The following words and phrases, as used in this article, shall have the
(1) Authorizing act.
Any of the following statutes or
a. Any of the following sections,
as amended: Section 11-20-1 et seq., relating to industrial revenue bonds to be
issued by counties; Section 11-54-20 et seq., relating to industrial revenue
bonds to be issued by municipalities; Section 11-54-80 et seq., relating to
industrial revenue bonds to be issued by municipal industrial development
boards; Section 11-58-1 et seq., relating to industrial revenue bonds to be
issued by municipal medical clinic boards, Section 22-21-170 et seq., relating
to industrial revenue bonds to be issued by county and municipal hospital
authorities; and Section 11-20-30 et seq., relating to industrial revenue bonds
to be issued by county industrial development boards.
b. The following acts of the
Alabama Legislature: Act No. 4, enacted at the 1956 Second Special Session of
the Alabama Legislature (1956 Acts, p. 240 et seq.), relating to industrial
revenue bonds to be issued by certain municipalities to finance hotel and motel
projects and Act No. 337, enacted at the 1971 Third Extra Session of the Alabama
Legislature (1971 Acts, p. 4625 et seq.), relating to industrial revenue bonds
to be issued by certain municipalities to finance hotel and motel projects.
The Alabama Securities Commission
existing under Article 2 (commencing with Section 8-6-50) of Chapter 6 of Title
The director appointed by the
commission pursuant to Section 8-6-55 or, in the absence of the director or his
or her inability to act, the deputy director appointed by the director as
provided in Section 8-6-57.
(4) Governing body.
The county commission, council,
board of commissioners, board of directors, or other governing body of any
The guarantor of the performance
by the lessee of its obligations under a lease or the guarantor of any
industrial revenue bonds.
With respect to any industrial
revenue bonds the term means that there is a reasonable probability that the
bonds will be deficient in one or more of the following respects:
a. The project may not be
b. The principal of or interest on
the industrial revenue bonds will not be paid when due.
c. The industrial revenue bonds
may be sold or distributed by the parties or in a manner as to constitute a
fraud on one or more purchasers of the bonds.
(7) Industrial revenue bonds.
The bonds, warrants, notes,
certificates of indebtedness, or other obligations issued by any issuer under
the authority of the authorizing act to finance or refinance a project or to
refund bonds, but does not include either of the following:
a. Any obligation unless the
lessee is a lessee as defined in this section.
b. Any issue of bonds, warrants,
notes, certificates of indebtedness, or other obligations, any of which has a
stated maturity not more than 18 months from the date of its issuance and
evidences a loan initially made by a bank to the issuer of the bonds, warrants,
notes, certificates of indebtedness, or other obligations.
Any county, city, town,
municipality, or public corporation issuing industrial revenue bonds under the
(9) Judicial validation.
The procedure described in Section
8-6-119 by which industrial revenue bonds may be validated and culminating in a
decree of the circuit court validating the bonds.
The lease, installment purchase,
or other agreement by which the lessee obtains the right to use the project and
agrees to make payments sufficient to pay the principal of and interest on the
industrial revenue bonds issued to finance or refinance the project.
The lessee, purchaser, or user of
a project under the lease. The term does not include the State of Alabama, any
county, any city, town, or municipality, any public corporation or any nonprofit
corporation organized and operated exclusively for religious, charitable, or
educational purposes, no part of the net earnings of which inures to the benefit
of any private share holder, member, or individual.
The instrument or the procedure,
or both, by which an issuer is required by this article to notify the director
prior to the proposed issuance of industrial revenue bonds.
Any land, plant, building,
facilities, equipment, or other property proposed to be acquired with the
proceeds of any industrial revenue bonds to be used by a lessee under a lease.
(14) Served upon the issuer.
As applied to a stop order, notice
of a reference to the commission, or of a hearing before the commission, the
term means that it has been deposited in the United States mail in a sealed
envelope with first class, certified postage prepaid, properly addressed to the
issuer at the address shown in the notification, or delivered to the person who
signed the notification on behalf of the issuer.
(15) Stop order.
An order issued by the director or
by the commission in accordance with this article prohibiting the issuer from
issuing the industrial revenue bonds described in the notification or any bonds
in lieu of those bonds.
