Arizona Administrative Code
Title 14 - PUBLIC SERVICE CORPORATIONS; CORPORATIONS AND ASSOCIATIONS; SECURITIES REGULATION
Chapter 4 - Corporation Commission - Securities
Article 1 - IN GENERAL RELATING TO THE ARIZONA SECURITIES ACT
Section R14-4-126 - Limited Offerings; Definitions
Universal Citation: AZ Admin Code R 14-4-126
Current through Register Vol. 30, No. 38, September 20, 2024
A. The following Section relates to transactions exempted from the registration requirements of A.R.S. §§ 44-1841 and 44-1842.
1. Attempted compliance with any part of this
Section does not act as an exclusive election. This Section is not available to
any issuer for any transaction or chain of transactions that, although in
technical compliance with the Section, is part of a plan or scheme to evade the
registration provisions of the Securities Act of Arizona (the "Securities
Act"). The Section may be used for business combinations that involve sales by
virtue of Rule 145(a) under the Securities Act of 1933 or otherwise.
2. Securities may be offered and sold outside
the United States in accordance with Regulation S under the Securities Act of
1933 and pursuant to an applicable registration or exemption under the
Securities Act even if coincident offers and sales are made inside the United
States in accordance with Regulation D and this Section. Thus, for example,
persons who are offered and sold securities from Arizona in accordance with
Regulation S would not be counted in the calculation of the number of
purchasers under this Section if the securities are registered or otherwise
exempt under the Securities Act (such as exempt under A.R.S. §
44-1844(A)(19)
). Similarly, proceeds from such sales would not be included in the aggregate
offering price. These provisions, however, do not apply if the issuer elects to
rely solely on Regulation D and this Section for offers or sales to persons
made outside the United States.
3.
Incorporation by reference. The following statutes, rules, and regulations are
incorporated herein by reference and on file with the office of the Secretary
of State. The incorporated material contains no later editions or amendments.
a. Under the Securities Act of 1933: Section
2(13),
15 U.S.C.
77 b(a)(13) (Supp. II 1996) ("Section 2(13)
of the Securities Act of 1933"); Section 3(a)(2),
15 U.S.C.
77 c(a)(2) (1994) ("Section 3(a)(2) of the
Securities Act of 1933"), and Section 3(a)(5)(A),
15 U.S.C.
77 c(a)(5)(A) (1994) ("Section 3(a)(5)(A) of
the Securities Act of 1933").
b.
Section 2(a)(48) of the Investment Company Act of 1940, 15 U.S.C. 80a -
2(a)(48)
(1994 & Supp. II 1996) ("Section 2(a)(48) of the Investment Company Act of
1940").
c. Section 202(a)(22) of
the Investment Advisers Act of 1940, 15 U.S.C. 80b -
2(a)(22)
(1994) ("Section 202(a)(22) of the Investment
Advisers Act of 1940").
B. Definitions and terms. As used in this Section, the following terms have the meaning indicated:
1. "Accredited investor" means any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:
a. Any bank
as defined in Section 3(a)(2) of the Securities Act of 1933, or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act of 1933 whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; any insurance company as defined in Section 2(13) of the
Securities Act of 1933; any investment company registered under the Investment
Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited
investors;
b. Any private business
development company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940;
c. Any organization
described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not formed for the
specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;
d. Any
director, executive officer, or general partner of the issuer of the securities
being offered or sold, or any director, executive officer, or general partner
of a general partner of that issuer;
e. Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of that
person's purchase exceeds $1,000,000;
f. Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year;
g. Any trust, with
total assets in excess of $5,000,000 not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a sophisticated
person as described in subsection (F)(2)(b) of this Section; and
h. Any entity in which all of the equity
owners are accredited investors.
