The Alabama Securities Act requires that any security sold in this state must be registered with the Commission, unless the security qualifies for a statutory exemption from registration. The Act provides for a number of exemptions, including an exemption for “any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States or any bank . . . organized and supervised under the laws of this state.” See Section 8-6-10(3) (Code of Ala. 1975). It has been the Commission’s position that this exemption is not available for securities issued by a bank in the process of organization.

This position has recently been challenged, and the Alabama Securities Commission staff has been requested to carefully reexamine its interpretation of the Alabama Securities Act with regard to this issue. An argument has been made that Section 8-6-10(3) should be interpreted to allow a bank information to sell presubscription stock or certificates without first registering that stock or certificate with the Commission. The staff of the Alabama Securities Commission has carefully and thoughtfully considered this request. In reaching its conclusion, the Commission staff has consulted with a number of other state securities agencies, as well as the Alabama Department of Banking. The staff has also carefully considered the language and overriding purpose of the statute.

During this investigation, the staff has learned that a number of other states, having virtually identical statutory language as Alabama, require a bank in formation to register its preorganizational shares or stock prior to the sale of the same. The staff has also determined, in consultation with the Alabama Department of Banking, that the Banking Department does not regulate or control the activities of a bank in formation. In fact, applicants for a banking license are instructed by the Banking Department to contact the Securities Commission and comply with the applicable securities laws and regulations.

Finally, it is apparent that a bank in formation does not fall within the strict language of the exemption provided in Section 8-6-10(3), in that a bank in formation is not yet a bank “organized under the laws of the United States or . . . under the laws of the state.” Therefore, it is the opinion of the Alabama Securities Commission that any security issued by a bank in formation is a security subject to registration pursuant to the provisions of the Alabama Securities Act. The Banking Department is in agreement that the preorganizational shares and stock of a bank in formation should be registered with the Securities Commission.