(Acts 1978, No. 586, p. 681, §1; Acts 1992, No. 92-124, p. 224, §3.)
|Legislative findings; purpose of article.|
(a) The legislature finds and determines that unscrupulous promoters may take
advantage of the authorizing act by inducing issuers to issue industrial revenue
bonds which careful investigation by the issuer or other responsible parties
would reveal to be improvident. The standing of all issuers could be impaired
and the purposes of the legislature in enacting the authorizing act could be
thwarted by those improvident issues.
(b) The purpose of this article is to provide a procedure whereby the State
of Alabama, acting through the director and the commission, may assist in
developing facts to aid the issuer in the exercise of its authority under the
authorizing act, and, to that end, to delay the issuance of industrial revenue
bonds pending adequate investigation by the director or to prevent the issue of
industrial revenue bonds found to be improvident.
|(Acts 1978, No. 586, p. 681, §2; Acts 1992, No.
92-124, p. 224, §3.)|
Powers of director of Securities Commission.|
(a) The director shall have authority to:
(1) Consider and investigate
proposed issues of industrial revenue bonds;
(2) Advise and consult with
issuers with respect thereto;
(3) Publish such notices of
proposed issues of industrial revenue bonds or proposed rules and regulations as
are required by this article or the rules and regulations of the commission;
(4) Stop the issuance of
industrial revenue bonds for the limited times and under the procedures provided
in this article by issuing the orders and giving the notices herein required;
(5) Cause information concerning a
proposed issue of industrial revenue bonds to be presented at any meeting of the
governing body at which industrial revenue bonds are to be authorized or
reauthorized or any hearing upon the judicial validation of such issue; and
(6) Perform such other functions
and duties as may be required by this article or by order of the commission.
(b) The authority herein granted to the director is in addition to that
granted under Section 8-6-50 et seq.
|(Acts 1978, No. 586, p. 681, §3.)|
|Powers of Securities Commission.|
(a) The commission may:
(1) Stop the issuance of
industrial revenue bonds under the procedures provided in this article.
(2) Issue rules and regulations
necessary or desirable to prescribe the form and content of notifications, the
conduct of investigations, the issuance of stop orders, appeals by issuers, or
references by the director to the commission and the conduct of hearings
thereon. No rule or regulation shall be adopted by the commission until the
commission shall hold a public hearing on the proposed rules and regulations,
notice of which shall be given by publication one time in a daily newspaper
published in the City of Montgomery and in any other manner as the commission
(b) The authority granted to the commission in this section is in addition to
that granted under Section 8-6-50 et seq., or any other provided by law.
|(Acts 1978, No. 586, p. 681, §4; Acts 1992, No.
92-124, p. 224, §3.)|
Notifications of intent to issue bonds.|
On and after May 27, 1978, any issuer proposing to issue any industrial
revenue bonds under authority of the authorizing act shall, at least 20 days
prior to the date of delivery of the industrial revenue bonds, deliver to the
director a notification in writing of its intention to issue the bonds. The
director may for good cause shown, waive, shorten, or, with the consent of the
issuer, extend the 20-day requirement. The notifications shall contain the name
and address of the issuer, the lessee, the guarantor, if any, the trustee, the
underwriter, purchaser, fiscal agent, or agents, legal counsel for each of the
above named parties and bond counsel, the estimated face amount of the bond
issue, the estimated capital budget for the project to the extent that the
information is available to the issuer when it files the notification, and any
other information prescribed by the rules and regulations issued by the
commission to advise the director and the commission of the nature of the
proposed transaction. Each notification shall be accompanied by a filing fee
equal to one twentieth of one percent of the principal amount of industrial
revenue bonds described in the notification. No filing fee shall be less than
$25 nor greater than $1,000. All fees shall be deposited
in a special account in the State Treasury to be withdrawn by the director for
the use of the commission in the administration of this article. All
notifications shall be available for public inspection during the normal
business hours of the director.