2. "Affiliate." An "affiliate" of, or person
"affiliated" with, a specified person means a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
3. "Aggregate offering price" means the sum
of all cash, services, property, notes, cancellation of debt, or other
consideration to be received by an issuer for issuance of its securities. Where
securities are being offered for both cash and noncash consideration, the
aggregate offering price is based on the price at which the securities are
offered for cash. Any portion of the aggregate offering price attributable to
cash received in a foreign currency is translated into United States currency
at the currency exchange rate in effect at a reasonable time prior to or on the
date of the sale of the securities. If securities are not offered for cash, the
aggregate offering price is based on the value of the consideration as
established by bona fide sales of that consideration made within a reasonable
time, or, in the absence of sales, on the fair value as determined by generally
accepted accounting principles. Such valuations of noncash consideration shall
be reasonable at the time made.
4.
"Business combination" means any transaction of the type specified in paragraph
(a) of Rule 145 under the Securities Act of 1933 and any transaction involving
the acquisition by one issuer, in exchange for all or a part of its own or its
parent's stock, of stock of another issuer if, immediately after the
acquisition, the acquiring issuer has control of the other issuer (whether or
not it had control before the acquisition).
5. "Calculation of number of purchasers." For
purposes of calculating the number of purchasers under subsections (E) and (F)
of this Section, the following apply. The issuer shall satisfy all of the other
provisions of this Section for all purchasers whether or not they are included
in calculating the number of purchasers. Clients of an investment adviser or
customers of a broker or dealer are considered the "purchasers" under this
Section regardless of the amount of discretion given to the investment adviser
or broker or dealer to act on behalf of the client or customer.
a. The following purchasers are excluded:
i. Any relative, spouse, or relative of the
spouse of a purchaser who has the same principal residence as the
purchaser;
ii. Any trust or estate
in which a purchaser and any of the persons related to the purchaser as
specified in subsections (B)(5)(a)(i) or (iii) collectively have more than 50%
of the beneficial interest (excluding contingent interests);
iii. Any corporation or other organization of
which a purchaser and any of the persons related to the purchaser as specified
in subsections (B)(5)(a)(i) or (ii) collectively are beneficial owners of more
than 50% of the equity securities (excluding directors' qualifying shares) or
equity interests; and
iv. Any
accredited investor.
b.
A corporation, partnership, or other entity is counted as one purchaser. If,
however, that entity is organized for the specific purpose of acquiring the
securities offered and is not an accredited investor under subsection
(B)(1)(h), then each beneficial owner of equity securities or equity interests
in the entity counts as a separate purchaser for all provisions of this Section
except to the extent provided in subsection (B)(5)(a).
c. A noncontributory employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974 counts as one purchaser where the trustee makes all investment decisions
for the plan.
6.
"Executive officer" means the president, any vice president in charge of a
principal business unit, division, or function (such as sales, administration,
or finance), any other officer who performs a policy-making function, or any
other person who performs similar policy-making functions for the issuer.
Executive officers of subsidiaries may be deemed executive officers of the
issuer if they perform such policy-making functions for the issuer.
7. "Issuer" is as defined in A.R.S. §
44-1801.
8. "Purchaser representative" means any
person who satisfies all of the following conditions or who the issuer
reasonably believes satisfies all of the following conditions:
a. Is not an affiliate, director, officer, or
other employee of the issuer, or beneficial owner of 10% or more of any class
of the equity securities or 10% or more of the equity interest in the issuer,
except where the purchaser is:
i. A relative
of the purchaser representative by blood, marriage, or adoption and not more
remote than a first cousin;
ii. A
trust or estate in which the purchaser representative and any persons related
to the purchaser representative as specified in subsections (B)(8)(a)(i) or
(iii) collectively have more than 50% of the beneficial interest (excluding
contingent interest) or of which the purchaser representative serves as
trustee, executor, or in any similar capacity; or
iii. A corporation or other organization of
which the purchaser representative and any persons related to the purchaser
representative as specified in subsections (B)(8)(a)(i) or (ii) collectively
are the beneficial owners of more than 50% of the equity securities (excluding
directors' qualifying shares) or equity interests;
b. Has such knowledge and experience in
financial and business matters that the purchaser representative is capable of
evaluating, alone or together with other purchaser representatives of the
purchaser or together with the purchaser, the merits and risks of the
prospective investment;
c. Is
acknowledged by the purchaser in writing, during the course of the transaction,
to be the purchaser's purchaser representative in connection with evaluating
the merits and risks of the prospective investment; and
d. Discloses to the purchaser in writing a
reasonable time prior to the sale of securities to that purchaser any material
relationship between the purchaser representative or the purchaser
representative's affiliates and the issuer or its affiliates that then exist,
that is mutually understood to be contemplated, or that has existed at any time
during the previous two years, and any compensation received or to be received
as a result of such relationship.
