Chap. 142.—An ACT to amend and re-enact sections 1, 2, 9 and 11 of
chapter 359 of the acts of 1920, entitled “An act to amend and re-
enact an act entitled an act to prevent unfairness, imposition or fraud
in the sale or disposition of certain securities herein defined by requir-
ing an inspection and regulation of the business of any person, asso-
ciation, partnership, or corporation, engaged or intending to engage,
whether as principal, broker, or agent, in the sale of any such securities
in the State of Virginia as may be necessary to prevent unfairness,
imposition or fraud in the sale or disposition of said securities, and
prescribing penalties for the violation thereof, approved March 28,
1918.” [S B’91]

Approved March 29, 1923.

1. Be it enacted by the general assembly of Virginia, That
sections one, two, nine and eleven of an act entitled “An act
to prevent unfairness, imposition or fraud in the sale or disposi-
tio of certain securities herein defined by requiring an Inspection
thereof, providing for such inspection, supervision and regula-
tion of the business of any person, association, partnership, or
corporation, engaged or intending to engage, whether as
principal, broker or agent, in the sale of any such securi-
ties in the State of Virginia as may be necessary to prevent
unfairness, imposition or fraud in the sale or disposition
of said securities. and prescribing penalties for the violation
thereof, approved March twenty-third, nineteen hundred and
eighteen, be amended and re-enacted so as to read as follows:
Section 1. Definitions of terms “securities,” “speculative
securities,” “speculative enterprise” and “promoter” as used in
this act.—The term “securities” as used in this act shall be
taken to mean stock certificates, shares, bonds, debentures, cer-
tificates of participation, contracts, contracts or bonds for the
sale and conveyance of land on deferred payments or installment
plan, subscriptions to the capital stock or other securities of any
corporation or joint stock company, whether the same has been
chartered or organized or not; or other instruments in the nature
thereof by whatsoever name known or called. The term “‘spécu-
lative securities” as used in this act shall be taken to mean and
include (1) all securities to promote or induce the sale of which,
profit, gain or advantage unusual in the ordinary course of
legitimate business is in any way advertised or promised; (2)
all securities for promoting the sale of which a commission of
more than ten per centum is offered or paid, either in money,
stock, property or otherwise, either directly or indirectly; (3)
the securities of any enterprise, association, partnership or
corporation which has included or proposes to include in its
assets as a material part thereof, oil, gas, coal or mineral lands,
services of any person or persons, leases or rights, options,
patents, formulae, good-will, promotion, or intangible assets, or
which has issued or proposes to issue a material part of its
securities in payment for formulae, options, patents, good-will,
promotion or intangible assets, oil, gas, coal, or mineral lands,
services of any person or persons, or any consideration of a
similar nature other than money; (4) securities made or issued
in furtherance or promotion of any enterprise or scheme for the
sale of unimproved or undeveloped land on any deferred pay-
ment or installment plan, where the value of such securities
materially depends on the future performance of any stipulation
or promise to furnish irrigation or transportation facilities,
sidewalks, sewers, gas, light, streets, or other value enhancing
utility or improvement; (5) contract issued by persons or com-
panies commonly styling themselves as “home” companies which
purport to entitle the holder thereof to a loan from the issuer
after the payment of certain installments or dues, or contracts
of a similar nature by whomsoever issued, or by whatsoever
name called; (6) any stock contract, certificate of participation
or other agreement which purports to permit persons, associa-
tions, partnerships or corporations to purchase any property,
real, personal, or intangible at a less price or upon more favor-
able terms than the general public is permitted to purchase
same; (7) deeds, contracts, subscription agreements or other
papers or contracts, by which persons are or may be sold title
to or interests in units or lots of oil or mineral lands or in lands
outside of this State, which are so divided to be planted in trees,
vines or shrubs, or are divided or to be divided into town or
surburban lots; provided that this clause shall not be construed
to include the bona fide owners of any such lot or unit who may
sell same for his own account and not as a part of or in further-
ance of any promotion. The term “speculative enterprise” as
used in this act shall be taken to mean any business undertaking,
project, venture or activity for the promotion or furtherance of
which “speculative securities” as herein defined are made, issued,
sold or offered for sale. The word “promoter” as used in this
act shall include any person, agent, broker, partnership, asso-
clation or corporation who shall sell, offer for sale, advertise or
do any act in furtherance of the sale, barter or exchange of any
“speculative securities” as defined in this act.

