Sec. 36b-3. (Formerly Sec. 36-471). Definitions. As used in sections 36b-2 to 36b-34, inclusive, unless the context otherwise requires:
(1) “Agent” means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. “Agent” does not include an individual who represents an issuer in (A) effecting transactions in a security exempted by subdivision (1), (2), (3), (4), (6), (9), (10), (11) or (22) of subsection (a) of section 36b-21, (B) effecting transactions exempted by subsection (b) of section 36b-21, except for transactions exempted by subdivisions (10), (13) or (14) of said subsection, (C) effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, or (D) effecting transactions in any covered security, except for covered securities within the meaning of Sections 18(b)(2) or 18(b)(4)(E) of the Securities Act of 1933. “Agent” does not include such other persons not within the intent of this subdivision as the commissioner may by regulation or order determine. A general partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if such person otherwise comes within this definition and any compensation that such person receives is directly or indirectly related to purchases or sales of securities.
(2) “Associated person” has the meaning given to that term in Section 3(a)(21) of the Securities Exchange Act of 1934.
(3) “Blank check company” means any company that (A) devotes substantially all of its efforts to establishing a new business in which planned principal operations have not commenced or, that has commenced planned principal operations, but has not derived significant revenue from such operations; and (B) has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.
(4) “Branch office” means any location other than the main office at which an agent or investment adviser agent regularly conducts business on behalf of a broker-dealer or investment adviser, or any location that is held out as such, excluding: (A) Any location that is established solely for customer service or back-office-type functions where no sales activities are conducted and that is not held out to the public as a branch office, (B) any location that is the agent's or investment adviser agent's primary residence, provided (i) only agents or investment adviser agents who reside at the location and are members of the same immediate family conduct business at the location, (ii) the location is not held out to the public as an office and the agent or investment adviser agent does not meet with customers at the location, (iii) neither customer funds nor securities are handled at that location, (iv) the agent or investment adviser agent is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements and other communications to the public by such agent or investment adviser agent, (v) the agent's or investment adviser agent's correspondence and communications with the public are subject to the supervision of the broker-dealer or investment adviser with which such agent or investment adviser agent is associated, (vi) electronic communications, including electronic mail, are made through the electronic system of the broker-dealer or investment adviser, (vii) all orders for securities are entered through the designated branch office or an electronic system established by a broker-dealer that is reviewable at the branch office, (viii) written supervisory procedures pertaining to supervision of activities conducted at the residence are maintained by the broker-dealer or investment adviser, and (ix) a list of the residence locations is maintained by the broker-dealer or investment adviser, (C) any location, other than a primary residence, that is used for securities or investment advisory business for less than thirty business days in any one calendar year, provided the broker-dealer or investment adviser complies with the provisions of subparagraph (B)(ii), (iii), (iv), (v), (vi), (vii) and (viii) of this subdivision, (D) any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, which is not held out to the public as an office, (E) any location that is used primarily to engage in nonsecurities activities and from which the agent or investment adviser agent effects no more than twenty-five securities transactions in any one calendar year, provided any advertisement or sales literature identifying such location also sets forth the address and telephone number of the location from which the agent or investment adviser agent conducting business at the nonbranch locations is directly supervised, (F) the floor of a registered national securities exchange where a broker-dealer conducts a direct access business with public customers, (G) a temporary location established in response to the implementation of a business continuity plan, or (H) any other location not within the intent of this subdivision as the commissioner may determine. As used in this subdivision, the term “business day” does not include any partial business day, provided the agent or investment adviser agent spends at least four hours on such day at the designated branch office of such agent or investment adviser agent during the hours that such office is normally open for business.
(5) “Broker-dealer” means any person engaged in the business of effecting transactions in securities for the account of others or for such person's own account. “Broker-dealer” does not include (A) an agent, (B) an issuer, (C) a bank, as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, when conducting activities that would except it from the definitions of “broker” or “dealer” under Sections 3(a)(4) or 3(a)(5) of the Securities Exchange Act of 1934, (D) a person who has no place of business in this state if such person effects transactions in this state exclusively with or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, or (iii) a bank and trust company, a national banking association, a savings bank, a savings and loan association, a federal savings bank, a federal savings and loan association, a credit union, a federal credit union, a trust company, an insurance company, an investment company as defined in the Investment Company Act of 1940, a pension or profit-sharing trust, or other financial institution or institutional buyer, whether acting for itself or as trustee, or (E) such other persons not within the intent of this subdivision as the commissioner may by regulation or order determine.
