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Substitute House Bill No. 6511
Substitute House Bill No. 6511
PUBLIC ACT NO. 97-22
AN ACT CONCERNING TECHNICAL REVISIONS TO THE
BANKING LAW OF CONNECTICUT AND THE SECURITIES AND
BUSINESS INVESTMENTS LAW OF CONNECTICUT.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Subsection (a) of section 36a-490
of the general statutes is repealed and the
following is substituted in lieu thereof:
(a) Each license shall state the address at
which the business is to be conducted and shall
state fully the name of the licensee. If the
licensee desires to grant first mortgage loans in
more than one location or to act as a mortgage
broker in more than one location, the
[commissioner] LICENSEE shall procure a license
for each location where the business is to be
conducted. Each license shall be prominently
posted in each place of business of the licensee.
Such license shall not be transferable or
assignable. Any change of location of a place of
business of a licensee shall require the prior
approval of the commissioner and requests for
relocation shall be in writing. No licensee shall
use any name other than the name set forth on the
license issued by the commissioner.
Sec. 2. Subsection (a) of section 36a-700 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) As used in this section, "credit clinic"
means any person who sells, provides [,] or
performs, or who represents that such person can
or will sell, provide or perform, a service for
the express or implied purpose of correcting,
changing or deleting adverse entries on a
consumer's credit record, history or rating or
providing advice or assistance to a consumer with
regard to correcting, changing or deleting adverse
entries on a consumer's credit record, history or
rating in return for the payment of a fee. "Credit
clinic" does not include: (1) Credit rating
agencies as defined in section 36a-695; (2) any
person licensed to practice law in this state
provided such person renders services as a credit
clinic, as defined in this subsection, within the
course and scope of his practice as an attorney;
or (3) any organization which is exempt from
taxation pursuant to Section 501(c)(3) of the
Internal Revenue Code of 1986, or any subsequent
corresponding internal revenue code of the United
States, as from time to time amended.
Sec. 3. Section 36b-1 of the general statutes
is repealed and the following is substituted in
lieu thereof:
Sections 36b-2 to 36b-33, inclusive, AS
AMENDED BY THIS ACT, and 36b-40 to 36b-52,
inclusive, and 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, shall be known
as the "Securities and Business Investments Law of
Connecticut" and shall be applicable to all
issuers of securities, broker-dealers, agents,
investment advisers, investment adviser agents,
sellers of business opportunities, and offerors in
a tender offer, and to such other corporations,
unincorporated associations, partnerships, limited
liability companies and individuals who subject
themselves to special provisions in said sections,
or who, by violating any of the provisions of said
sections become subject to the penalties provided
in said sections.
Sec. 4. Subsection (b) of section 36b-18 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(b) A registration statement under this
section shall contain the following information
and be accompanied by the following documents in
addition to the information specified in
subsection (c) of section 36b-19 and the consent
to service of process required by subsection (g)
of section 36b-33: (1) With respect to the issuer
and any significant subsidiary: Its name, address,
and form of organization; the state or foreign
jurisdiction and date of its organization; the
general character and location of its business; a
discussion of the principal factors that make the
offering speculative or one of high risk; a
description of its physical properties and
equipment, and a statement of the general
competitive conditions in the industry or business
in which it is or will be engaged; (2) with
respect to every director and officer of the
issuer, or person occupying a similar status or
performing similar functions: His name, address
and principal occupation for the past five years;
the amount of securities of the issuer held by him
as of a specified date within thirty days of the
filing of the registration statement; the amount
of the securities covered by the registration
statement to which he has indicated his intention
to subscribe; and a description of any material
interest in any material transaction with the
issuer or any significant subsidiary effected
within the past three years or proposed to be
effected; (3) with respect to persons covered by
subdivision (2) of this subsection: The
remuneration paid during the past twelve months
and estimated remuneration to be paid during the
next twelve months, directly or indirectly, by the
issuer together with all predecessors, parents,
subsidiaries and affiliates to all such persons in
the aggregate; (4) with respect to any person
owning of record, or beneficially if known, ten
per cent or more of the outstanding shares of any
class of equity security of the issuer: The
information specified in said subdivision (2) of
this subsection other than his occupation; (5)
with respect to every promoter if the issuer was
organized within the past three years: The
information specified in said subdivision (2) of
this subsection, any amount paid to him within
that period or intended to be paid to him, and the
consideration for any such payment; (6) with
respect to any person on whose behalf any part of
the offering is to be made in a nonissuer
distribution: His name and address; the amount of
securities of the issuer held by him as of the
date of the filing of the registration statement;
a description of any material interest in any
material transaction with the issuer or any
significant subsidiary effected within the past
three years or proposed to be effected; and a
statement of his reasons for making the offering;
(7) the capitalization and long-term debt, on both
a current and pro forma basis, of the issuer and
any significant subsidiary, including a
description of each security outstanding or being
registered or otherwise offered, and a statement
of the amount and kind of consideration, whether
in the form of cash, physical assets, services,
patents, good will or anything else, for which the
issuer or any subsidiary has issued any of its
securities within the past two years or is
obligated to issue any of its securities; (8) the
kind and amount of securities to be offered; the
proposed offering price or the method by which it
is to be computed; any variation therefrom at
which any proportion of the offering is to be made
to any person or class of persons other than the
underwriters, with a specification of any such
person or class; the basis upon which the offering
is to be made if otherwise than for cash; the
estimated aggregate underwriting and selling
discounts or commissions and finders' fees,
including separately cash, securities, contracts
or anything else of value to accrue to the
underwriters or finders in connection with the
offering, or, if the selling discounts or
commissions are variable, the basis of determining
