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Regulatory Alert

CURRENT PROPOSED STATE OF ILLINOIS RULES AFFECTING SMALL BUSINESS

If any of the following proposed regulations impact your business, let us know!   Click here to submit comments on how the proposed rulemakings will impact your business or industry.   

Following are  proposed rules of possible interest to small businesses published in the Illinois Register.  During the comment period, individuals have an opportunity to express their support or opposition to the rule.  To submit comments or to learn more about the proposed rules, contact Katy Khayyat at the Department of Commerce and Economic Opportunity Business Information Center via e-mail at Katy.Khayyat@Illinois.gov  or call (800) 252-2923 or (217) 785-8020. 

To get more information on Illinois Rules and Regulations, how to file a complaint about a burdensome or excessive state rule, go to www.ienconnect.com/regflex.
 

 

 

 

 

The following proposed amendments will impact brokers assisting in merger and acquisition activity: 

 

 

 

The Secretary of State proposed an amendment to Regulations Under Illinois Securities Law of 1953 (14 IAC 130; 40 Ill. Reg. 329) providing exemption from registration for merger and acquisition brokers. 

 

Bottom Line:  This rule provides an exemption from registration for brokers assisting in merger and acquisition activity.  Exempted brokers must still comply with all anti-fraud provisions of the Illinois Securities Act.  The full text of the proposed amendment is posted on the SOS website, http://www.cyberdriveillinois.com/departments/index/register/home.html.   This rule was published in the January 8, 2016 Illinois Register.  For questions or to submit comments, contact Tanya Solov, Illinois Secretary of State, Department of Securities, at tsolov@ilsos.net. Click here to submit comments.

 

 

 

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The following regulation will impact businesses regulated under the Illinois Securities Law of 1953:        

 

 

 

The Secretary of State proposed an amendment to Regulations Under Illinois Securities Law of 1953 (14 IAC 130; 40 Ill. Reg. 175) requiring regulated businesses (e.g. investment advisors) to establish and maintain a written Business Continuity and Succession Plan addressing the following issues:  protection, backup and recovery of books and records; alternate means of communication with customers, employees, key personnel, vendors and service providers; office relocation in the event the primary place of business is temporarily or permanently lost; assignment of duties to qualified responsible persons in the event that key personnel die or are unavailable; and other means of minimizing service disruptions or client harm from significant business interruption.  SOS states that this rulemaking is based upon a model business continuity planning rule adopted by the North American Securities Administrators Association.   

 

Bottom Line:  This rulemaking mandates the preparation of a Business Continuity and Succession Plan for protection of investors in case of death of key personnel, loss of a place of business or records, or other disruption of the investment advisor’s business activities.  The full text of the proposed amendment is posted on the SOS website, http://www.cyberdriveillinois.com/departments/index/register/home.html.   The rule was published in the January 4, 2016 Illinois Register.  For questions or to submit comments, contact Tanya Solov, Illinois Secretary of State, Department of Securities, at tsolov@ilsos.net. Click here to submit comments.

 

 

 

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The following proposed regulation will impact businesses subject to regulation under the Illinois Securities Law: 

 

 

 

The Secretary of State proposed an amendment to Regulations Under Illinois Securities Law of 1953 (14 IAC 130; 40 Ill. Reg. 441) implementing recent statutory changes that allow investment in a new or existing business via crowdfunding (collecting funds on the internet).  The rulemaking requires crowdfunded businesses that sell shares or stocks to file notice with the Secretary of State at least 15 days before their first sale of securities, to provide this notice to investors, and to post the notice on the business’ dedicated internet portal.  These notices must be updated annually.  Notice must also be provided if the business terminates its offering of securities; a filing fee of $100 is required for this notice.  Other provisions address escrow agreements, required disclosure, the maximum and minimum number or around of securities to be sold, the right of an investor to cancel, return of funds if an offering is not completed, qualification of investors, and factors that disqualify businesses from participating in the crowdfunding process.  

 

Bottom Line:  The rulemaking sets forth requirements for crowdfunding issuers.  Required filings with the Secretary of State as follows:  Notice as a Crowdfunding Issuer before sale of securities or solicitation, filing an annual renewal, and filing of Termination of Funding forms when an offering concludes; disclosures to investors regarding specifics an status of an offering.   To submit comments or ask questions, contact Tanya Solov, Director, Illinois Secretary of State, Department of Securities, 69 West Washington, Suite 1220, Chicago, IL 60602, or email tsolov@ilsos.net.  Click here to submit comments.