(6) “Commissioner” means the Banking Commissioner or any person appointed or designated by the Banking Commissioner to administer sections 36b-2 to 36b-34, inclusive.
(7) “Covered security” has the meaning given to that term in Section 18(b) of the Securities Act of 1933.
(8) “Fraud”, “deceit” and “defraud” are not limited to common-law deceit.
(9) “Guaranteed” means guaranteed as to payment of principal, interest or dividends.
(10) “International banking institution” means an international financial institution, as defined in 22 USC 262r, as from time to time amended, of which the United States is a member and whose securities are exempt from registration under the Securities Act of 1933.
(11) “Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. “Investment adviser” does not include (A) an investment adviser agent; (B) a bank, as defined in Section 202(a)(2) of the Investment Advisers Act of 1940, or a bank holding company, as defined in the Bank Holding Company Act of 1956, that is excepted from the definition of “investment adviser” in Section 202(a)(11) of the Investment Advisers Act of 1940; (C) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of such person's profession; (D) a broker-dealer whose performance of these services is solely incidental to the conduct of such person's business as a broker-dealer and who receives no special compensation for them; (E) a publisher of any bona fide newspaper, news magazine, or business or financial publication of general, regular, and paid circulation; (F) a person whose advice, analyses or reports relate only to securities exempted by subdivision (1) of subsection (a) of section 36b-21; (G) any insurance company under the supervision of the Insurance Commissioner or any affiliate thereof, as defined in subsection (b) of section 38a-129, when providing services to separate accounts of that insurance company or registered investment companies all of whose shares are owned by such insurance company or its insurance company affiliates or by the separate accounts of that insurance company or its insurance company affiliates; and (H) such other persons not within the intent of this subdivision as the commissioner may by regulation or order designate.
(12) (A) “Investment adviser agent” includes (i) any individual, including an officer, partner or director of an investment adviser, or an individual occupying a similar status or performing similar functions, employed, appointed or authorized by or associated with an investment adviser to solicit business from any person for such investment adviser in this state and who receives compensation or other remuneration, directly or indirectly, for such solicitation; or (ii) any partner, officer, or director of an investment adviser, or an individual occupying a similar status or performing similar functions, or other individual employed, appointed, or authorized by or associated with an investment adviser, who makes any recommendation or otherwise renders advice regarding securities to clients and who receives compensation or other remuneration, directly or indirectly, for such advisory services.
(B) “Investment adviser agent” does not include an individual employed, appointed or authorized by, associated with or acting on behalf of an investment adviser exempt from registration under subdivision (1) or (2) of subsection (e) of section 36b-6, who is a “supervised person”, as defined in Section 202(a)(25) of the Investment Advisers Act of 1940, unless such supervised person is an “investment adviser representative”, as defined in Securities and Exchange Commission Rule 203A-3, 17 CFR 275.203A-3.
(C) “Investment adviser agent” does not include such other individuals not within the intent of this subdivision as the commissioner may by regulation or order designate.
(13) “Issuer” means any person who issues or proposes to issue any security; except that (A) with respect to a certificate of deposit, a voting-trust certificate, or a collateral-trust certificate, or with respect to a certificate of interest or a share in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management, or unit type, “issuer” means any person performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued; (B) with respect to an equipment trust certificate or similar security serving the same purpose, “issuer” means any person who uses or will use the property, any person to whom the property or equipment is or will be leased or conditionally sold or any person who is otherwise contractually responsible for assuring payment of the certificate; and (C) with respect to a fractional undivided interest in oil, gas or other mineral leases or in payments out of production under a lease, right or royalty, “issuer” means any owner of an interest in the lease or in payments out of production under a lease, right or royalty, whether whole or fractional, who creates fractional interests for the purpose of sale.
(14) “Nonissuer” means not directly or indirectly for the benefit of the issuer.