them and their maximum and minimum amounts; the
estimated amounts of other selling expenses,
including legal, engineering and accounting
charges; the name and address of every underwriter
and every recipient of a finder's fee; a copy of
any underwriting or selling-group agreement
pursuant to which the distribution is to be made,
or the proposed form of any such agreement whose
terms have not yet been determined, and a
description of the plan of distribution of any
securities which are to be offered otherwise than
through an underwriter; (9) the estimated cash
proceeds to be received by the issuer from the
offering; the purposes for which the proceeds are
to be used by the issuer; the amount to be used
for each purpose, the order or priority in which
the proceeds will be used for the purposes stated;
the amounts of any funds to be raised from other
sources to achieve the purposes stated; the
sources of any such funds, and, if any part of the
proceeds is to be used to acquire any property,
including good will, other than in the ordinary
course of business, the names and addresses of the
vendors, the purchase price, the names of any
persons who have received commissions in
connection with the acquisition, and the amounts
of any such commissions and any other expense in
connection with the acquisition, including the
cost of borrowing money to finance the
acquisition; (10) a description of any stock
options or other security options outstanding, or
to be created in connection with the offering,
together with the amount of any such options held
or to be held by every person required to be named
in subdivision (2), (4), (5), (6) or (8) of this
subsection and by any person who holds or will
hold ten per cent or more in the aggregate of any
such options; (11) the dates of, parties to and
general effect concisely stated of, every
management or other material contract made or to
be made otherwise than in the ordinary course of
business if it is to be performed in whole or in
part at or after the filing of the registration
statement or was made within the past two years,
together with a copy of every such contract; (12)
a description of any material litigation or
proceeding commenced or resolved within the past
ten years, including any administrative proceeding
or any disciplinary action by self-regulatory
organizations, to which the issuer or any of its
officers, directors, persons nominated as
directors or general partners, any beneficial
owner of ten per cent or more of any class of its
equity securities, any promoter or any underwriter
of the securities to be offered, including any
partner, director or officer of any such
underwriter, was named a party, provided any
conviction for any misdemeanor involving a
security or any aspect of the securities business
or any felony shall be deemed material unless
determined by the commissioner not to be material;
(13) a copy of any prospectus, pamphlet, circular,
form letter, advertisement or other sales
literature intended as of the effective date to be
used in connection with the offering; (14) a
specimen or copy of the security being registered;
a copy of the issuer's articles of incorporation
and bylaws, or their substantial equivalents, as
currently in effect, and a copy of any indenture
or other instrument covering the security to be
registered; (15) a signed or conformed copy of an
opinion of counsel as to the legality of the
security being registered with an English
translation if it is in a foreign language, which
shall state whether the security when sold will be
legally issued, fully paid and nonassessable, and,
if a debt security, a binding obligation of the
issuer; (16) the written consent of any
accountant, engineer, appraiser or other person
whose profession gives authority to a statement
made by him if any such person is named as having
prepared or certified a report or valuation other
than a public and official document or statement
which is used in connection with the registration
statement; (17) (A) a balance sheet, statement of
income and cash flow and changes in stockholders'
equity of the issuer as of the date within four
months prior to the filing of the registration
statement, which financial statements may be
unaudited, provided if the issuer has been in
business for less than one full year from the date
of the filing of the registration statement, such
financial statements must be reviewed by an
independent certified public accountant; (B) a
balance sheet, statement of income and cash flow
and changes in stockholders' equity for each of
the three preceding fiscal years, which financial
statements must be audited by an independent
certified public accountant; and (C) if any part
of the proceeds of the offering is to be applied
to the purchase of any business, the same
financial statements which would be required if
that business were the registrant, and (18) such
additional information as the commissioner
requires by regulation or order.
Sec. 5. Subsection (h) of section 36b-33 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(h) When any person, including any nonresident
of this state, engages in conduct prohibited or
made actionable by sections 36b-2 to 36b-33,
inclusive, AS AMENDED BY THIS ACT, or any
regulation or order thereunder, and he has not
filed a consent to service of process under
subsection (g) of this section and personal
jurisdiction over him cannot otherwise be obtained
in this state, that conduct shall be considered
equivalent to his appointment of the commissioner
or his successor in office to be his attorney to
receive service of any lawful process in any
noncriminal suit, action, or proceeding against
him or his successor executor or administrator
which grows out of that conduct and which [it] IS
brought under said sections or any regulation or
order thereunder, with the same force and validity
as if served on him personally. Service may be
made by leaving a copy of the process in the
office of the commissioner, and it is not
effective unless (1) the plaintiff, who may be the
commissioner in a suit, action, or proceeding
instituted by him, forthwith sends notice of the
service and a copy of the process by registered
mail to the defendant or respondent at his last
known address or takes other steps which are
reasonably calculated to give actual notice, and
(2) the plaintiff's affidavit of compliance with
this subsection is filed in the case on or before
the return day of the process, if any, or within
such further time as the court allows.
Sec. 6. Section 36b-60 of the general statutes
is repealed and the following is substituted in
lieu thereof:
Sections 36b-60 to [36b-79] 36b-80, inclusive,
AS AMENDED BY THIS ACT, may be cited as the
"Connecticut Business Opportunity Investment Act".
Sec. 7. Section 36b-61 of the general statutes
is repealed and the following is substituted in
lieu thereof:
When used in sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, unless
the context otherwise requires:
(1) "Commissioner" means the Commissioner of
Banking or any person appointed or designated by
the Commissioner of Banking to administer said
sections.
(2) "Person" means an individual, corporation,
limited liability company, trust, partnership,
incorporated or unincorporated association or any
other legal entity.
