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Bill Number: 2866 Ratification Number: 699 Act Number 604 Introducing Body: House Subject: The South Carolina Business Opportunity Sales Act
(A604, R699, H2866)
AN ACT TO AMEND SECTION 39-57-20, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE SOUTH CAROLINA BUSINESS OPPORTUNITY SALES ACT, SO AS TO REVISE THE DEFINITION OF "BUSINESS OPPORTUNITY" AND TO FURTHER PROVIDE FOR EXCEPTIONS TO THIS DEFINITION; AND TO AMEND SECTION 39-57-50, RELATING TO REGISTRATION AND FILING OF INFORMATION WITH THE SECRETARY OF STATE UNDER THE BUSINESS OPPORTUNITY SALES ACT, SO AS TO AUTHORIZE THE SECRETARY OF STATE TO CHARGE A NONREFUNDABLE FILING FEE OF FIFTY DOLLARS FOR PROCESSING INFORMATION FILED BY THE SELLER.
Be it enacted by the General Assembly of the State of South Carolina:
Definition and exceptions revised
SECTION 1. Section 39-57-20 of the 1976 Code is amended to read:
"Section 39-57-20. As used in this chapter 'business opportunity' means the sale or lease of any products, equipment, supplies, or services which are sold to the purchaser for the purpose of enabling the purchaser to start a business, for which the purchaser is required to pay the seller a fee which exceeds two hundred fifty dollars, and in which the seller represents:
(1) that he will provide locations or assist the purchaser 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, on premises neither owned nor leased by the purchaser or seller; or
(2) that he will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part, the supplies, services, or chattels sold to the purchaser; or
(3) that he guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid for the business opportunity; or that he 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 is unsatisfied with the business opportunity; or
(4) the seller will provide a sales program or marketing program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity; provided, that this subsection does not apply to the sale or a marketing program made in conjunction with the licensing of a registered trademark or service mark.
'Business opportunity' does not include the sale of ongoing businesses when the owner of those businesses sells or intends to sell any portion thereof; provided, a business is not considered an ongoing business unless it has filed income tax returns with the South Carolina Tax Commission for at least one year; nor does it include the sale of assets or substantially all of the assets of an ongoing business; nor does it include payment for the not-for-profit sale of sales demonstration equipment, material or samples, or where the payment is made for product inventory sold to the purchaser at a bona fide wholesale price; nor does it include the sale or lease of any products, equipment, supplies, or services where the seller has a net worth on a consolidated basis, according to its most recent audited financial statement, of not less than ten million dollars."
Filing fee authorized
SECTION 2. Section 39-57-50 of the 1976 Code is amended to read:
"Section 39-57-50. (a) The seller of every business opportunity shall file with the Secretary of State a copy of the disclosure statement required by Section 39-57-30 before placing any advertisement or making any other representations to prospective purchasers in this State and shall update this filing as any material change in the required information occurs, but no less than annually. If the seller is required by Section 39-57-40 to provide a bond or establish a trust account, he contemporaneously shall file with the Secretary of State a copy of the bond or a copy of the formal notification by the depository that the trust account is established. The Secretary of State shall charge a nonrefundable filing fee of fifty dollars for processing and maintaining the information filed by the seller.
(b) The Secretary of State shall maintain a record of all sellers registering under this chapter and shall assign a registration number to each. The seller must be advised in writing of the assigned registration number, and any advertisements, pamphlets, or brochures used in the promotion of the business opportunity by the seller must include the assigned registration number in the following manner: 'S.S. Reg. No. .'
(c) Any person who fails to file is guilty of a misdemeanor and, upon conviction, must be fined in an amount not to exceed two hundred dollars or imprisoned for not more than thirty days. Each day in which a person fails to file constitutes a separate offense."
SECTION 3. This act takes effect upon approval by the Governor.