ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 7. BANKING AND SECURITIES Part VII. State Securities Board Chapter 106. Guidelines for the Assessment of Administrative Fines 7 TAC sec.106.1 The State Securities Board adopts new sec.106.1, concerning guidelines for the assessment of administrative fines. The rule is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5350). The new rule sets forth guidelines for the Securities Commissioner to consider in assessing the amount of an administrative fine under new sec.23-1 of The Securities Act, added by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995. The rule apprises persons subject to the fining authority provisions of The Securities Act of the relevant factors that the Securities Commissioner will consider in determining the amount of such fines. No comments were received regarding adoption of the new rule. The new section is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511181 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 Chapter 113. Registration of Securities 7 TAC sec.113.2 The State Securities Board adopts an amendment to sec.113.2, concerning applications for registration by coordination. The rule is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5350). The amendment implements changes made to sec.7.C(1) of The Securities Act, by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, and makes other non- substantive, grammatical changes to the section. The amendment promotes uniformity between state and federal registration requirements by permitting certain open-end investment companies and unit investment trusts to submit the same financial statements at the state level as those they are required to provide on the federal level. One comment letter was received regarding adoption of the new amendment. That letter, from the Investment Company Institute, supported the amendment. The Board agrees. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511182 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.113.4 The State Securities Board adopts an amendment to sec.113.4, concerning application for securities registration. The rule is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5351). The amendment implements changes made by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, to sec.8 of The Securities Act, governing consents to service of process. The rule accommodates the Agency's participation in the Securities Registration Depository System ("SRD"), which, once implemented, will permit electronic filings of securities registration applications. One comment letter was received regarding adoption of the new amendment. That letter, from the Investment Company Institute ("ICI"), supported the Board's intent, but recommended that acceptance of electronically filed consents to service of process not be limited to those filed through the SRD. Instead, the ICI recommended replacing the reference to the SRD with the phrase "an approved electronic filing service." The Board disagrees. Because of concerns about system security and open records requirements concerning such matters as file integrity, the Board prefers to consider its acceptance of alternative electronic filing systems, if any, as they are developed, and, accordingly, amend the rule to include them if appropriate. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511183 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.113.5 The State Securities Board adopts an amendment to sec.113.5, concerning financial statements. The rule is adopted with changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5351). A change was made to subsection (c)(1) of the published proposal to clarify that prior offerings made by a small business issuer pursuant to certain exemptions will not disqualify such issuer from using the rule. The amendment implements new sec.7.A(1)(f)(2) of The Securities Act, added by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, by defining the term "small business issuer" for purposes of the rule and prescribing the circumstances under which such an issuer can submit reviewed financial statements in connection with registration of securities by qualification. The rule facilitates small business capital formation by relaxing the financial statement requirements for certain small business issuers. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. sec.113.5. Financial Statements. (a) Audited financial statements. Except as provided in subsection (b) of this section, all financial statements submitted to the Securities Commissioner pursuant to The Securities Act, sec.7.A(1)(f), (including all financial statements of the issuer and any entity that is being taken over by an issuer which has not been operating) must be audited, and an opinion must be expressed by an independent certified public accountant or an independent public accountant. Such opinion shall be one acceptable to the Securities Commissioner. (b) Reviewed financial statements. Financial statements, prepared in accordance with generally accepted accounting principles, submitted by a small business issuer in connection with a small business offering may be reviewed by an independent certified public accountant in accordance with the standards for reviewed financial statements promulgated by the American Institute of Certified Public Accountants. (c) Small business issuer. For purposes of subsection (b) of this section, the term "small business issuer" shall mean any corporation: (1) that has not previously sold securities by means of an offering involving public solicitation or advertising unless such offering was made in compliance with sec.139.16 of this title (relating to Sales to Individual Accredited Investors), sec.109.3(c) of this title (relating to Sales to Financial Institutions and Certain Institutional Investors under The Securities Act, sec.5.H), or The Securities Act, sec.5.H; (2) that has not been previously required under federal or state securities law to provide audited financial statements in connection with any sale of its securities; (3) that is not an investment company (including any mutual fund); (4) that does not engage or propose to engage in petroleum exploration or production or other extractive industries; (5) that is not subject to the reporting requirements of sec.13 or sec.15(d) of the Securities Exchange Act of 1934; (6) that has its principal place of business in Texas and employs at least 50% of its full-time employees in Texas; and (7) whose previous sales of securities (exclusive of debt financing with banks and similar commercial lenders) does not exceed $500,000. (d) Parent corporations. If a corporation otherwise meeting the criteria specified in subsection (c) of this section is a majority-owned subsidiary of another corporation, the subsidiary shall not be considered a "small business issuer" for purposes of subsection (b) of this section unless its parent corporation also meets the criteria specified in subsection (c) of this section. (e) Small business offering. For purposes of subsection (b) of this section, the term "small business offering" shall mean that the amount of the offering must not exceed $500,000. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511184 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 Chapter 115. Dealers and Salesmen 7 TAC sec.115.3 The State Securities Board adopts an amendment to sec.115.3, concerning examinations. The rule is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5352). The amendment expressly describes the examinations currently accepted, recognizes the new Uniform Combined State Law Examination (Series 66), and makes other non-substantive clarifications to the rule. Persons subject to the examination requirements of The Securities Act will be apprised of the examinations accepted and the circumstances under which they are accepted. One comment letter was received regarding adoption of the new amendment. That letter, from the Investment Company Institute ("ICI"), supported the amendment. The ICI noted that the amended rule would expressly permit applicants to substitute either the NASAA Investment Advisors Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for an examination on the Texas Securities Act. The ICI noted that providing these additional examination options eases the burden on investment adviser applicants without lowering the registration standards imposed on such persons. The Board agrees. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511185 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.115.4 The State Securities Board adopts an amendment to sec.115.4, concerning evidences of registration. The rule is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5354). The amendment clarifies the procedures the Agency employs in renewing dealer, agent, and salesmen registrations and new subsection (g) prescribes certain circumstances under which reduced registration fees, authorized by The Securities Act, sec.42, added by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, would apply. Persons who are required to register in certain dual capacities may request relief from payment of the full fee required by The Securities Act by filing a request with the Securities Commissioner. This filing would be made on new form sec.133.36-Request for Multiple Capacity Status which is concurrently adopted. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511186 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 Chapter 123. Administrative Guidelines for Registration of Open-End Investment Companies 7 TAC sec.123.1 The State Securities Board adopts an amendment to sec.123.1, concerning the treatment of certain registration applications. The amendment is adopted with changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5355). A change was made to subsection (b) of the published proposal to delete a reference to the one year permit period because certain permits, under certain circumstances, will last longer than one year. The amendment implements changes to The Securities Act, sec.7.C(3), made by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995. The amendment facilitates uniform renewal procedures for open-end investment companies and unit investment trusts on both the state and federal level. One comment letter was received regarding adoption of the amendment. That letter, from the Investment Company Institute, supported the amendment. The Board agrees. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. sec.123.1. Generally. (a) Treatment of certain registration applications. Applications to register securities of open-end investment companies and unit investment trusts subject to the provisions of the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, will be considered and treated as applications to register securities by coordination. (b) Requirements for renewal applications. Since there is no statutory provision for the renewal of an expired permit, the expiration date should be noted with great care. The following requirements are prescribed for renewal applications. (1) Renewal applications should be filed approximately one month prior to the date of expiration. (2) A permit cannot be renewed if the renewal application is filed after the expiration date shown on the permit. However, when a timely and sufficient renewal application is filed on or before the expiration date, the authority of the existing permit is effective until the application is acted upon by the Securities Commissioner. (3) Renewal applications for issuer's permits which have not been completed within 60 days after the expiration date of the permit being renewed will be denied unless the applicant satisfies the Securities Commissioner that the deadline should be extended. The preceding provision does not limit the power of the Securities Commissioner to deny a renewal application at any time after proper notice. (4) Before a renewal application is denied, the applicant will be notified by certified or registered mail of the reasons alleged to warrant the denial and given an opportunity to show compliance with all requirements of law for renewal of the permit. (c) There is no exemption under Texas law for an unregistered mutual fund to accept unsolicited orders from Texas residents. Accordingly, all mutual fund shares must be registered and sold through a registered dealer, which may be the issuer itself. Included are no-load mutual fund shares. In addition, the following are required. (1) Because of the continuous nature of the offering, distributors must conform to