Section 2. Information and fees required of promoters;
conditions precedent to offering securities for sale; bond re-
quired.—It shall be hereafter unlawful for any promoter to sell
or offer for sale (except to banks, bankers, trust companies or
dealers. in securities) or by means of any advertisement, cir-
culars or prospectus, or by any other form of public offering, to
attempt to promote the sale of any speculative securities in this
State until the said promoter shall have first applied for and
secured from the State corporation commission, hereinafter
called the commission, a permit to do so, and no such permit
shall be granted until there first shall have been filed with the
commission by the applicant and made a part of such applica-
tion, duly sworn to: (1) a copy of the securities so to be pro-
moted; (2) a statement in substantial detail of the assets and
liabilities of the person or company making and issuing such
securities and of any person or company guaranteeing the same,
including specifically the total amount of such securities and
of any securities prior thereto in interest or lien, authorized or
issued by any such person or company; (8) if such securities are
secured by mortgage or other lien, a copy of such mortgage or
of the instrument creating such lien, and a competent appraisal
or valuation of the property covered thereby, with a specific
statement of all prior liens thereon, if any; (4) a full statement
of facts showing the gross and net earnings, if any, of any per-
son or company making, issuing or guaranteeing such securities,
or of any property covered by any such mortgage or lien; (5)
all knowledge or information in the possession of such promoter
relative to the character or value of such securities or of the
property or earning power of the person or company making,
issuing or guaranteeing the same; (6) a copy of any prospectus
or advertising matter which is to be used in connection with
such promotion, and no such prospectus or advertising matter
shall be used, unless the same has been filed hereunder, but same
may be amended from time to time, by filing copies of the amend-
ments with the commission; (7) the names, addresses, and sell-
ing territory in this State of any agents by or through whom
any such securities are to be sold and no such agent shall be em-
ployed unless such statement with respect to them, together with
satisfactory evidence of their good character, has been filed here-
under and there shall have been paid to the commission a regis-
tration fee of twenty-five dollars for each such agent, provided
however, that if such agent’s license shall be granted on or after
November first of any year the fee for such license shall be the
sum of fifteen dollars. The payment of such fee shall be pay-
ment in full of all fees for registration of such agent for the
sale of any properly licensed issue of securities, until and in-
cluding the first day of May next following; (8) the name and
address of such promoter, including the names and addresses of
all partners; if the promoter be a partnership, and the names
and addresses of the officers and directors or trustees, if the
promoter be a corporation or association; (9) a statement show-
ing in detail the plan on which the business or enterprise is to
be conducted; (10) the articles of co-partnership or association,
and all other papers pertaining to its organization, if the securi-
ties be issued or guaranteed by a co-partnership or unin-
corporated association; (11) a copy of its charter and by-laws if
the securities be issued or guaranteed by a corporation; (12)
any other information concerning the said promotion, its assets
or the persons interested therein, which the commission may re-
quire; (13) a copy of the contract to be used in taking sub-
scriptions for such securities wherein shall be set out a complete
and accurate statement, without unnecessary verbiage, of any
stock or security of the corporation whose securities are being
offered for sale, which has been or is proposed to be issued for
any consideration, other than par value or more in money, to-
gether with a full statement of the exact amount which is being
paid, or is proposed or promised or* contracted to be paid, di-
rectly or indirectly in money, securities or otherwise for the
promotion of such corporation or the flotation of such securities,
either directly or indirectly, to any person whatsoever; (14) a
filing fee of fifty dollars; (15) in any case the commission shall
have the right to require of any promoter before granting a per-
mit for the sale of stock a bond, the form whereof shall be pre-
scribed and the surety approved by the commission, penalty
whereof shall be fixed by the commission at not more than
twenty per centum of the face value of the securities issued or
proposed or authorized to be issued. The said bond shall be
with surety and payable to the Commonwealth, conditioned that
the facts set forth in the application for such permit and in all
other documents required by this act to be filed with the com-
mission are true, and that the provisions of this act shall be
strictly complied with. Such bond may be made with individual
sureties or a surety company authorized to do business in this
State, but it shall be the duty of the commission to satisfy itself
that such surety is amply solvent before accepting same; if and
when the application shall have been approved by the commis-
sion, the applicant shall before receiving a permit to sell stock
in the State, pay a license fee, which license fee shall be com-
puted at the rate of one-fourth of one per centum upon the par
value of all securities permitted to be sold in the State, irre-
spective of the actual value of such securities or the considera-
tion to be received therefor; but the maximum fee to be charged
or collected hereunder shall not exceed five hundred dollars. For
the purposes of this section, stock without nominal or par value
shall be assumed to have a part value of one hundred dollars
per share. The amount of the filing fee hereinbefore provided
for shall be deducted from the amount of license fee so ascer-
tained. ,

