securities of a corporation, limited partnership or limited liability company, organized under the laws of this State or any issuer determined by the

administrator by order to have its principal executive office in this State, if the number of holders of securities of the entity, exclusive of persons specified in section 10501, subsection 4, will in consequence of the sale exceed 10, but will not in consequence of the sale exceed 25 in number and if the securities sold in reliance on this subsection have not been offered to the public by general advertisement or general solicitation. Any person who relies on this exemption shall file with the administrator a notification for exemption that must be in such form as may be prescribed by the administrator and requires only the following information: The name, address and telephone number of the issuer; the state and date of incorporation of the issuer; the name, address and telephone number of persons who may respond to inquiries about the issuer; the location at which the books and records of the issuer are kept and whether they are available for inspection by shareholders; a description of all classes of securities of the issuer, including newly authorized classes of securities, providing the number of authorized units of each class, par value per unit and the number of units of each class as are issued and outstanding; a description of the class of securities offered for sale, including the number of units authorized, par value per unit, the number of units currently outstanding, the number of units being offered for sale, the number of units to be outstanding and the price at which each unit is offered for sale; a description of the rights of holders of the securities offered pursuant to this exemption, including voting rights and if cumulative or noncumulative liquidation rights, preemptive rights and any other rights or limitations applicable to the securities; the date the annual meeting of the shareholders is held, the location and time of the meeting, a description of how the shareholders are notified and if an annual financial statement and report of activity is available to shareholders; a brief description of how the proceeds of the offering will be used and whether proceeds will be returned to investors if minimum amounts are not raised by a specific date; a brief description of the issuer's plan of business and whether the business is currently operational; and a list of the significant risks assumed by the investor, including management experience, competitive and economic factors, net worth position of the issuer and improbable or limited opportunity for release of the securities. A copy of the notification of exemption must be made available provided to each offeree of securities sold in reliance on this exemption and must contain such legends as the administrator prescribes, notifying the offeree that the securities have not been registered with the administrator, that they may be considered restricted securities and that

the issuer is under an obligation to make a reasonable finding that the securities are a suitable investment for the offeree. The administrator may adopt such rules as are considered necessary to further define or implement this subsection consistent with the intent of this subsection;

SUMMARY

This bill amends the Revised Maine Securities Act in several respects.

Part A of the bill defines "investment adviser representative" and requires investment adviser representatives to be licensed in the same manner as investment advisers. The licensing of investment adviser representatives allows the State to participate in a national investment adviser representative database to track and regulate these individuals for the protection of the public.

Part B of the bill clarifies certain ambiguous language in the Revised Maine Securities Act. Part B updates a current securities exemption for companies where information about the company is publicly available through a nationally recognized securities manual. The exemption language proposed is model language recommended by the North American Securities Administrators Association. Part B updates the securities exemptions for certain domestic issuers so that they apply to limited partnerships and limited liability companies organized under the laws of this State or any issuer determined by the securities administrator to have its principal place of business in the State.