(3) "Purchaser-investor" means a person who
has purchased or is solicited for the purchase of
a business opportunity.
(4) "Seller" means a person who is engaged in
the business of selling or offering for sale
business opportunities or any agent or
representative of such person.
(5) (A) "Sale" or "sell" includes every
contract of sale of, contract to sell, or
disposition of a business opportunity or interest
in a business opportunity for value. (B) "Offer"
or "offer to sell" includes every attempt or offer
to dispose of, or solicitation of an offer to buy,
a business opportunity or interest in a business
opportunity for value. Nothing in this subdivision
shall limit or diminish the full meaning of the
terms "sale", "sell", "offer" or "offer to sell"
as construed by the courts of this state.
(6) "Business opportunity" means the sale or
lease, or offer for sale or lease of any products,
equipment, supplies or services which are sold or
offered for sale to the purchaser-investor for the
purpose of enabling the purchaser-investor to
start a business, and in which the seller
represents (A) that the seller will provide
locations or assist the purchaser-investor in
finding locations for the use or operation of
vending machines, racks, display cases or other
similar devices, or currency-operated amusement
machines or devices, or any other devices within
the intent of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, as the
commissioner shall by regulation or order
determine, on premises neither owned nor leased by
the purchaser-investor or seller; or (B) that the
seller will purchase any or all products made,
produced, fabricated, grown, bred or modified by
the purchaser-investor using in whole or in part,
the supplies, services or chattels sold to the
purchaser-investor; or (C) that the seller
guarantees, either conditionally or
unconditionally, that the purchaser-investor will
derive income from the business opportunity; or
that the seller will refund all or part of the
price paid for the business opportunity, or
repurchase any of the products, equipment,
supplies or chattels supplied by the seller, if
the purchaser-investor is unsatisfied with the
business opportunity; or (D) that the seller will
provide a sales program or marketing program to
the purchaser-investor, provided sections 36b-60
to [36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, shall not apply to the sale of a marketing
program made in conjunction with the licensing of
a registered trademark or service mark, provided
(i) such trademark or service mark has been
effectively registered under federal law; and (ii)
for such trademark or service mark initially
registered under federal law on or after October
1, 1996, the seller files with the commissioner a
copy of the trademark or service mark certificate
prior to any offer or sale in Connecticut,
provided further that failure to file such
certificate shall not, in and of itself, preclude
reliance on this exclusion. "Business opportunity"
does not include the sale of an ongoing business
where the owner of that business sells and intends
to sell only that one business opportunity; nor
does it include the not for profit sale of sales
demonstration equipment, materials or samples, for
a total price of five hundred dollars or less to
any one person.
(7) "Not for profit sale" means a sale in
which the seller recovers only the actual costs of
producing and shipping the goods or materials
sold. A sale shall not qualify as a not for profit
sale if the price to the purchaser-investor
includes any commissions, rebates, fees or
overrides.
(8) "Trademark" or "service mark" includes
trademarks, trade names, service marks, logotypes,
advertising or other commercial symbols.
Sec. 8. Section 36b-62 of the general statutes
is repealed and the following is substituted in
lieu thereof:
(a) Prior to the sale or offer for sale of a
business opportunity the seller shall register
said business opportunity with the commissioner
by: (1) Filing a copy of the disclosure statement
required by section 36b-63, AS AMENDED BY SECTION
9 OF THIS ACT; (2) furnishing a bond in accordance
with the provisions of section 36b-64, AS AMENDED
BY SECTION 10 OF THIS ACT; (3) providing a sworn
to and certified statement containing the
information required by section 36b-65, AS AMENDED
BY SECTION 11 OF THIS ACT; (4) providing the
commissioner in accordance with subsection (b) of
this section with an irrevocable consent
appointing the commissioner or his successor in
office to be his attorney to receive service of
any lawful process in any noncriminal suit, action
or proceeding which arises under sections 36b-60
to [36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, or any regulation or order adopted or issued
under the provisions of said sections; and (5)
submitting a nonrefundable registration fee of
four hundred dollars.
(b) Every seller proposing to sell or offer
for sale a business opportunity in this state or
from this state through any person acting on an
agency basis as determined by reference to
principles of common law shall file with the
commissioner, in such form as he by regulation or
order prescribes, an irrevocable consent
appointing said commissioner or his successor in
office to be his attorney to receive service of
any lawful process in any noncriminal suit, action
or proceeding against him or his successor
executor or administrator which arises under
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, or any regulation or order
adopted or issued under said sections after the
consent has been filed, with the same force and
validity as if served personally on the person
filing the consent. Service may be made by leaving
a copy of the process in the office of the
commissioner, but such service shall not be
effective unless (1) the plaintiff, who may be the
commissioner in a suit, action or proceeding
instituted by him, forthwith sends notice of the
service and a copy of the process by registered
mail to the defendant or respondent at his last
address on file with the commissioner, and (2) the
plaintiff's affidavit of compliance with this
subsection is filed in the case on or before the
return day of the process, if any, or within such
further time as the court allows.
(c) When any person, including any nonresident
of this state, engages in conduct prohibited or
made actionable by sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, or any
regulation or order adopted or issued under said
sections, and he has not filed a consent to
service of process under subsection (b) of this
section and personal jurisdiction over him cannot
otherwise be obtained in this state, that conduct
shall be considered equivalent to his appointment
of the commissioner or his successor in office to
be his attorney to receive service of any lawful
process in any noncriminal suit, action or
proceeding against him or his successor executor
or administrator which grows out of that conduct
and which is brought under said sections or any
regulation or order adopted or issued under said
sections, with the same force and validity as if
served on him personally. Service may be made by
leaving a copy of the process in the office of the
commissioner, but such service shall not be
effective unless (1) the plaintiff, who may be the
commissioner in a suit, action or proceeding
instituted by him, forthwith sends notice of the
service and a copy of the process by registered
mail to the defendant or respondent at his last
known address, and (2) the plaintiff's affidavit
of compliance with this subsection is filed in the
case on or before the return day of the process,
if any, or within such further time as the court
allows.