the dealer registration requirements of The Securities Act. Agents and salesmen must also be registered as provided in The Securities Act. Included within the registration requirements are financial institutions that engage in the sale or offer for sale of fund shares. (2) In all cases, annual sales reports must be filed. Money market funds qualified as such under sec.123.3(c) of this title (relating to Conditional Exemption for Money Market Funds) must file this report as set forth in sec.123.3(g). Other open-end investment companies must file this report within 60 days from the end of the registrant's fiscal year. (d) All registered investment companies and unit investment trusts engaged in a continuous offering of securities must file a preliminary copy of each revised prospectus and each materially revised advisory agreement contemporaneously with the filing of such exhibits with the SEC and sufficiently far in advance to allow review and substantive comment prior to finalizing the documents. (e) The guidelines also apply to the registration of closed-end investment companies, where applicable. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511187 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 Chapter 131. Guidelines for Confidentiality of Information 7 TAC sec.131.1 The State Securities Board adopts an amendment to sec.131.1, concerning confidentiality of information. The amendment is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5356). The amendment reflects a change to The Securities Act, sec.28.A, made by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, which expressly grants the Securities Commissioner discretion to supply information obtained during the course of an investigation to a receiver appointed under The Securities Act, sec.25-1. The amendment reflects a more comprehensive approach toward the dissemination of confidential information by recognizing that the Securities Commissioner can supply investigatory information to a receiver appointed under The Securities Act. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511188 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 Chapter 133. Forms 7 TAC sec.133.7 The State Securities Board adopts the repeal of sec.133.7, the Application for Registration of Securities under the Securities Act of Texas form. The repeal is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5357). The repeal allows for the simultaneous adoption of a new application for registration of securities form. The repeal eliminates an outdated form. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511189 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 The State Securities Board adopts new sec.133.7, concerning an Application for Registration of Securities form. The new form is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5357). The new form reflects the revisions to The Securities Act, sec.7, made by House Bill 1295, Chapter 228, Acts, 74th Legislature, 1995, which, among other things, reduce paperwork requirements and ease financial statement requirements under certain circumstances. The new form replaces the existing form, sec.133.7-Application for Registration of Securities under the Securities Act of Texas, which is being concurrently repealed. One comment letter was received regarding adoption of the new form. That letter, from the Investment Company Institute, generally supported adoption of the new form. The Board agrees. The new form is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511190 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.133.10 The State Securities Board adopts the repeal of sec.133.10, the investment company report of sales form. The repeal is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5357). The repeal allows for the simultaneous adoption of a new investment company report of sales form. The repeal eliminates a form which contains outdated information. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511191 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 The State Securities Board adopts new sec.133.10, the investment company report of sales form. The new form is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5358). The new form provides a space for the Texas permit number and the fiscal year end date and will enable the Agency to more efficiently review and process investment company report of sales forms. The new form replaces the existing form, which is being concurrently repealed, and will accurately reflect the requirements of The Securities Act, sec.7.C. One comment letter was received regarding adoption of the new form. That letter, from the Investment Company Institute, supported adoption of the new form. The Board agrees. The new form is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511192 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.133.12 The State Securities Board adopts the repeal of sec.133.12, the renewal application for mutual funds, employee benefit plans, and other continuous offerings form. The repeal is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5358). The repeal allows for the simultaneous adoption of a new renewal application for mutual funds and other continuous offerings form. The repeal eliminates a form which contains outdated information. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511193 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 The State Securities Board adopts new sec.133.12, a renewal application for mutual funds and other continuous offerings form. The new form is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5358). The new form will enable the Agency to more efficiently review and process investment company report of sales forms. The new form replaces the existing form, sec.133.12-Renewal Application-Mutual Funds, Employee Benefit Plans, and Other Continuous Offerings, which is being concurrently repealed, and will accurately reflect the requirements of The Securities Act, sec.7. One comment letter was received regarding adoption of the new form. That letter, from the Investment Company Institute, supported adoption of the new form. The Board agrees. The new section is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511194 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.133.13 The State Securities Board adopts the repeal of sec.133.13, the application for renewal permit form. The repeal is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5358). The repeal allows for the simultaneous adoption of a new application for renewal permit form. The repeal eliminates a form which contains outdated information. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511195 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 The State Securities Board adopts new sec.133.13, the application for renewal permit form. The new form is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5359). The new form enables the Agency to more efficiently review and process applications for renewal permits. The new form replaces the existing form, which is being concurrently repealed, and accurately reflects the requirements of The Securities Act, sec.7. No comments were received regarding adoption of the new rule. The new rule is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511196 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 7 TAC sec.133.36 The State Securities Board adopts new sec.133.36, a request for multiple capacity status form. The new form is adopted without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5359). The new form corresponds to an amendment to sec.115.4(g), which is being concurrently adopted, and facilitates the review and processing of applications for multiple capacity status. The new form provides a form on which certain applicants registered in multiple capacities with the Agency can request reduced registration fees. No comments were received regarding adoption of the new rule. The new rule is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of The Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 1, 1995. TRD-9511197 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: September 22, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 305-8300 TITLE 22. EXAMINING BOARDS Part IX. Texas State Board of Medical Examiners Chapter 163. Licensure 22 TAC sec.163.1 The Texas State Board of Medical Examiners adopts an amendment to sec.163. 1, without changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5127). The section as adopted will ensure that all qualified physicians will be licensed in Texas. The section as adopted will function by clarifying the combinations of examinations acceptable for physician licensure. No comments were received regarding adoption of the amendment. The amendment is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511278 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 834-7728 Chapter 166. Physician Registration 22 TAC sec.166.6 The Texas State Board of Medical Examiners adopts new sec.166.6, without changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5128). The section as adopted will provide a mechanism for implementing the exemption from the annual registration fee for those physicians practicing only voluntary charity care as mandated by House Bill 3116, 74th Legislature. The section as adopted will function by exempting those qualified physicians from the annual registration fee following execution of a notarized affidavit. No comments were received regarding adoption of the new section. The new section is adopted under the Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511279 Bruce A. Levy, M.D., J.D. Executive Director Texas State Board of Medical Examiners Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 834-7728 Part XXX. Texas State Board of Examiners of Professional Counselors Chapter 681. Professional Counselors The Texas State Board of Examiners of Professional Counselors (the board) adopts amendments to existing sec.sec.681.15, 681.17, 681.26, 681.51, 681.52, 681.81, 681.82, 681.84, 681.91-681.96, 681.112, 681.178 and 681.220, concerning the licensing of professional counselors. Section 681.220 is adopted with changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5009). Sections 681.15, 681.17, 681.26, 681.51, 681.52, 681.81, 681.82, 681.84, 681.91-681.96, 681.112, 681. 178 are adopted without changes to the proposed text and therefore will not be republished. Specifically, the sections cover license certificates, fees, counseling methods and practices, application procedures and materials, temporary licenses, post- graduate experience requirements and other conditions of supervision, examination and procedures, endorsement, reporting continuing education, and actions after administrative hearings. The amendments will allow the board's executive secretary to sign provisional license letters without having the board chair's signature; delete the application materials fee and raise the initial licensing fee, examination fee, and the license renewal fees; revise the acceptable fee payments; clarify language concerning expressive therapies; delete language relating to examination application deadlines; clarify language concerning temporary licenses and the maintenance of same; clarify language concerning the submission of documents to qualify for a temporary license; clarify language concerning the submission of documents to qualify for licensure by endorsement; establish further licensure requirements for supervisors; establish procedures for the licensing examination to be electronically administered and administered by a national testing company; revise requirements for persons who fail to take the exam or fail the exam; allow the board to collect a fee equal to the annual renewal fee from a person who is returning his or her license to active status from inactive status; clarify language relating to submission of official graduate transcripts to document continuing education; and establish procedures the board may take concerning the results of an administrative hearing. The sections insure the regulation of professional counselors continues to identify competent practitioners and implements testing procedures that will be more convenient and efficient for licensees. The following comment was received regarding the proposed amendments. Comment: Concerning sec.681.220(d)(2), a commenter from the Clinicians Issues Committee of the Texas Counseling Association indicated concern that the amended language created an additional step to the formal hearing process, a diminution of due process