(15) “Person” means an individual, a corporation, a limited liability company, a partnership, a limited partnership, a limited liability partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government or a political subdivision of a government.
(16) (A) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value. (B) “Offer” or “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value. (C) Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing shall be conclusively presumed to constitute a part of the subject of such purchase and to have been sold for value. (D) 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. (E) A purported gift of assessable stock is considered to involve an offer and sale. (F) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security. (G) The terms defined in this subdivision do not include: (i) Any bona fide pledge or loan; (ii) any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash or property or in stock; (iii) any act incident to a class vote by security holders on a merger, exchange of securities for securities, consolidation, reclassification of securities, or sale of assets in consideration of the issuance of securities or securities and cash of another person other than an individual; or (iv) any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved by any state or federal court.
(17) “Securities Act of 1933”, “Securities Exchange Act of 1934”, “Public Utility Holding Company Act of 1935”, “Investment Advisers Act of 1940” and “Investment Company Act of 1940” mean the federal statutes of those names, as from time to time amended.
(18) “Securities and Exchange Commission” means the United States Securities and Exchange Commission.
(19) “Security” means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, interests of limited partners in a limited partnership, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, put, call, straddle, option, or privilege on any security or group or index of securities, including any interest in or based on the value of such security, group or index, put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. “Security” includes (A) a certificated and an uncertificated security, and (B) as an “investment contract”, an interest in a limited liability company or limited liability partnership, but does not include any insurance or endowment policy or annuity contract issued by an insurance company that is subject to regulation by the Insurance Commissioner.
(20) “Self-regulatory organization” means a national securities exchange, a national securities association of broker-dealers or a clearing agency registered under the Securities Exchange Act of 1934 or the Municipal Securities Rulemaking Board established under the Securities Exchange Act of 1934.
(21) “Shell company” or “dormant company” means any company which does not pursue nor has the financial capacity to pursue a business plan or purpose.
(22) “State” means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.
(P.A. 77-482, S. 2; 77-614, S. 161, 163, 587, 610; P.A. 78-5, S. 1–3; 78-34, S. 1, 2, 17; 78-303, S. 85, 136; P.A. 79-396, S. 1–4, 11; P.A. 80-88, S. 1–3, 12; 80-482, S. 265, 345, 348; P.A. 81-292, S. 1, 2; P.A. 82-149, S. 1–3, 16; P.A. 83-368, S. 1, 2, 11; P.A. 85-169, S. 1, 2, 11; P.A. 87-9, S. 2, 3; 87-375, S. 1; P.A. 88-208, S. 1; P.A. 89-220, S. 1; P.A. 91-145, S. 1; P.A. 92-12, S. 94; P.A. 93-157, S. 1, 4; P.A. 95-66, S. 1; 95-79, S. 136, 189; P.A. 96-192, S. 1; P.A. 97-220, S. 1, 15; P.A. 98-162, S. 1, 2; 98-177, S. 6; P.A. 99-36, S. 35; 99-38, S. 1; P.A. 01-48, S. 1, 2; P.A. 03-84, S. 26; P.A. 05-177, S. 1; P.A. 06-165, S. 2; P.A. 10-141, S. 3; P.A. 16-65, S. 9; P.A. 21-40, S. 40.)