(d) The registration of a business opportunity
under this section shall become effective on order
of the commissioner.
(e) (1) When any business opportunities have
been sold or offered for sale without compliance
with the registration provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, the seller thereof may apply in
writing on forms designated by the commissioner
for the postsale registration of such business
opportunities.
(2) A seller who seeks to register a business
opportunity which has been sold or offered for
sale without compliance with the registration
provisions of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, shall submit
the following to the commissioner:
(A) The documents, information and
registration fee required by [section 36b-62(a)]
SUBSECTION (a) OF SECTION 36b-62, AS AMENDED BY
SECTION 8 OF THIS ACT;
(B) A single document, signed and sworn to by
an executive officer of the seller, which contains
an explanatory statement and a statement of
nonprejudice;
(i) The explanatory statement shall include
the following information:
(aa) A statement that business opportunities
were sold or offered for sale without compliance
with the registration provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT;
(bb) A statement that, to induce each
purchaser-investor to whom a business opportunity
has been sold in violation of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, to sign the statement of nonprejudice, the
document is being prepared for presentation to
that purchaser-investor;
(cc) A full and complete statement of the
remedies provided to the purchaser-investor under
section 36b-74, AS AMENDED BY SECTION 19 OF THIS
ACT;
(dd) A statement containing any other material
facts relating to the sale or offer for sale of
the unregistered business opportunities; and
(ee) The most recent balance sheet and income
statement of the seller.
(ii) The statement of nonprejudice shall
provide:
(aa) That the purchaser-investor to whom a
business opportunity was sold without compliance
with the registration provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, read the explanatory statement;
(bb) That the purchaser-investor to whom a
business opportunity was sold without compliance
with the registration provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, is satisfied that he or she will not
be defrauded, damaged or prejudiced by the
postsale registration of the business opportunity;
and
(cc) That each purchaser-investor to whom a
business opportunity has been sold without
compliance with the registration provisions of
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, has not waived any of his or
her rights under said sections by signing the
statement.
(3) The seller shall file the document
containing both the explanatory statement and the
statement of nonprejudice with the commissioner
for review before the seller mails the document to
each purchaser-investor to whom an unregistered
business opportunity has been sold. The
commissioner may object to the content of the
document but shall in no way pass upon its
truthfulness. Following review by the
commissioner, the seller shall send the document
by certified mail, return receipt requested, to
each purchaser-investor to whom an unregistered
business opportunity has been sold and shall
submit copies of all return receipts to the
commissioner. The seller shall certify that each
purchaser-investor to whom an unregistered
business opportunity was sold has signed the
document, and shall return the signed documents to
the commissioner. The seller shall also furnish
the commissioner with a list of the names,
addresses and telephone numbers of those
purchaser-investors to whom business opportunities
have been sold without compliance with the
registration provisions of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, and the amount of payment furnished by each
purchaser-investor for the business opportunity.
(4) If it appears to the commissioner that no
person has been defrauded, prejudiced or damaged
by such noncompliance or sale and that no persons
will be defrauded, prejudiced or damaged by such
postsale registration, the commissioner may permit
those business opportunities to be registered upon
the payment of fifty dollars plus the fees
prescribed in section 36b-65, AS AMENDED BY
SECTION 11 OF THIS ACT. Registration under the
provisions of this subsection shall not affect the
prosecution of a violation of any provision of
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT.
Sec. 9. Subdivisions (16) and (17) of
subsection (b) of section 36b-63 of the general
statutes are repealed and the following is
substituted in lieu thereof:
(16) With respect to the seller and as to the
particular named business being offered, a
statement disclosing: (A) The total number of
business opportunities operating within the
calendar year immediately preceding, and as of a
date thirty days prior to, the filing of
information required by sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT; (B) the total number of company-owned outlets
operating within the calendar year immediately
preceding, and as of a date thirty days prior to,
the filing of information required by said
sections; (C) the names, addresses, and telephone
numbers of (i) the ten business opportunity
outlets of the named business opportunity business
nearest the prospective purchaser-investor's
intended location or (ii) all purchaser-investors
of the seller, or (iii) all purchaser-investors of
the seller in the state in which the prospective
purchaser-investor lives or where the proposed
business opportunity is to be located, provided
there are more than ten such purchaser-investors.