|(Acts 1978, No. 586, p. 681, §6; Acts 1992, No. 92-124, p. 224, §3.)|
|Action by director upon receipt of notification; stop orders.|
Upon receipt of a notification, the director shall cause a preliminary
investigation or inquiry to be made into the proposed issue to determine whether
there exist circumstances which, in his or her opinion, indicate that the
proposed issue of industrial revenue bonds may be an improvident issue. If he or
she finds that the proposed issue may be improvident, he or she shall advise the
issuer of the findings and shall issue a stop order or stop orders requiring
that for a period of time not exceeding in the aggregate 90 days after the
filing of the notification, the issuer shall not issue the industrial revenue
bonds proposed in the notification or any industrial revenue bonds in lieu of
the bonds proposed. When a stop order has been served upon the issuer, it shall
be fully effective (a) unless lifted by the director or the commission for good
cause shown, or (b) unless the proposed industrial revenue bonds described in
the notification have been reauthorized by the governing body of the issuer at a
meeting at which the governing body has considered any comments or objections
presented by the director or his or her representative. Written notice of the
meeting shall be given to the director. The notice shall also be published in a
newspaper published or circulated in the county where the proposed issuer is
|(Acts 1978, No. 586, p. 681, §7; Acts 1992, No.
92-124, p. 224, §3.)
|Appeals or references to Securities Commission.|
When a stop order has been issued by the director, the issuer shall have the
right to appeal the matter to the commission by notice in writing of such appeal
delivered to the director. The director shall have the right to refer to the
commission the matter of any issue of industrial revenue bonds proposed in a
notification as to which a stop order is then in effect or which have been
reauthorized by the governing body of the issuer pursuant to Section 8-6-116,
and to request that the commission issue a permanent stop order. Notice of such
reference and request shall be given in writing and served upon the issuer. The
director shall mail to each member of the council a copy of each notice required
by this section as soon as it is delivered to him or prepared for service upon
(Acts 1978, No. 586, p. 681, §8.)
|Proceedings before Securities Commission.|
When the matter of any proposed industrial revenue bond issue has been
appealed by the issuer to the commission or referred to the commission by the
director with the request that the commission issue a permanent stop order, the
director shall convene the commission. The commission shall conduct a hearing on
the matter within 14 days after receipt by the director of the notice of appeal
or service upon the issuer of the referral. At the request of the issuer, the
date of the hearing may be postponed. Notice of the time, place, and purpose of
the hearing shall be served upon the issuer at least three days before the date
of the hearing. The issuer and other interested parties shall have the right to
appear and be heard in person or by counsel. The commission shall render a
decision within three days after the hearing. Pending the determination by the
commission of any appeal or referral, the stop order previously issued by the
director shall remain in effect until the commission renders a decision, or
three days after the hearing, whichever is earlier. If, upon a hearing of the
matter, the commission concludes that the proposed issue of industrial revenue
bonds is improvident, the stop order previously issued by the director shall be
made permanent and neither the proposed industrial revenue bonds nor any
industrial revenue bonds in lieu of the bonds shall be issued until approved by
judicial validation in proceedings instituted by the proposed issuer after the
issuance of the stop order. If the commission concludes that the issue is not
improvident, the commission shall lift the stop order and the issuer may proceed
to issue the proposed industrial revenue bonds.
|(Acts 1978, No. 586, p. 681, §9; Acts 1992, No. 92-124, p. 224, §3.)|
|Judicial validation proceedings.|
Any judicial validation proceeding instituted under this article shall
conform to and be conducted in accordance with either Section 6-6-750 et seq. or
Section 11-81-220 et seq., whichever is applicable to the issuer. The petition
shall allege that the issue of industrial revenue bonds proposed by the issuer
is not improvident, and the director shall be served with notice of the
proceeding in the same manner and for the same time as the district attorney,
and may attend the hearing before the circuit court having jurisdiction of the
matter in person or by attorney, present evidence, and be heard by the court.
The court shall not validate unless, pursuant to evidence presented at the
hearing, the court finds and determines that the issue is not improvident. No
judicial validation proceedings shall be instituted under this article until the
commission enters a stop order or until the expiration of 15 days after the
proposed industrial revenue bond issue is appealed by the issuer or referred to
the commission by the director without any stop order having been issued.
|(Acts 1978, No. 586, p. 681, §10; Acts 1992, No.