e. A person acting as a purchaser
representative should consider the applicability of the registration and
anti-fraud provisions:
i. Relating to dealers
under the Securities Act (see
R14-4-104
with respect to dealer registration in Arizona), and
ii. Relating to investment advisers under the
Arizona Investment Management Act, A.R.S. §
44-3101 et
seq.
f. The
acknowledgment required by subsection (B)(8)(c) and the disclosure required by
subsection (B)(8)(d) shall be made with specific reference to each prospective
investment. Advance blanket acknowledgment, such as for "all securities
transactions" or "all private placements," is not sufficient.
g. Disclosure of any material relationships
between the purchaser representative or the purchaser representative's
affiliates and the issuer or its affiliates does not relieve the purchaser
representative of the obligation to act in the interest of the
purchaser.
C. General conditions to be met. Except as otherwise provided, the following conditions are applicable to offers and sales made under this Section:
1. Integration. All sales that are part of
the same Section
R14-4-126
offering shall meet all of the terms and conditions of this Section. Offers and
sales that are made more than six months before the start of a Section
R14-4-126
offering or are made more than six months after completion of a Section
R14-4-126
offering will not be considered part of that Section
R14-4-126
offering, so long as during those six-month periods there are no offers or
sales of securities by or for the issuer that are of the same or a similar
class as those offered of sold under this Section, other than those offers or
sales of securities under any written purchase, savings, option, bonus,
appreciation, profit sharing, thrift, incentive, pension, or similar plan, or
written compensation contract, solely for employees, directors, general
partners, trustees (where the issuer is a business trust), officers, or
consultants or advisors, provided that bona fide services shall be rendered by
consultants or advisors, and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
a. The term "offering" is not defined in the
Securities Act or in this Section. If the issuer offers or sells securities for
which the safe harbor rule in subsection (C)(1) is unavailable, the
determination as to whether separate sales of securities are part of the same
offering (i.e., are considered "integrated") depends on the particular facts
and circumstances.
b. Generally,
transactions otherwise meeting the requirements of an exemption will not be
integrated with simultaneous offerings being made outside the United States
that are in compliance with Regulation S and are registered or otherwise exempt
under the Securities Act.
c. The
following factors should be considered in determining whether offers and sales
should be integrated for purposes of the exemptions under this Section:
i. Whether the sales are part of a single
plan of financing;
ii. Whether the
sales involve issuance of the same class of securities;
iii. Whether the sales have been made at or
about the same time;
iv. Whether
the same type of consideration is received; and
v. Whether the sales are made for the same
general purpose.
2. Information requirements.
a. When information shall be furnished. If
the issuer sells securities to any purchaser that is not an accredited
investor, the issuer shall furnish the information specified in subsection
(C)(2) to such purchaser a reasonable time prior to sale. The issuer is not
required to furnish the specified information to any accredited
investor.
b. Type of information to
be furnished if the issuer is not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934. At a reasonable
time prior to the sale of securities the issuer shall furnish to the purchaser,
to the extent material to an understanding of the issuer, its business, and the
securities being offered:
i. Nonfinancial
statement information. If the issuer is eligible to use Regulation A, the same
kind of information as would be required in Part II of Form 1-A. If the issuer
is not eligible to use Regulation A, the same kind of information as required
in Part I of a registration statement filed under the Securities Act of 1933 on
the form that the issuer would be entitled to use.