If the number of purchaser-investors to be
disclosed exceeds fifty, the listing may be made
in a separate document and delivered to the
prospective purchaser-investor with the disclosure
document if the existence of such separate
document is disclosed in the disclosure document;
(D) the number of business opportunities that,
within the calendar year immediately preceding,
and as of a date thirty days prior to, the filing
of information required by said sections, were
voluntarily terminated or not renewed by
purchaser-investors within or at the conclusion of
the term of the business opportunity agreement;
(E) the number of business opportunities that,
within the calendar year immediately preceding,
and as of a date thirty days prior to, the filing
of information required by said sections, the
seller reacquired by purchase during the term of
the business opportunity agreement and upon the
conclusion of the term of the business opportunity
agreement; (F) the number of business
opportunities that, within the calendar year
immediately preceding, and as of a date thirty
days prior to, the filing of information required
by said sections, were otherwise reacquired by the
seller during the term of the business opportunity
agreement and upon the conclusion of the term of
the business opportunity agreement; (G) the number
of business opportunities within the calendar year
immediately preceding, and as of a date thirty
days prior to, the filing of information required
by said sections, in which the seller refused
renewal of the business opportunity agreement or
other agreements relating to the business
opportunity; (H) the number of business
opportunities that, within the calendar year
immediately preceding, and as of a date thirty
days prior to, the filing of information required
by said sections, were cancelled or terminated by
the seller during the term of the business
opportunity agreement and upon conclusion of the
term of the business opportunity agreement; and
(I) with respect to the disclosures required by
subparagraphs (D), (E), (F), (G) and (H) of this
subdivision, the disclosure statement shall also
include a general categorization of the reasons
for such reacquisitions, terminations and refusals
to renew and the number falling within each such
category, including but not limited to the
following categories: Failure to comply with
quality control standards, failure to make
sufficient sales, and other breaches of contract;
(17) (A) If the seller promises services to be
performed in connection with site selection, a
statement disclosing the full nature of those
services, (B) for each agreement entered into
within the calendar year immediately preceding,
and as of a date thirty days prior to, the filing
of information required by sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, a statement disclosing the range of time that
has elapsed between the signing of the business
opportunity agreement or other agreement relating
to the business opportunity and the site
selection; (C) for each agreement entered into
within the calendar year immediately preceding,
and as of a date thirty days prior to, the filing
of information required by said sections, if the
seller is to provide operating business
opportunity outlets, a statement disclosing the
range of time that has elapsed between the signing
of each business opportunity agreement or other
agreement relating to the business opportunity and
the commencement of the purchaser-investor's
business, (D) with respect to the disclosures
required by subparagraphs (B) and (C) of this
subdivision, a seller may provide a distribution
chart using meaningful classifications with
respect to such ranges of time.
Sec. 10. Section 36b-64 of the general
statutes is repealed and the following is
substituted in lieu thereof:
If the business opportunity seller makes any
of the representations set forth in subparagraph
(C) of subdivision (6) of section 36b-61, AS
AMENDED BY SECTION 7 OF THIS ACT, the seller shall
have obtained a surety bond issued by a surety
company authorized to do business in this state or
shall have established a trust account with a
licensed and insured bank or savings institution
located in Connecticut. The amount of such bond or
trust account shall be an amount not less than
fifty thousand dollars, but the commissioner may
require a greater amount if he believes it
necessary for the protection of
purchaser-investors. Such bond or trust account
shall be in favor of the state of Connecticut. Any
person who is damaged by any violation of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, or by the seller's breach of the
contract for the business opportunity sale or of
any obligation arising under such contract may
bring an action against the bond or trust account
to recover damages suffered.
Sec. 11. Subsection (e) of section 36b-65 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(e) The following business opportunities are
exempt from subsections (a) and (b) of section
36b-62, AS AMENDED BY SECTION 8 OF THIS ACT;
sections 36b-63, AS AMENDED BY SECTION 9 OF THIS
ACT, and 36b-64, AS AMENDED BY SECTION 10 OF THIS
ACT; subsections (a), (b), (c), (d) and (f) of
this section; section 36b-66 and subdivisions (1),
(2) and (3) of section 36b-67, AS AMENDED BY
SECTION 12 OF THIS ACT: (1) (A) Subject to the
provisions of subparagraph (B) of this
subdivision, any business opportunity for which
the initial payment made by the purchaser-investor
per business opportunity does not exceed two
hundred dollars, if no representations are made
that the seller guarantees, either conditionally
or unconditionally, that the purchaser-investor
will derive income from the business opportunity.
For purposes of this subparagraph, "initial
payment" means the total amount the
purchaser-investor becomes obligated to pay to the
seller or to any third party either prior to or at
the time of delivery of the products, equipment,
supplies or services or within one year of the
commencement of operation of the business by the
purchaser-investor. If payment is over a period of
time, "initial payment" shall include the sum of
the down payment and the total periodic payments.
"Initial payment" does not include periodic
payments where the amount or rate of the payment
is based on net revenue or gross revenue generated
by the business. (B) The commissioner may, by
regulation or order as to any business opportunity
or type of business opportunity or transaction
exempt under subdivision (1) (A) of this
subsection, modify, withdraw, further condition or
waive such conditions, in whole or in part,
conditionally or unconditionally, on a finding
that such regulation or order is necessary and
appropriate, in the public interest or for the
protection of purchaser-investors; (2) any
business opportunity sold in this state
exclusively to purchaser-investors each of whom
has a net worth of not less than one million
dollars exclusive of principal residence, home
furnishings, and personal automobiles; and (3) any
other business opportunity that the commissioner
by regulation or order may exempt, conditionally
or unconditionally, if he finds that enforcement
of all the provisions of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, with respect to such business opportunity is
not necessary to protect the public interest, and
for the protection of purchaser-investors due to
the limited character of the business opportunity,
or because such business opportunity is, in the
judgment of the commissioner, adequately regulated
by federal law. (4) The commissioner may by order
deny, suspend or revoke any exemption with respect
to a particular offering of one or more business
opportunities in accordance with the provisions of
section 36b-68, AS AMENDED BY SECTION 13 OF THIS
ACT. No order under this subdivision may operate
retroactively. No person may be considered to have
violated any order issued under this subdivision
by reason of any offer or sale effected after the
entry of such order if he sustains the burden of
proof that he did not know, and in the exercise of
reasonable care could not have known, of such
order. (5) In any proceeding under this
subsection, the burden of proving an exemption is
upon the person claiming it.