 

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The following proposed regulation will impact tobacco products retailers, distributors and manufacturers:   

 

 

 

The Department of Revenue proposed amendments to Tobacco Products Tax Act of 1995 (86 IAC 660; 40 Ill. Reg. 2156) implementing provisions of Public Acts 97-688, 98-273 and 98-1055.  The amendments add a definition of moist snuff and reflect a change in the manner it is taxed from a percentage basis to a weight-based approach; increase the rate of tax on other tobacco products from 18% to 36%; tax packages of 20-25 little cigars as cigarettes; require retailers of tobacco products to obtain a retailer’s license; and require stamping distributors to affix stamps on packages of little cigars in the same way cigarettes are stamped.  The rulemaking also modifies returns and documentation for distributors collecting taxes on moist snuff and little cigars; requires electronic filing of certain documents; adds new recordkeeping requirements; explains restrictions on purchase, sale and possession of tobacco products; reflects changes to conditions for making exempt sales; explains claims made under retailers’ provisions; addresses credits for stamps damaged, unused, destroyed or affixed to packages of little cigars returned to the manufacturer; prescribes statutory penalties, interest and procedures; and adds various definitions. 

 

Bottom Line:  Beginning January 1, 2016, all retailers that sell tobacco products at retail must obtain a retailer's license from the Department to sell tobacco products.  Retailers are required to file an application for a license with the Department for each location at which the retailers sell tobacco products. The annual fee for each location is $75. Retailers are required to maintain books and records for their purchases and sales of tobacco products. As a result of the changes in the manner of taxing moist snuff and little cigars, distributors will be required to provide additional information on their monthly returns. Distributors whose annual tax liability is $20,000 or more for the preceding calendar year are required to make tax payments by electronic funds transfer.  Tobacco Products Tax Act is being amended in response to changes made to the Tobacco Products Tax Act of 1995 (Act) by PA 97-688, PA 98-273 and PA 98-1055 and to incorporate some existing statutory provisions. Section 660.5 is amended to add a definition of "moist snuff" and reflect the change in the manner moist snuff is taxed -- from a percentage basis to a weight-based approach -- made by PA 97-688. The Section is also amended to reflect the increase in the rate of the tax on other tobacco products from 18% of the wholesale price to 36%. Section 660.05 is also amended to reflect changes enacted by PA 98-273; beginning July 1, 2013, little cigars in packages containing 20 or 25 little cigars are taxed in the same manner and at the same rate as cigarettes. Section 660.10 is amended to add definitions for "contraband cigarettes", "little cigars", "stamps", "stamping distributor" and several existing statutory definitions.  Section 660.15 is amended to reflect that the existing licensing section applies only to distributors and reflects changes made by PA 98-271 regarding little cigars. A new Section 660.16 reflects the changes enacted by PA 98-1055 that require retailers of tobacco products to obtain retailer's licenses. A new Section 660.18 incorporates changes made by PA 98-273. Beginning July 1, 2013, stamping distributors are required to affix tax stamps on packages of little cigars containing 20 or 25 little cigars in the same manner as cigarettes. Section 660.18 explains the process of acquiring tax stamps and affixing them to packages of little cigars. Section 660.20 is amended to modify the requirements for returns filed by distributors in response to the changes in the method and manner of taxing moist snuff and little cigars. Also, effective January 1, 2016, returns, schedules, documents and data required to be filed by the Act with the Department must be filed electronically in the format required by the Department. A new Section 660.24 explains the recordkeeping requirement for retailers of tobacco products. Section 660.25 is amended to require distributors to place their Tobacco Products License number on invoices unless a waiver from the Department is obtained by a distributor. A new Section 660.26 contains new requirements for invoices issued by distributors for little cigars. A new Section 660.27 explains the restrictions on the sale and possession of little cigars by manufacturers. A new Section 660.28 explains the restrictions on the purchase and possession of little cigars and other tobacco products by retailers. A new Section 660.29 explains the restrictions on the purchase, sale and possession of little cigars by wholesalers. Section 660.30 is amended to reflect changes to the conditions for making exempt sales as a result of the changes made in the manner of taxing packages of little cigars containing 20 or 25 little cigars. Section 660.35 is amended to incorporate the claims sections contained in the Retailers' Occupation Tax Act. A new Section 660.40 addresses credits for stamps that are damaged, unused, destroyed or affixed to packages of little cigars returned to the manufacturer. A new Section 660.45 addresses the revocation, cancellation and suspension of distributor and retailer licenses. A new Section 660.50 includes statutory penalties, interest and procedures. A new Section 660.55 identifies the sections of the Retailer's Occupation Tax Act incorporated by reference into the Tobacco Products Tax Act.  For questions to submit comments contact Richard Wolters, DOR Legal Services, 101 West Jefferson Street, Springfield, 62794 or call (217) 782-2844 or email Richard.Wolters@illinois.gov.

Click here to submit comments.

 

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