History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner within the department of business regulation, likewise placed insurance commissioner within said department, reflecting incorporation of their respective departments as divisions within said department, effective January 1, 1979; P.A. 78-5 extensively redefined “agent” and “broker-dealer”; P.A. 78-34 extensively redefined “investment advisor” and “sell”; P.A. 79-396 redefined “agent” to specifically exclude “person not within the intent of this subsection” as determined by commissioner, redefined “broker-dealer” to include similar reference in Subdiv. (5), added “in this state” for clarity in Subsec. (f)(7), defining “investment advisor”, and rephrased Subsec. (k)(3)(D); P.A. 80-88 added provisions re investment advisory publications in Subsec. (f), added reference to issuance of “securities and cash” in Subsec. (k) and added Subsec. (o) defining “investment advisory publication”; P.A. 80-482 restored banking and insurance divisions as independent departments and abolished the department of business regulation, allowing changes in commissioners' names accordingly; P.A. 81-292 amended Subsec. (h) by deleting the provision that with respect to certificates of interest or participation in oil, gas or mining titles or leases, or in payments out of production under such titles or leases, there is not considered to be any “issuer”, and amended Subsec. (k)(3)(C) by replacing “stockholders” with “security holders” and deleting the restriction that the sale be of “corporate” assets and replacing securities and cash of another “corporation” with the securities and cash of another “person”; P.A. 82-149 amended Subsec. (b) by including and excluding additional individuals under the definition of “agent” depending on the transaction involved, added Subsec. (h)(2), and amended Subsec. (k) by deleting the definitions of “sell” and “offer for sale” and defining “sale”, “sell”, “offer” and “offer to sell” and revised the subdivision indicators; P.A. 83-368 made technical changes in Subsec. (b), deleted the provisions of Subsec. (c)(B) whereby a person directing fifteen or less offers to sell or buy into the state for 12 consecutive months was not considered a broker-dealer and made technical changes in Subsec. (g); P.A. 85-169 amended Subsecs. (c) and (f) deleting “mutual” from “mutual savings bank”; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 87-375 made technical change in Subsec. (b); P.A. 88-208 redefined “investment advisor agent” by substituting the references to individual for person and adding the provision re receipt of compensation for a solicitation and redefined “security” to include interests of limited partners in a limited partnership; P.A. 89-220 added Subsec. (p) defining “branch office”; P.A. 91-145 removed the exception for certain investment advisory publications from Subsec. (f)(4); P.A. 92-12 redesignated Subsecs., Subdivs. and Subparas., and made a technical change; P.A. 93-157 added Subdivs. (17) and (18) defining “blank check company” and “shell company” or “dormant company”, respectively, effective July 1, 1993; Sec. 36-471 transferred to Sec. 36b-3 in 1995; P.A. 95-66 and 95-79 redefined “person” to include a limited liability company, effective May 31, 1995; P.A. 96-192 amended Subpara. (2)(B), defining “agent”, re transactions exempted by both Sec. 36b-21(b)(13) and the Securities Act of 1933; P.A. 97-220 redefined “agent” and “investment adviser”, added definitions of “associated person”, “covered security” and “Investment Advisers Act of 1940”, deleted definition of “investment advisory publication”, renumbered all definitions and made technical changes, effective July 1, 1997; P.A. 98-162 redefined “investment advisor” to exclude investment adviser agents and to make technical changes and redefined “investment adviser agent”; P.A. 98-177 made technical changes; P.A. 99-36 made a technical change in Subdiv. (1); P.A. 99-38 redefined “investment adviser agent” in Subdiv. (11); P.A. 01-48 redefined “broker-dealer” in Subdiv. (5) and “investment adviser” in Subdiv. (10); P.A. 03-84 changed “Commissioner of Banking” to “Banking Commissioner” in Subdiv. (6), effective June 3, 2003; P.A. 05-177 made technical changes in definitions of “agent” in Subdiv. (1) and “blank check company” in Subdiv. (3), redefined “branch office” in Subdiv. (4), inserted “a federal savings bank” in Subdiv. (5)(D)(iii), defined “international banking institution” in new Subdiv. (10), redesignated existing Subdivs. (10) to (16) as Subdivs. (11) to (17), made a technical change in definition of “investment adviser agent” in Subdiv. (12)(A), redefined “issuer” in Subdiv. (13), added limited partnership and limited liability partnership in definition of “person” in Subdiv. (15), defined “Securities and Exchange Commission” in new Subdiv. (18), redesignated existing Subdiv. (17) as Subdiv. (19) and redefined “security” therein, defined “self-regulatory organization” in new Subdiv. (20), and redesignated existing Subdivs. (18) and (19) as Subdivs. (21) and (22); P.A. 06-165 amended Subdiv. (4)(C) to make a technical change, effective June 6, 2006; P.A. 10-141 replaced references to Sec. 36b-33 with references to Sec. 36b-34, effective June 7, 2010; P.A. 16-65 amended Subdiv. (1)(D) by replacing “18(b)(4)(D)” with “18(b)(4)(E)”, effective July 1, 2016; P.A. 21-40 made a technical change in Subdiv. (4).
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