Sec. 12. Section 36b-67 of the general
statutes is repealed and the following is
substituted in lieu thereof:
No person shall in connection with the sale or
offer for sale of a business opportunity: (1) Sell
or offer for sale a business opportunity in this
state or from this state unless it has first been
registered with the commissioner and declared
effective by the commissioner in accordance with
the provisions of section 36b-62, AS AMENDED BY
SECTION 8 OF THIS ACT; (2) represent that the
business opportunity will provide income or
earning potential of any kind unless the seller
has documented data to substantiate the claims of
income or earnings potential and discloses this
data to the prospective purchaser-investor at the
time such representations are made; (3) use the
trademark, service mark, trade names, logotype,
advertising or other commercial symbol of any
business which does not either control the
ownership interest in the seller or accept
responsibility for all representations made by the
seller in regard to the business opportunity,
unless it is clear from the circumstances that the
owner of the commercial symbol has knowledge of
and consents to such use and is not involved in
the sale of the business opportunity; (4) make or
authorize the making of any reference to its
compliance with sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, in any
advertisement or other contact with prospective
purchaser-investors; (5) make any claim or
representation in advertising or promotional
material, or in any oral sales presentation,
solicitation or discussion between the seller and
a prospective purchaser-investor, which is
inconsistent with the information required to be
disclosed by sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT; (6) directly or
indirectly (A) employ any device, scheme or
artifice to defraud, (B) make any untrue statement
of a material fact or omit to state a material
fact necessary in order to make the statements
made, in the light of the circumstances under
which they are made, not misleading, or (C) engage
in any act, practice or course of business which
operates or would operate as a fraud or deceit
upon any person.
Sec. 13. Subsection (a) of section 36b-68 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) The commissioner may issue a stop order
denying effectiveness to, or suspending or
revoking the effectiveness of, any business
opportunity registration if he finds: (1) That
such order is in the public interest; (2) that
such order is necessary for the protection of
purchaser-investors or prospective
purchaser-investors; (3) that the registration of
the business opportunity is incomplete in any
material respect or contains any statement which
was, in the light of the circumstances under which
it was made, false or misleading with respect to
any material fact; or (4) that any provision of
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, or any regulation, order or
condition lawfully adopted, issued or imposed
under said sections has been wilfully violated by
any person.
Sec. 14. Subsection (a) of section 36b-69 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) The fact that an application for
registration under section 36b-62, AS AMENDED BY
SECTION 8 OF THIS ACT, has been filed or the fact
that a business opportunity is effectively
registered shall not constitute a finding by the
commissioner that any document filed under
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, is true, complete and not
misleading. No such fact shall mean that said
commissioner has passed in any way upon the merits
of, or recommended or given approval to any
business opportunity.
Sec. 15. Section 36b-70 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Sections 36b-60 to [36b-79] 36b-80, inclusive,
AS AMENDED BY THIS ACT, shall be administered by
the commissioner.
Sec. 16. Section 36b-71 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Subject to the provisions of chapter 3,
the commissioner may: (1) Make such public or
private investigations within or outside of this
state as he deems necessary to determine whether
any person has violated or is about to violate any
provision of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, or any
regulation or order adopted or issued under said
sections, or to aid in the enforcement of said
sections or in the adoption of regulations and
forms under said sections; (2) require or permit
any person to file a statement in writing, under
oath or otherwise as said commissioner determines,
as to all the facts and circumstances concerning
the matter to be investigated; and (3) publish
information concerning any violation of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, or of any regulation or order adopted
or issued under said sections.
(b) For the purpose of any investigation or
proceeding under sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, the
commissioner or any officer designated by him may
administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence
and require the production of any books, papers,
correspondence, memoranda, agreements or other
documents or records which the commissioner deems
relevant or material to the inquiry.
(c) In case of contumacy by, or refusal to
obey a subpoena issued to, any person, the
superior court for the judicial district of
Hartford-New Britain*, upon application by the
commissioner, may issue to such person an order
requiring him to appear before the commissioner,
or the officer designated by him there to produce
documentary evidence if so ordered or to give
evidence concerning the matter under investigation
or in question. Failure to obey the order of the
court may be punished by the court as a contempt
of court.
(d) No person shall be excused from attending
and testifying or from producing any document or
record before the commissioner, or in obedience to
the subpoena of said commissioner or any officer
designated by him, or in any proceeding instituted
by said commissioner, on the ground that the
testimony or evidence, documentary or otherwise
required of him may tend to incriminate him or
subject him to a penalty of forfeiture; but no
individual may be prosecuted or subjected to any
penalty or forfeiture for or on account of any
transaction, matter or thing concerning which he
is compelled, after claiming his privilege against
self-incrimination, to testify or produce
evidence, documentary or otherwise, except that
the individual testifying is not exempt from
prosecution and punishment for perjury or contempt
committed in testifying.
Sec. 17. Section 36b-72 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Whenever it appears to the commissioner
that any person or persons are violating or are
about to violate any of the provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
THIS ACT, any regulation, rule or order adopted or
issued under said sections or that a further sale
or offer to sell would constitute a violation of
said sections, or any regulation, rule or order
adopted or issued under said sections, the
commissioner may in his discretion order the
person or persons to cease and desist from the
violations of the provisions of said sections or
of the regulations, rules or orders adopted or
issued under said sections or from further sale or
offering to sell business opportunities
constituting or which would constitute a violation
of the provisions of said sections or of the
regulations, rules or orders adopted or issued
under said sections. After such order is issued,
the person or persons named in such order may,
within fourteen days after receipt of the order,
file a written request for a hearing. Such hearing
shall be held in accordance with the provisions of
chapter 54.