ii. Financial statement information for
offerings up to $2,000,000. The information required in Item 310 of Regulation
S-B, except that only the issuer's balance sheet, which shall be dated within
120 calendar days of the start of the offering, shall be audited.
iii. Financial statement information for
offerings up to $7,500,000. The financial statement information required in
Form SB-2. If an issuer, other than a limited partnership, cannot obtain
audited financial statements without unreasonable effort or expense, then only
the issuer's balance sheet, which shall be dated within 120 calendar days of
the start of the offering, shall be audited. If the issuer is a limited
partnership and cannot obtain the required financial statements without
unreasonable effort or expense, it may furnish financial statements that have
been prepared on the basis of federal income tax requirements and examined and
reported on in accordance with generally accepted auditing standards by an
independent public or certified accountant.
iv. Financial Statement information for
offerings over $7,500,000. The financial statement as would be required in a
registration statement filed under the Securities Act of 1933 on the form that
the issuer would be entitled to use. If an issuer, other than a limited
partnership, cannot obtain audited financial statements without unreasonable
effort or expense, then only the issuer's balance sheet, which shall be dated
within 120 calendar days of the start of the offering, shall be audited. If the
issuer is a limited partnership and cannot obtain the required financial
statements without unreasonable effort or expense, it may furnish financial
statements that have been prepared on the basis of federal income tax
requirements and examined and reported on in accordance with generally accepted
auditing standards by an independent public or certified accountant.
v. Information from a foreign private issuer.
If the issuer is a foreign private issuer eligible to use Form 20-F under the
Securities Act of 1933, the issuer shall disclose the same kind of information
required to be included in a registration statement filed under the Securities
Act of 1933 on the form that the issuer would be entitled to use. The financial
statements need be certified only to the extent required by subsection
(C)(2)(b)(ii), (iii), or (iv) as appropriate.
c. Type of information to be furnished if the
issuer is subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934. At a reasonable time prior to the sale of
securities the issuer shall furnish to the purchaser the information specified
in subsection (C)(2)(c)(i) or (ii), and in either event the information
specified in subsection (C)(2)(c)(iii):
i.
The issuer's annual report to shareholders for the most recent fiscal year, if
such annual report meets the requirements of Section 240.14a-3 or 240.14c-3
under the Securities Exchange Act of 1934, the definitive proxy statement filed
in connection with the annual report, and, if requested by the purchaser in
writing, a copy of the issuer's most recent Form 10-K and Form 10-KSB under the
Securities Exchange Act of 1934.
ii. The information contained in an annual
report on Form 10-K or Form 10-KSB under the Securities Exchange Act of 1934 or
in a registration statement on Form S-1, SB-1, SB-2, or S-11 under the
Securities Act of 1933 or on Form 10 or Form 10-SB under the Securities
Exchange Act of 1934, whichever filing is the most recent required to be
filed.
iii. The information
contained in any reports or documents required to be filed by the issuer under
Sections 13(a), 14(a), 14(c), and 15(d) of the Securities Exchange Act of 1934
since the distribution or filing of the report or registration statement
specified in subsections (C)(2)(c)(i) or (ii), and a brief description of the
securities being offered, the use of the proceeds from the offering, and any
material changes in the issuer's affairs that are not disclosed in the
documents furnished.
iv. If the
issuer is a foreign private issuer, the issuer may provide, in lieu of the
information specified in subsection (C)(2)(c)(i) or (ii), the information
contained in its most recent filing on Form 20-F under the Securities Exchange
Act of 1934 or Form F-1 under the Securities Act of 1933.
