Memo #
24003

Mississippi Adopts Uniform Securities Act and Revises Notice Filing Fee and Structure Effective January 1, 2010
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[24003]

 

December 8, 2009

TO: STATE SECURITIES MEMBERS No. 11-09
TRANSFER AGENT ADVISORY COMMITTEE No. 91-09
COMPLIANCE MEMBERS No. 53-09     RE: MISSISSIPPI ADOPTS UNIFORM SECURITIES ACT AND REVISES NOTICE FILING FEE AND STRUCTURE EFFECTIVE JANUARY 1, 2010

 

Effective January 1, 2010, Mississippi will replace its existing securities act with a new act, the Securities Act of 2009 (the “new Act”), which is based on the most recent version of the Uniform Securities Act. [1]  In addition to clarifying the ability of mutual fund notice filers to take advantage of exemptions and expanding the definition of “institutional investor,” the new Act revises Mississippi’s notice filing fees and fee structure.  These changes under the new Act are briefly summarized below.

 

Changes to Fees and Fee Structure

 

Currently, Mississippi offers mutual funds the option of paying fees based on a definite or indefinite number of shares to be sold.  Issuers electing the definite option pay 1/10th of 1% of the dollar amount to be offer for sale, with a minimum fee of $150 and a maximum of $1000.  Those electing the indefinite option pay $150 at the time of filing plus, at the end of the filing period, an additional amount of 1/10th of 1% of securities sold, with a maximum fee of $1000.

 

Under the new Act, effective January 1, 2010, Mississippi will only accept indefinite filings.  Accordingly, all Forms NF filed with Mississippi should only be for an indefinite amount.  While the calculation of the fee remains unchanged, the minimum fee has been increased to $300.  (The maximum fee remains $1000.)  These changes apply to the renewal fee as well.  Importantly, filings with an expiration date up to and including February 1, 2010 will be processed under the old fee structure provided the filings are received by Mississippi by January 1, 2010.

 

Exemptions

 

In the past, and contrary to its historical practice and the plain language of the old act, Mississippi has questioned the ability of certain notice filers to claim exemptions.  The new Act resolves this issue by unequivocally affirming the ability of notice filers to claim such exemptions. [2]  The two exemptions most commonly claimed by mutual funds, [3] which are preserved in the new Act, are the exemption for sales to existing shareholders [4] and the exemption for sales to institutional shareholders. [5]  Importantly, consistent with the Uniform Securities Act, the new Act’s definition of “institutional shareholder” has been expanded and includes each of the following: [6]

 

  1. A depository institution or international banking institution;
  2. An insurance company;
  3. A separate account of an insurance company;
  4. An investment company;
  5. A registered broker-dealer;
  6. An employee, pension, profit-sharing, or benefit plan if either (1) it has total assets in excess of ten million dollars or (2) its investment decisions are made by a named fiduciary as defined by ERISA that is a registered broker-dealer, registered or exempt investment adviser, a depository institution, or an insurance company;
  7. A plan established or maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees (subject to the same conditions in 6);
  8. A trust with total assets in excess of ten million dollars if its trustee is a depository institution and its participants are exclusively plans described in 6 or 7, regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;
  9. A 501(c)(3) organization, corporation, Massachusetts trust, or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of ten million dollars;
  10. A small business investment company licensed by the Small Business Administration with assets in excess of ten million dollars;
  11. A federal covered investment adviser acting for its own account;
  12. A “qualified institution buyer” as defined in SEC Rule 144A under the Securities Act of 1933, other than in Rule 144A(a)(1)(i)(H);
  13. A “major U.S. institutional investor” as defined in SEC Rule 15a-6(b)(4)(i) under the Securities Exchange Act of 1934;
  14. Any other person, other than an individual, of institutional character with total assets in excess of ten million dollars that is not organized for the specific purpose of evading the new Act; and
  15. Any other person specified by rule or order adopted under the new Act.

 

Tamara K. Salmon
Senior Associate Counsel

 

endnotes

 [1]  A copy of the new Act, which was enacted as House Bill 781 (HB 781), is available at:  http://billstatus.ls.state.ms.us/documents/2009/pdf/HB/0700-0799/HB0781SG.pdf.

 [2]  See Section 75-71-302(a) of the new Act, which begins on line 820 of HB 781.

 [3]  The new Act’s exemptions also include an exemption for unit investment trusts that meet specified conditions.  See Section 75-71-202(2) of the new Act, which begins on line 535 of HB 781.

 [4]  See Section 75-71-202(15) of the new Act, which begins on line 683 of HB 781.  The exemption is conditioned on no commission or other remuneration (other than a stand-by commission) being paid.

 [5]  See Section 75-71-202(13) of the new Act, which begins on line 661 of HB 781.

 [6]  See Section 75-71-102(15) of the new Act, which begins on line 109 of HB 781.  The terms “depository institution,” “international banking institution,” “insurance company,” “investment adviser,” “federal covered investment adviser,” and “broker-dealer” as used in these exemptions are separately defined in Section 75-71-102 of the new Act.