(b) (1) Whenever it appears to the
commissioner that any person or persons have
violated any of the provisions of sections 36b-60
to [36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, or any regulation, rule or order adopted or
issued under said sections, the commissioner may
send a notice to such person or persons by
certified mail, return receipt requested. Any such
notice shall include: (A) A reference to the
title, chapter, regulation, rule or order alleged
to have been violated; (B) a short and plain
statement of the matter asserted or charged; (C)
the maximum fine that may be imposed for such
violation; and (D) the time and place for the
hearing. Such hearing shall be fixed for a date
not earlier than fourteen days after the notice is
mailed.
(2) The commissioner shall hold a hearing upon
the charges made unless such person or persons
fail to appear at the hearing. Such hearing shall
be held in accordance with the provisions of
chapter 54. After the hearing if the commissioner
finds that the person or persons have violated any
of the provisions of sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, or any
regulation, rule or order adopted or issued under
said sections, the commissioner may, in his
discretion and in addition to any other remedy
authorized by said sections, order that a civil
penalty not exceeding ten thousand dollars per
violation be imposed upon such person or persons.
If such person or persons fail to appear at the
hearing, the commissioner may, as the facts
require, order that a civil penalty not exceeding
ten thousand dollars per violation be imposed upon
such person or persons. The commissioner shall
send a copy of any order issued pursuant to this
subsection by certified mail, return receipt
requested, to any person or persons named in such
order.
(c) Whenever it appears to the commissioner
that any person or persons are violating or are
about to violate any of the provisions of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, or any regulation, rule or order
adopted or issued under said sections, or that the
further sale or offer to sell would constitute a
violation of said sections, or any regulation,
rule or order adopted or issued under said
sections, the commissioner may in his discretion
and in addition to any other remedy authorized by
said sections (1) bring an action in the superior
court for the judicial district of Hartford-New
Britain* to enjoin the acts or practices
constituting a violation and to enforce compliance
with said sections or any regulation or order
adopted or issued under said sections. Upon a
proper showing a permanent or temporary
injunction, restraining order or writ of mandamus
shall be granted and a receiver or conservator may
be appointed for the defendant or the defendant's
assets. The court shall not require the
commissioner to post a bond; (2) seek a court
order imposing a fine not to exceed ten thousand
dollars per violation against any person found to
have violated any order issued by the
commissioner; or (3) in addition to any other
remedies provided by this section, apply to the
court hearing a matter under this section for an
order of restitution whereby the defendants in
such action shall be ordered to make restitution
of those sums shown by the commissioner to have
been obtained by them in violation of any of the
provisions of said sections plus interest at the
rate set forth in section 37-3a. Such restitution
shall, at the option of the court, be payable to
the receiver or conservator appointed pursuant to
subdivision (1) of this subsection, or directly to
the persons whose assets were obtained in
violation of any provision of said sections.
(d) Any time after the issuance of an order
provided for in subsection (a) or (b) of this
section, the commissioner may accept an agreement
by any person charged with violating any provision
of sections 36b-60 to [36b-79] 36b-80, inclusive,
AS AMENDED BY THIS ACT, to enter into a written
consent order in lieu of an adjudicative hearing.
The acceptance of a consent order shall be within
the complete discretion of the commissioner or
such presiding officer as has been designated by
the commissioner. The consent order provided for
in this subsection shall contain (1) an express
waiver of the right to seek judicial review or
otherwise challenge or contest the validity of
such order; (2) a provision that the order may be
used in construing the terms of the consent order;
(3) a statement that such consent order shall
become final when issued; (4) a specific assurance
that none of the violations alleged in such order
shall occur in the future; (5) such other terms
and conditions as are necessary to further the
purposes and policies of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT; (6) the signature of each of the individual
respondents evidencing his consent; and (7) the
signature of the commissioner or of his authorized
representative.
Sec. 18. Section 36b-73 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Any person who wilfully violates any
provision of subdivision (6) of section 36b-67, AS
AMENDED BY SECTION 12 OF THIS ACT, shall be fined
for each violation a maximum of twenty-five
thousand dollars or imprisoned for not more than
ten years or both.
(b) Any person who wilfully violates any other
provision of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, shall be fined
for each violation a maximum of two thousand
dollars or imprisoned for not more than two years
or both.
(c) No information may be returned under
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, more than five years after
the alleged violation.
Sec. 19. Section 36b-74 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) If a business opportunity seller uses any
untrue or misleading statement in the sale of a
business opportunity, or fails to give the proper
disclosures in the manner required by section
36b-63, AS AMENDED BY SECTION 9 OF THIS ACT, or
fails to deliver the equipment, supplies or
products or render the services necessary to begin
substantial operation of the business opportunity
within forty-five days of the delivery date stated
in the business opportunity contract, or if the
contract does not comply with the requirements of
section 36b-66, then within one year of the date
of the contract, upon written notice to such
business opportunity seller, the
purchaser-investor may void the contract and shall
be entitled to receive from such business
opportunity seller all sums paid to such business
opportunity seller. Upon receipt of such sums,
such purchaser-investor shall make available to
such business opportunity seller at such
purchaser-investor's address or at the places at
which they are located at the time notice is
given, all products, equipment or supplies
received by such purchaser-investor.
Purchaser-investors shall not be entitled to
unjust enrichment by exercising the remedies
provided in this subsection.
(b) Any purchaser-investor injured by a
violation of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, or by a
business opportunity seller's breach of contract
subject to said sections or any obligation arising
therefrom may bring an action for recovery of
damages, including reasonable attorney's fees.
(c) Upon complaint of any person that a
business opportunity seller has violated the
provisions of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, the superior
court for the judicial district in which either
the seller or purchaser-investor is located or the
superior court for the judicial district of
Hartford-New Britain* shall have jurisdiction to
enjoin the defendant or defendants from further
violations.