d. Exhibits required to be filed with the
Securities and Exchange Commission as part of a registration statement or
report, other than an annual report to shareholders or parts of that report
incorporated by reference in a Form 10-K and Form 10-KSB report, need not be
furnished to each purchaser that is not an accredited investor if the contents
of material exhibits are identified and such exhibits are made available to a
purchaser, upon the purchaser's written request, a reasonable time prior to the
purchase.
e. At a reasonable time
prior to the sale of securities to any purchaser that is not an accredited
investor in a transaction under subsections (E) or (F), the issuer shall
furnish to the purchaser a brief description in writing of any material written
information concerning the offering that has been provided by the issuer to any
accredited investor but not previously delivered to such nonaccredited
purchaser. The issuer shall furnish any portion or all of this information to
the purchaser, upon the purchaser's written request, a reasonable time prior to
the purchase.
f. The issuer shall
also make available to each purchaser at a reasonable time prior to the
purchaser's purchase of securities in a transaction under subsections (E) or
(F) the opportunity to ask questions and receive answers concerning the terms
and conditions of the offering and to obtain any additional information which
the issuer possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of information furnished under subsection
(C)(2)(b) or (c).
g. For business
combinations or exchange offers, in addition to information required by Form
S-4, the issuer shall provide to each purchaser at the time the plan is
submitted to security holders, or, with an exchange, during the course of the
transaction and prior to sale, written information about any terms or
arrangements of the proposed transactions that are materially different from
those for all other security holders. For purposes of this subsection, an
issuer that is not subject to the reporting requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934 may satisfy the requirements of Part
I.B. or C. of Form S-4 by compliance with subsection (C)(2)(b).
h. At a reasonable time prior to the sale of
securities to any purchaser that is not an accredited investor in a transaction
under subsection (E) or (F), the issuer shall advise the purchaser of the
limitations on resale in the manner contained in subsection (C)(4)(b). Such
disclosure may be contained in other materials required to be provided by this
subsection (C)(2).
3.
Limitation on manner of offering. Neither the issuer nor any person acting on
its behalf shall offer or sell the securities by any form of general
solicitation or general advertising, including, but not limited to, the
following:
a. Any advertisement, article,
notice, or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio; and
b. Any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
4. Limitations on resale.
Securities acquired in a transaction under this Section have the status of
securities acquired in an exempt transaction under A.R.S. §
44-1844
of the Securities Act and cannot be resold without registration under the
Securities Act or an exemption therefrom. The issuer shall exercise reasonable
care to assure that the purchasers of the securities are not underwriters
within the meaning of A.R.S. §
44-1801
of the Securities Act. Such reasonable care may be demonstrated by the
following. While taking these actions will establish the requisite reasonable
care, it is not the exclusive method to demonstrate such care. Other actions by
the issuer may satisfy this provision. In addition, subsection (C)(2)(h)
requires the delivery of written disclosure of the limitations on resale to
investors in certain instances.
a. Reasonable
inquiry to determine if the purchaser is acquiring the securities for the
purchaser or for other persons;
b.
Written disclosure to each purchaser prior to sale that the securities have not
been registered under the Securities Act and, therefore, cannot be resold
unless they are registered under the Securities Act or unless an exemption from
registration is available; and
c.
Placement of a legend on the certificate or other document that evidences the
securities stating that the securities have not been registered under the
Securities Act and setting forth or referring to the restrictions on
transferability and sale of the securities.
D. Filing of notice of sales and fees.
1. The issuer shall file with the Commission
one copy of a notice on Form D at the following times:
a. No later than 15 calendar days after the
first sale of securities in or from this state in an offering under this
Section; and
b. No later than 30
calendar days after the termination of an offering under this Section;
provided, however, that noncompliance with this subsection (D)(1)(b) shall not
result in the loss of the exemption under this Section, if the issuer has
complied with the filing requirements of subsection (D)(1)(a). If the Arizona
Securities Division sends a written request to an issuer to file a final Form
D, the issuer shall deliver a final Form D to the Arizona Securities Division
within 30 calendar days of receipt of such request. No exemption under this
Section shall be available for an issuer if such issuer or any of its
predecessors or affiliates have been subject to any order, judgment, or decree
of the Commission or any other court of competent jurisdiction temporarily,
preliminarily, or permanently enjoining such person for failure to comply with
the filing requirements of this subsection; provided, however, that the loss of
exemption shall not apply if the Commission determines upon a showing of good
cause that it is not necessary under the circumstances that the exemption be
denied.
