BILL ANALYSIS                                                                                                                                                                                                    






Date of Hearing: July 12, 1995                               
                  SB 261

 SENATE COMMITTEE ON FINANCE, INVESTMENT, AND INTERNATIONAL  
                           TRADE
                     LUCY KILLEA, CHAIR

         SB 261 (Campbell) as amended July 3, 1995

Prior Action:  None

Fiscal Committee:  Yes

 Summary:  This bill exempts offers or sales of a security  
under a stock purchase or stock option plan that complies  
with the requirements of federal law, revises the  
provisions to exempt certain exchanges involved in a merger  
or sale of assets, provides for a minimum offering price of  
$2 per share of voting common stock, and preferred stock  
and imposes a fee for filing the notice of transactions  
relating to the offer or sales of securities.

Digest:

 Existing law:

     1.  Makes it unlawful to offer or sell a security  
unless it is qualified or exempt from the Department of  
Corporations qualification requirements; 

     2.  Exempts certain transactions from the  
qualification requirement applicable to offers or sales in  
an issuer transaction or in connection with certain  
reorganizations;

     3.  Exempts certain exchanges incident to a merger or  
sale of corporate assets from qualification requirements of  
federal law applicable to limited offers or certain  


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compensatory benefit plans:

     4.  Permits a security for which a registration  
statement has been filed under the federal Securities Act  
of 1933 in connection with the same offering to be  
qualified under a specified federal securities regulation.

     5.  Provides for the qualification of certain  
securities by permit.  Provides for the filing of a small  
company application for permit if it meets certain  
statutory requirements. These requirements include a  
minimum offering price of voting common stock of $5 per  
share and the submission of an application and disclosure  
document that has been reviewed and signed by each member  
of the board of directors.

     
     6.  Imposes various fees in connection with  
securities-related actions by the Commissioner of  
Corporations.

 This bill:

     1.  Additionally exempts offers and sales of a  
security under a stock purchase plan or stock option that  
complies with the requirements of federal law that is  
applicable to limited offer or certain compensatory benefit  
plans; 

     2.  Revises the provisions to exempt certain exchanges  
incident to a merger, consolidation, or sale of assets  
concerning the issuance of equity securities of another  
entity if certain requirements are met;

     3.  Provides that the term oregistration statemento  
include an offering statement as defined under federal  
securities regulation;



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     4.  Provides for  a minimum offering price of $2 per  
share of voting common stock, preferred stock, and the  
conversion of preferred stock into voting common stock;

     5.  Requires the application and disclosure document  
to be reviewed and signed by a majority of the members of  
the board of directors rather than each member;

     6. Imposes a fee for filing the notice of transactions  
under provisions related to the offer or sale of securities  
under limited offers or certain compensatory benefit plans.  
 This bill would increase the fee for filing a notice of an  
exchange incident to a merger, consolidation, or sale.
 

Comments:

     This bill seeks to make a number of amendments to the  
California Securities Law.  The supporters of this bill  
contend this is needed to increase options for capital  
access for small businesses.  The supporters claim this  
bill would simplify the private offering procedure and  
would bring California rules into conformity with those of  
other states and federal securities law while reducing the  
cost of compliance and permit more companies to access the  
private capital markets.  This bill provides for the  
following reforms to the California Securities Law:
          1.  An exemption from the qualification  
requirements of the                                     
California Securities Law for certain qualified employee  
stock purchase and stock option plans;

          2.  An exemption from the qualification  
requirements of the                                     
California Securities Law for certain mergers and  
reorganization based on the proposal originally set forth  
in Senate Bill 141 (Beverly);



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          3.  Elimination of the one class voting common  
stock restriction for certain small company applications  
under the California Securities Law;

          4.  Replacement of the requirement that all  
directors review and                                   sign  
the application and disclosure document for certain small  
company   applications under the California Securities Law  
with a provision that only                             a  
majority of the directors need to take such action;

          5.  Reduction of the minimum per share offering  
price restriction from $5 to $2 for certain small company  
applications under the California Securities Law; and

          6.  Qualification by coordination for federal  
Regulation A offerings.

     The proponents also believe the amendments to the  
California Securities Law will provide some of the needed  
reforms to improve and facilitate the California capital  
formation procedural and regulatory structure while  
increasing and optimizing investor fraud prevention and  
protection.

     This bill has been substantially amended since it was  
heard in this committee.  The Department of Corporations  
provided technical assistance in the form of amendments to  
the author and committee staff.  This bill in its present  
form balances the Department of Corporations historic  
policy of protecting investors with the public policy of  
facilitating capital formation.

 
Support: Environmental Capital Corporation
               California State Bar Business Law Section

Opposition: None reported to date:  July 11, 1995 


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Contact:  Jan L. Owen   445-6306



































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HEARING:  JULY 12, 1995                                   
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