Alaska Administrative Code
Title 3 - Commerce, Community, and Economic Development
Part 1 - Banking, Securities, Small Loans and Corporations
Chapter 08 - Securities
Article 2 - Registration and Notice of Securities
3 AAC 08.225 - Preferred stock

Universal Citation: 3 AK Admin Code 08.225

Current through February 24, 2025

(a) The administrator will, in the administrator's discretion, disallow a public offering of preferred stock if

(1) the issuer's adjusted net earnings for the last fiscal year or the issuer's average adjusted net earnings for the last three fiscal years before the public offering were insufficient to
(A) pay the issuer's fixed charges and preferred stock dividends, whether or not accrued; and

(B) meet the redemption requirements, if applicable, of the preferred stock being offered; or

(2) a cash analysis indicates that the issuer lacks sufficient cash to cover the preferred stock dividend, whether or not declared.

(b) If determining whether to disallow, under (a)(2) of this section, a public offering of preferred stock, the administrator will, in the administrator's discretion,

(1) consider the statement of cash flows, if the statement demonstrates that the issuer had positive net cash provided by operating activities for the issuer's last fiscal year before the public offering; or

(2) require the issuer to submit a financial statement demonstrating that the issuer had average positive net cash provided by operating activities for the issuer's last three fiscal years before the public offering.

(c) The requirements of (a) and (b) of this section apply to a public offering of convertible preferred stock that is superior in right to payment of dividends, interest, and liquidation proceeds to any preferred stock and convertible debt that is or may be legally or beneficially, directly or indirectly, owned by promoters. The risks of failure to declare or pay dividends and the equity characteristics of the convertible preferred stock must be disclosed in the prospectus. The administrator will, in the administrator's discretion, review an offering of these securities using the requirements in AS 45.55 and this chapter for equity offerings.

(d) If the issuer's net earnings are subject to cyclical fluctuations or if the administrator determines redemption requirements to be necessary for investor protection, the administrator will, in the administrator's discretion, require that the issuer establish redemption requirements.

(e) The administrator will, in the administrator's discretion, disallow a public offering of equity securities if the issuer's articles of incorporation authorize the issuer's board of directors to issue preferred stock in the future without a vote of the common shareholders, unless

(1) the issuer represents in its prospectus or offering document that the issuer will not offer preferred stock to a promoter except on the same terms as that stock is offered to all other existing shareholders or to new shareholders; or

(2) the issuance of preferred stock is approved by a majority of the issuer's independent directors without an interest in the transaction; those directors must have access, before voting and at the issuer's expense, to the issuer's or independent legal counsel; if the issuer has on its board of directors only two independent directors without an interest in the transaction, both independent directors must approve the issuance of preferred stock.

Authority:AS 45.55.120

AS 45.55.950

Disclaimer: These regulations may not be the most recent version. Alaska may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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