2. If the
offering is completed within the 15-day period described in subsection
(D)(1)(a) and if the notice is filed no later than the end of that period but
after the completion of the offering, then only one notice need be filed to
comply with subsections (D)(1)(a) and (b).
3. The notice on Form D shall contain a
manual or facsimile signature of a person duly authorized by the
issuer.
4. If sales are made under
subsection (E), the notice shall contain an undertaking by the issuer to
furnish to the Commission, upon the written request of its staff, the
information furnished by the issuer under subsection (C)(2) to any purchaser
that is not an accredited investor.
5. If more than one notice for an offering is
required to be filed under subsection (D)(1), notices after the first notice
need only report the issuer's name and the information required by Part C and
any material change in the facts from those set forth in Parts A and B of the
first notice.
6. A notice on Form D
shall be considered filed with the Commission:
a. Upon receipt at its Phoenix
office.
b. As of the date on which
the notice is mailed by means of United States registered or certified mail to
the Commission's Phoenix office if the notice is delivered to such office after
the date on which it is required to be filed.
7. Issuer shall pay the fee prescribed by
A.R.S. §
44-1861(E).
E. Limited offers and sales not exceeding $5,000,000.
1. Exemption. Offers
and sales of securities that satisfy the conditions in subsection (E)(2) by an
issuer that is not an investment company under the Investment Company Act of
1940 shall be added to the class of transactions exempt under A.R.S. §
44-1844.
2. Conditions and limitations.
a. General conditions. To qualify for
exemption under this subsection (E), offers and sales shall satisfy the terms
and conditions of subsections (B) through (D).
b. Limitation on aggregate offering price.
The aggregate offering price for an offering of securities under this
subsection (E) shall not exceed $5,000,000, less the aggregate offering price
for all securities sold within the 12 months before the start of and during
such offering of securities in reliance on this subsection (E) or in violation
of A.R.S. §
44-1841.
c. Limitation on number of purchasers. There
are no more than, or the issuer reasonably believes that there are no more
than, 35 purchasers of securities from the issuer in any offering under this
subsection (E).
3.
Disqualification. No exemption under this subsection (E) shall be available for
the securities of any issuer, if it or any of its predecessors, affiliates,
directors, officers, general partners, or beneficial owners of 10% or more of
any class of its equity securities, or the underwriter of such securities:
a. Has been convicted within the 10 years
preceding the filing of the notice required by the Section, or at any time
thereafter prior to the termination of the offering, of a felony or misdemeanor
involving racketeering or a transaction in securities, or of which fraud is an
essential element;
b. Is subject to
an order, judgment, or decree of a court of competent jurisdiction entered
within five years of the date of filing of the notice required by this Section,
temporarily, preliminarily, or permanently enjoining or restraining it, him, or
her from engaging in or continuing any conduct or practice in connection with
the sale or purchase of securities, or involving fraud, deceit, or
racketeering;
c. Has been subject
to any state or federal administrative order or judgment in connection with the
purchase or sale of securities entered within five years preceding the filing
of the notice required by this Section, or at any time thereafter prior to the
termination of the offering.
d. Is
subject to the reporting requirements of the Securities Exchange Act of 1934
and not filed all required reports during the 12 calendar months preceding the
filing of the notification required by subsection (D)(1) of this
Section.
e. Is subject to an order
of the Securities and Exchange Commission denying or revoking registration as a
broker or dealer in securities under the Securities Exchange Act of 1934, or is
subject to an order denying or revoking membership in a national securities
association registered under the Securities Exchange Act of 1934, or has been
suspended for a period exceeding six months or expelled from membership in a
national securities exchange registered under the Securities Exchange Act of
1934.
f. The Commission may, at its
discretion, waive any disqualification caused by this subsection (E). A
disqualification caused by subsection (E) ceases to exist if:
i. The basis for the disqualification has
been removed by the jurisdiction creating it;
ii. The jurisdiction in which the
disqualifying event occurred issues a written waiver of the disqualification;
or
iii. The jurisdiction in which
the disqualifying event occurred declines in writing to enforce the
disqualification.