for the counselor, and an additional legal and financial burden for the counselor. Response: The amendment sets forth the basis on which the board may revise recommended findings of fact and conclusions of law pursuant to the Administrative Procedure Act (APA), Government Code, sec.2001.058. The board disagrees that the amendment creates an additional procedure or burden since all proposals for decision which contain the findings and conclusions resulting from a formal hearing currently must be heard before the board. The APA allows revisions for "reasons of policy." The rule describes such reasons. The board has amended the proposed language to better describe its "reasons of policy." Comments were received from the Clinicians Issues Committee of the Texas Counseling Association. The commenter was against the amendment to 681.220(d) (2) and expressed concerns over the adoption of the amendment. Subchapter A. The Board 22 TAC sec.681.15, sec.681.17 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provides the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511296 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter B. Authorized Counseling Methods and Practices 22 TAC sec.681.26 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511264 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter D. Application Procedures 22 TAC sec.681.51, sec.681.52 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511265 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter F. Experience Requirements for Examination and Licensure 22 TAC sec.sec.681.81, 681.82, 681.84 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511266 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter G. Licensure Examinations 22 TAC sec.sec.681.91-681.96 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on September 6, 1995. TRD-9511267 James O. Mathis, Ed.D., Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter H. Licensing 22 TAC sec.681.112 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511268 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter K. Continuing Education Requirements 22 TAC sec.681.178 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511269 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Subchapter M. Formal Hearings 22 TAC sec.681.220 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. sec.681.220. Action After the Hearing. (a)-(c) (No change.) (d) Final orders or decisions. (1) (No change.) (2) To protect the public interest and to ensure that appropriate principles govern the decisions of the board, it is the policy of the board to change a finding of fact or conclusion of law or to modify the proposed order of an administrative law judge when the board determines that the proposed order is: (A) against the weight of the evidence; (B) based on misapplication or misinterpretation of laws, rules, or policies; (C) based on insufficient review of the evidence; (D) not sufficient to protect the public interest with respect to the recommended disciplinary action; or (E) not appropriate recognition of whether or not rehabilitation of the licensee or applicant has occurred with respect to the recommended disciplinary action. (3) All final orders or decisions shall be in writing and shall set forth the findings of fact and conclusions required by law. (4) All final orders shall be signed by the chairperson of the board; however, interim orders may be issued by the ALJ. (5) A copy of all final orders and decisions shall be timely provided to all parties as required by law. (e)-(f) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511270 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 458-7236 Texas Department of Insurance Exempt Filing Notification Pursuant to the Insurance Code, Chapter 5, Subchapter L (Editor's Note: As required by the Insurance Code, Article 5.96 and 5. 97, the Texas Register publishes notices of actions taken by the Department of Insurance pursuant to Chapter 5, Subchapter L, of the Code. Board action taken under these articles is not subject to the Administrative Procedure Act. These actions become effective 15 days after the date of publication or on a later specified date. The text of the material being adopted will not be published, but may be examined in the offices of the Department of Insurance, 333 Guadalupe, Austin.) The Commissioner of Insurance, at a public hearing under Docket Number 2169 held at 9:00 a.m., August 29, 1995, in room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street, Austin, Texas, adopted a forms filing by the Office of the Secretary of State for a revised surety bond form entitled "Official Notary Public Bond For The State of Texas" (Bond). The bond is a requirement of Government Code, sec.406.010, Vernon's Texas Civil Statutes, as amended by Senate Bill 1391, acts of the 74th Legislature, Regular Session 1995. The form was filed in the Chief Clerk's Office on August 8, 1995. The following revisions have been made to the Bond: The penalty of the bond has been increased from $2,500 to $10,000. The Bond form now incorporates into one document the application for a notary public along with the official oath. Further the Secretary of State has the authority to accept an electronic filing of the Bond if an agreement has been made with the surety company. There is no standard premium rate for the new bond limit. An insurance company must file with the Texas Department of Insurance for prior approval their proposed premium rate before they can use the revised Bond. The full text of the surety bond form filing (Reference Number O-0895-20), was published in the August 15, 1995, issue of the Texas Register (20 TexReg 6200). The Texas Department of Insurance has jurisdiction over this matter pursuant to the Insurance Code, Articles 5.13, 5.15 and 5.97. The full text of the surety bond form entitled "Official Notary Public Bond For The State Of Texas", as adopted by the Texas Department of Insurance are filed with the Chief Clerk under (Reference Number O-0895-20) and is incorporated by reference by Commissioner Order Number 95-0891. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on September 6, 1995. TRD-9511293 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 27, 1995 For further information, please call: (512) 463-6328