HBA-JEK S.B. 988 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 988
By: Duncan
Financial Institutions
5/5/2001
Engrossed



BACKGROUND AND PURPOSE 

Under current law, a purchaser may sell public securities publicly or
privately, but the amount of securities being sold may not exceed a limit
specified by law or determined by the voters.  The attorney general
recently determined that an underwriter's compensation is not counted
against a public sale but is counted against a private sale.  This decision
has created an economic disequity between the two methods of sale. Senate
Bill 988 provides that the commission of an initial purchaser of public
securities is not counted against either the public or private sale of such
securities for the purpose of determining whether the amount of securities
sold exceeds the authorized limit. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

Senate Bill 988 amends the Government Code to provide that the commission
on public securities, with a principal amount limited by law or voter
authorization that are resold by the initial purchaser and constitute all
or part of the initial purchaser's compensation, are not regarded as
proceeds of the issuer that are calculated to determine whether the
principal amount of public securities being sold exceeds the legal limit. 

EFFECTIVE DATE

September 1, 2001.