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Senate Bill Report SB 6131, Repealing Debenture Company Laws (Financial Institutions Committee, 2020)

Summary

Senate Bill Report on SB 6131, as of January 15, 2020, for the Senate Committee on Financial Institutions, Economic Development & Trade, which lists committee activity on 1/16/20. The bill is an act relating to repealing the debenture company laws from the securities act of Washington, with Senators Mullet and Hobbs among the sponsors, by request of Department of Financial Institutions. The background section defines a debenture as a type of debt instrument unsecured by collateral and states that Washington has not had a debenture company in operation since 2005. The summary of the bill states that Washington debentures statutes are repealed, with appropriation none and an effective date ninety days after adjournment of the session in which the bill is passed.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer
Congressional materials
Document type
Report
Date
2020-01-16
Case
2020 01 16 A26165 D208977 Bill Report 6131 Sba Fiet 20

Cite this document

“Senate Bill Report SB 6131, Repealing Debenture Company Laws (Financial Institutions Committee, 2020).” Original at app.leg.wa.gov, dated 2020-01-16. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2020-01-16-2020-01-16-a26165-d208977-bill-report-6131-sba-fiet-20/, SHA-256 3e834d0155036f3cc783276ee18336605a3d9c03b6051350c4bb32ae10b2a728.

Full text

                             SENATE BILL REPORT
                                   SB 6131

                                      As of January 15, 2020

Title: An act relating to repealing the debenture company laws from the securities act of
    Washington.

Brief Description:      Repealing the debenture company laws from the securities act of
   Washington.

Sponsors: Senators Mullet, Hobbs, Short, Wilson, L. and Das; by request of Department of
   Financial Institutions.

Brief History:
   Committee Activity: Financial Institutions, Economic Development & Trade: 1/16/20.

                                      Brief Summary of Bill
          Ÿ Repeals the state's debenture statutes.


SENATE  COMMITTEE                  ON      FINANCIAL          INSTITUTIONS,           ECONOMIC
DEVELOPMENT & TRADE

    Staff: Clint McCarthy (786-7319)

    Background: Debentures. A debenture is a type of debt instrument unsecured by collateral.
    Since debentures have no collateral backing, debentures must rely on the creditworthiness
    and reputation of the issuer for support. Similar to most bonds, debentures may pay coupon
    payments. In Washington State, at least 50 percent of debenture securities must have
    maturity dates of two years or more.

    Debenture Companies and the Jumpstart Our Business Startups Act of 2012. Debenture
    companies are required in the state of Washington to maintain a net worth of at least
    $200,000 for securities up to $1 million, and must maintain a net worth of 10 percent of the
    outstanding securities for securities between $1 million and $100 million. One half of the net
    worth must be held in cash or comparably liquid assets. Every debenture company must
    report annually on financial and business conditions of the issuer.



––––––––––––––––––––––
    This analysis was prepared by non-partisan legislative staff for the use of legislative
    members in their deliberations. This analysis is not a part of the legislation nor does it
    constitute a statement of legislative intent.

Senate Bill Report                              -1-                                          SB 6131
    In 2012, Congress passed the Jumpstart Our Business Startups (JOBS) Act. The legislation
    loosened regulations instituted by the Securities and Exchange Commission on small
    businesses, and created new exemptions form federal securities registration requirements that
    sidestep state debenture statutes. Washington has not had a debenture company in operation
    since 2005.

    Not-For-Profit Companies. Not-for-profit companies are exempt from registering securities.
    The security must be offered or sold to persons who, prior to their solicitation, were members
    of, contributors to, or listed as participants in, the organization. Not-for-profit organizations
    using unsecured debt to fund social impact investments or church projects are still subject to
    the debenture company laws with respect to liquidity and net worth for fundraising in
    Washington.

    Summary of Bill: Washington debentures statutes are repealed.

    Appropriation: None.

    Fiscal Note: Requested on January 9, 2020.

    Creates Committee/Commission/Task Force that includes Legislative members: No.

    Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                              -2-                                          SB 6131

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2020-01-16_a26165_d208977_bill-report-6131-sba-fiet-20.pdf
Original
app.leg.wa.gov
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