Section 9. Securities exempt from operation of this act.—
The provisions of this act shall not apply to (a) securities of the
United States; or any foreign country; or of any State or terri-
tory; or of any county, city, township, district or other taxing
. Sub-division of any State or territory of the United States or
any foreign government. (b) Securities of public service or
utilities corporations after organization, which are regulated
by the commission or by the public service commission or board
of similar authority of any State or territory of the United
States; or securities senior thereto. (c) Securities of any
national bank, or of any bank, trust company or building and
loan association, organized under the laws of this State, after
organization and while subject to examination and supervision
by the proper authorities thereof. (d) Securities of any
domestic corporation organized without capital stock, for re-
ligious, charitable or reformatory purposes. (e) Securities of
persons, firms or corporations which are not comprehended in
the definition of “speculative securities” contained in section one
of this act. (f) The capital stock of a corporation, whose au-
thorized capital is not more than twenty-five thousand dollars:
provided, however, that if any single enterprise or business shall
be divided into two or more parts and separately incorporated
for the purpose of bringing such enterprise or business within
this exception, it shall be deemed to be a fraudulent evasion of
this act and shall be punishable in the manner prescribed by
section eleven hereof. (g) Securities which are offered for sale
or exchange only to the persons named in the charter, as di-
rectors, officers or incorporators.

Section 11. Violation of provisions of this act, punishment
for.—Any promoter, or other person who shall commit, in whole
or in part, in this State any act declared unlawful by this act or
who shall fraudulently evade or attempt to evade the provisions
thereof, shall be deemed guilty of a misdemeanor where not
otherwise provided, and on conviction, be punished by a fine of
not less than one hundred nor more than five thousand dollars,
or by confinement in jail for not less than thirty days or more
than one year, or by both such fine and imprisonment. Indict-
ments or presentments charging violations of this act shall not
be certified to a justice of the peace for trial. The court before
whom such fine is imposed shall order one-half of such fine to
be paid to the person or persons instigating the prosecution in
which such fine was imposed.

Every sale or contract made in violation of any of the pro-
visions of this act shall be voidable at the election of the pur-
chaser, and the person making such sale or contract for sale, and
every agent of or for such seller who shall have participated or
aided in any way in making such sale, shall be jointly and
severally liable to such purchaser, upon tender to the seller or
in court of the securities sold or of the contract made, for the
full amount paid by such purchaser together with all taxable
court costs and reasonable attorney fee in any action brought
under this section.

The limitation of any prosecution for a violation of any act
declared by this chapter to be a misdemeanor shall hereafter be
two years.