92-124, p. 224, §3.)|
|Certificate of notification; representation that industrial revenue bonds
have been approved prohibited.|
In the event that (1) 20 days shall have expired after the filing by an
issuer of the notification required by Section 8-6-115 describing proposed
industrial revenue bonds to be issued by it, or the director shall have waived,
shortened or, with the consent of the issuer, extended such waiting period and
(2) no stop order shall then be effective as to the proposed industrial revenue
bonds, the director shall provide such issuer with a certificate substantially
as follows: CERTIFICATE OF NOTIFICATION The _______________ of _______________
(the issuer) has filed in my office a notification under Act No. 586 of the 1978
Regular Session of the Alabama Legislature stating its intention to issue
$ _______________ of its _______________ Industrial Revenue Bonds and
no stop order is effective as to the issue of such bonds. This certificate is
not an approval of said bonds, and it is unlawful for any person to represent
that such bonds have been approved by the director, the commission or any other
agency of the state. This _______________ day of _______________, 19
It shall be unlawful for any issuer to issue any industrial revenue bonds
under the authority of the authorizing act unless the foregoing certificate with
respect to such industrial revenue bonds shall have been issued by the director
or unless the proposed industrial revenue bonds shall have been reauthorized by
the governing body of the issuer pursuant to Section 8-6-116 or shall have been
judicially validated pursuant to Sections 8-6-118 and 8-6-119. When a
certificate of notification shall have been issued by the director, no stop
order thereafter issued either by the director or the commission with respect to
the industrial revenue bonds described in such certificate shall be effective
unless, prior to the issuance of the industrial revenue bonds described in such
certificate, such stop order shall have been served personally upon the person
who signed the notification in behalf of the issuer and upon each bond counsel
named in the notification with respect to the industrial revenue bonds described
in such certificate. When the industrial revenue bonds described in a
certificate of notification shall have been issued, such certificate shall be
conclusive evidence of formal compliance by the issuer with this article, and
the failure of the issuer to comply with any requirement of this article in
issuing the industrial revenue bonds described in such certificate shall not
affect the validity of such industrial revenue bonds. In the event that any
industrial revenue bonds shall be issued without a certificate of notification
having been issued with respect thereto, the holder of any such bonds shall, in
addition to any other right he may have by statute or law, have the right of
rescission as to such bonds; provided, that such right shall be exercised within
12 months of the date on which such bonds shall have been delivered by the
issuer and paid for; and provided further, that any right of recovery against
the issuer shall be limited to the then unexpended proceeds of such bonds. In
the event that the director shall refuse to issue a certificate of notification
to any issuer entitled thereto, an appeal shall lie to the commission or the
circuit court of Montgomery County, which shall have jurisdiction to require the
director forthwith to issue any certificate wrongfully withheld.
It shall be unlawful for any issuer or any person, firm, or corporation to
represent that an issue of industrial revenue bonds has been approved by the
director or the commission or any agency of the state, whether the certificate
herein provided for shall have been issued or not.
|(Acts 1978, No. 586, p. 681, §11.)|
Any lessee, any guarantor, or any officer of any issuer, lessee, or guarantor
or any other person, firm, or corporation who:
(1) Willfully violates this
(2) Willfully participates in the
issuance of any industrial revenue bonds without having obtained the certificate
of notification required by Section 8-6-120;
(3) Willfully participates in the
issuance of any industrial revenue bonds in violation of this article;
(4) Willfully violates any stop
order lawfully issued by the director or the commission under this article and
in effect; or
(5) Makes or files or causes to be
made or filed, with the director or the commission under this article, any
statement, document, or other paper which is false in any material respect or
shall be guilty of a felony and upon conviction shall be fined not more than
$10,000 or shall be imprisoned for a period not exceeding 10 years or
both so fined and so imprisoned, as the trial court shall determine. No
prosecution under this section shall be commenced more than five years after the
occurrence of the alleged violation.
|(Acts 1978, No. 586, p. 681, §12.)|
|Article remedial; certain statutes not repealed.|
This article is remedial in nature and shall not be construed so as to repeal
any provision of Section 8-6-1 et seq. or Section 8-6-50 et seq.
|(Acts 1978, No. 586, p. 681, §13.)|