(d) Any purchaser-investor who is damaged by
any violation of sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, or by a
seller's breach of the contract for the business
opportunity sale or of any obligation arising
therefrom may bring an action against the bond or
trust account provided for in section 36b-64, AS
AMENDED BY SECTION 10 OF THIS ACT, to recover
damages suffered.
(e) The rights and remedies provided by
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, shall be in addition to any
other rights or remedies provided by law or
equity.
(f) Every cause of action under sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, shall survive the death of any person
who might have been a plaintiff or defendant.
(g) No person may sue under this section more
than six years after the contract of sale.
(h) No person who has made or engaged in the
performance of any contract in violation of any
provision of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, or any
regulation or order adopted or issued under said
sections, or who has acquired any purported right
under such contract with knowledge of the facts by
reason of which its making or performance was in
violation, may base any cause of action on the
contract.
(i) Any condition, stipulation or provision
binding any person acquiring any business
opportunity to waive compliance with any provision
of sections 36b-60 to [36b-79] 36b-80, inclusive,
AS AMENDED BY THIS ACT, or any regulation or order
adopted or issued under said sections is void.
Sec. 20. Section 36b-77 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) The commissioner may from time to time
adopt, amend and rescind such regulations and
forms as are necessary to carry out the provisions
of sections 36b-60 to [36b-79] 36b-80, inclusive,
AS AMENDED BY THIS ACT, including regulations and
forms governing registrations, applications and
reports, and defining any terms, whether or not
used in said sections, insofar as the definitions
are not inconsistent with the provisions of said
sections. For the purpose of regulations and
forms, the commissioner may classify business
opportunities within his jurisdiction.
(b) No regulation or form may be adopted,
amended or rescinded unless the commissioner finds
that the action is necessary or appropriate in the
public interest or for the protection of investors
and consistent with the purposes fairly intended
by policy and provisions of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT. In adopting regulations and forms the
commissioner may cooperate with agency
administrators of the other states and the Federal
Trade Commission with a view to effectuating the
policy of said sections to achieve maximum
uniformity in the form and content of
registrations, applications and reports wherever
applicable.
(c) The commissioner may by regulation
prescribe: (1) The form and content of financial
statements required under sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT; (2) the circumstances under which
consolidated financial statements shall be filed;
and (3) whether any required financial statements
shall be certified by independent or certified
public accountants. All financial statements shall
be prepared in accordance with generally accepted
accounting practices.
(d) Any regulations adopted pursuant to the
provisions of sections 36b-60 to [36b-79] 36b-80,
inclusive, AS AMENDED BY THIS ACT, shall be
adopted in accordance with the provisions of
chapter 54.
(e) The commissioner, or employees of the
Department of Banking authorized by him, may,
whether or not requested by any person, issue
written advisory interpretations of sections
36b-60 to [36b-79] 36b-80, inclusive, AS AMENDED
BY THIS ACT, including interpretations of the
applicability of any provision of said sections.
(f) Every hearing in an administrative
proceeding shall be public.
(g) No provision of sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, imposing any liability applies to any act
done or omitted in good faith in conformity with
any regulation, form, order or advisory
interpretation of the commissioner,
notwithstanding that such regulation, form, order
or advisory interpretation may later be amended or
rescinded or be determined by judicial or other
authority to be invalid for any reason.
Sec. 21. Section 36b-78 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) A document is filed when it is received by
the commissioner.
(b) The commissioner shall keep a register of
all applications for registration which are or
have ever been effective under sections 36b-60 to
[36b-79] 36b-80, inclusive, AS AMENDED BY THIS
ACT, and all denial, suspension or revocation
orders which have ever been entered under said
sections. Such register shall be open for public
inspection.
(c) The information contained in or filed with
any registration, application or report may be
made available to the public under the provisions
of chapter 3.
(d) Upon request and at such charges as
provided for in chapter 3, the commissioner shall
furnish to any person photostatic or other copies,
certified under his seal of office if requested,
of any entry in the register or any document which
is a matter of public record. In any proceeding or
prosecution under sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, any
copy so certified shall be prima facie evidence of
the contents of the entry or document certified.
Sec. 22. Section 36b-79 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Within one hundred and twenty days following
the end of the seller's most recent fiscal year
and each year thereafter, each seller whose
business opportunity has been registered under
sections 36b-60 to [36b-79] 36b-80, inclusive, AS
AMENDED BY THIS ACT, shall renew the registration
by submitting to the commissioner: (1) An annual
renewal registration fee of one hundred dollars;
(2) an application filed in accordance with the
requirements of subsection (a) of section 36b-65,
reflecting all amendments as of the date of
filing; (3) a disclosure document filed in
accordance with the requirements of sections
36b-62, AS AMENDED BY SECTION 8 OF THIS ACT, and
36b-63, AS AMENDED BY SECTION 9 OF THIS ACT,
reflecting all amendments, clearly marked, since
the date of the most recent disclosure document
that was filed with the commissioner, or, if no
such amendments have been made, an affidavit so
stating; and (4) financial statements in
accordance with the requirements of subsection (b)
of section 36b-65. In the event that the seller
fails to submit the fee and information within the
time period and in accordance with requirements of
this section, the registration of such seller's
business opportunity shall terminate.
Sec. 23. Section 36b-80 of the general
statutes is repealed and the following is
substituted in lieu thereof:
No person shall make or cause to be made in
any document filed with the commissioner or in any
proceeding under sections 36b-60 to [36b-79]
36b-80, inclusive, AS AMENDED BY THIS ACT, any
statement which is, at the time and in the light
of the circumstances under which it is made, false
or misleading in any material respect.
Approved May 6, 1997