F. Private offerings without regard to dollar limitations.
1. Conditions to be met. Offers
to sell or sales of securities by the issuer thereof that are part of an
offering complying with all the conditions of subsections (B) through (D) and
this subsection (F) shall be deemed to be "transactions by an issuer not
involving any public offering" within the meaning of A.R.S. §
44-1844(A)(1).
Issuers may make private offerings without compliance with this subsection (F)
provided such offerings completely satisfy the criteria set forth in Arizona
court decisions interpreting A.R.S. §
44-1844(A)(1)
and in federal court decisions interpreting
Section 4(2) of the Securities Act of 1933. Issuers are cautioned, however,
that in all instances in which availability of an exemption from registration
under the Securities Act is claimed, the claimant has the burden of proving
that the exemption claimed is available to the claimant. This subsection does
not shift such burden.
2. Specific
conditions.
a. Limitation on number of
purchasers. There are no more than, or the issuer reasonably believes that
there are no more than, 35 purchasers of securities from the issuer in any
offering under this subsection.
b.
Nature of purchasers. Each purchaser who is not an accredited investor either
alone or with the purchaser's purchaser representative(s) has such knowledge
and experience in financial and business matters that the purchaser is capable
of evaluating the merits and risks of the prospective investment, or the issuer
reasonably believes immediately prior to making any sales that such purchaser
comes within this description.
G. Disqualifying provision relating to exemptions under subsections (E) and (F).
1.
No exemption under subsections (E) and (F) shall be available for an issuer if
such issuer, any of its predecessors, or affiliates have been subject to any
order, judgment, or decree of any court of competent jurisdiction temporarily,
preliminarily, or permanently enjoining such person, or any final order of an
administrative agency directing such person to cease-and-desist, for failure to
comply with subsection (D) or its counterpart, if any, in such
jurisdiction.
2. The Commission
may, at its discretion, waive any disqualification caused by subsection
(G)(1).
3. A disqualification
caused by subsection (G)(1) ceases to exist if:
a. The basis for the disqualification has
been removed by the jurisdiction creating it;
b. The jurisdiction in which the
disqualifying event occurred issues a written waiver of the disqualification;
or
c. The jurisdiction in which the
disqualifying event occurred declines in writing to enforce the
disqualification.
H. Insignificant deviations from a term, condition, or requirement.
1. A failure to
comply with a term, condition, or requirement of subsections (E) or (F) will
not result in the loss of the exemption from the requirements of A.R.S. §
44-1841
or A.R.S. §
44-1842
for any offer or sale to a particular individual or entity, if the person
relying on the exemption shows:
a. The
failure to comply did not pertain to a term, condition, or requirement directly
intended to protect that particular individual or entity; and
b. The failure to comply was insignificant
with respect to the offering as a whole, provided that any failure to comply
with subsections (C)(3), (E)(2)(b), (E)(2)(c), and (F)(2)(a) shall be deemed to
be significant to the offering as a whole; and
c. A good faith and reasonable attempt was
made to comply with all applicable terms, conditions, and requirements of
subsections (E) and (F).
2. Notwithstanding subsection (H)(1), an
exemption established only through reliance upon subsection (H)(1) shall
constitute a violation of this Section. In such event, the Commission may take
action under A.R.S. §§
44-2032
and
44-2036
for a violation of this Section.
Disclaimer: These regulations may not be the most recent version. Arizona 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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