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 R14-4-138 - Foreign Security Exemption
Universal Citation: AZ Admin Code R 14-4-138
Current through Register Vol. 30, No. 38, September 20, 2024
A. The following transactions are added to the class of transactions exempt under A.R.S. § 44-1844. Pursuant to A.R.S. § 44-1848, no dealer or salesman as defined in A.R.S. § 44-1801 shall engage in the following transactions unless such dealer or salesman is registered under A.R.S. Title 44, Chapter 12, Article 9 or unless such transactions are exempt pursuant to A.R.S. § 44-1844(A)(4) and dealer registration is not required by R14-4-104:
1. A non-issuer transaction in an outstanding
security (including an American Depository Receipt representing such a
security), of an issuer domiciled in a foreign country with which the United
States is at the time of the transaction maintaining diplomatic relations
(including the sale by a dealer, including an underwriter no longer acting as
an underwriter in respect to the securities involved, but not including
securities constituting an unsold allotment to or subscription by the dealer as
a participant in the distribution of the securities by the issuer or by or
through an underwriter), if the class of security has been outstanding in the
hands of the public for not less than 90 days preceding the date of the
transaction and if, at the time of the transaction, the conditions of
subsections (a) and (b) hereof are met:
a.
The exemption of subsection (A)(1) is not available unless one of the following
requirements is met:
i. The most recent
edition of Moody's International Manual or Standard & Poor's Corporation
Records, or the periodic supplements to such publications (hereinafter referred
to as the "Manual"), contains a description of the issuer's business or
operations, the names of the issuer's officers and directors (or their
corporate equivalents in the issuer's country of domicile), an audited balance
sheet of the issuer as of a date within 18 months of the date of the
transaction and audited profit and loss statements for each of the issuer's two
fiscal years immediately preceding the date of such balance sheet (such
statements to be prepared in accordance with U.S. or Foreign GAAP);
or
ii. The issuer of the security
has a class of securities subject to the reporting requirements of Section 13
of the Securities Exchange Act, 15 U.S.C.A. 78m (West 1981 & Supp. 1992)
("Section 13") or Section 15(d) of the Securities Exchange Act, 15 U.S.C.A.
78o(d) (West 1981) ("Section 15(d)") and is not delinquent in such reporting.
Section 13 and Section 15(d) are incorporated herein by reference and on file
with the Secretary of State; or
iii. The security is exempted from the
provisions of Section 12(g) of the Securities Exchange Act of 1934, 15 U.S.C.A.
78l(g) (West 1981) by Section 12(g)(3) of that Act, 15 U.S.C.A. 78l(g)(3) (West
1981) and the issuer is in compliance with all of the conditions of Section
12g3-2(b)(1), 17 CFR 240.12g3 - 2(b)(1) (1992) which sections and rule are
incorporated herein by reference and on file with the Secretary of
State.
b. The exemption
of subsection (A)(1) is not available unless all of the following requirements
are met:
i. The issuer, including any
predecessors, has been in continuous operation for at least the preceding five
years, is a going concern actually engaged in business and is not in an
organizational or developmental stage, and is not in bankruptcy or
receivership; and
ii. The issuer
has net tangible assets of at least U.S. $25,000,000 as of the date of its most
recent audited financial statement prepared in accordance with U.S. or Foreign
GAAP. Such statement shall be dated as of a date within 18 months of the date
of the transaction; and
iii. The
issuer had an average net income after taxes of at least U.S. $1,000,000 over
its most recent two consecutive years of operation according to audited profit
and loss statements of the issuer prepared in accordance with U.S. or Foreign
GAAP for the issuer's two fiscal years immediately preceding the date of the
financial statement referred to in subsection (A)(1)(b)(ii) hereof;
and
iv. The issuer has a class of
securities listed or traded on a stock exchange or automated quotation system
organized under the laws of its country of domicile; and
v. For the issuer's securities in the United
States, there are at least two market makers, who are registered broker-dealers
under the Securities Exchange Act of 1934, or at least one market maker who is
a registered broker-dealer under the Securities Exchange Act of 1934 and who
has a net capital of at least $25,000,000.
2. A non-issuer transaction in an outstanding
security, other than a revenue obligation, which is issued or guaranteed by any
foreign government with which the United States is at the time of sale
maintaining diplomatic relations, or by a political subdivision of Canada or
Mexico having the power of taxation, if the securities when offered for sale in
this state are acknowledged by the foreign government or political subdivision
as valid obligations, and none of the securities of the foreign government or
political subdivision are in default either as to principal or
interest.
B. The Commission may by order revoke or suspend this exemption with respect to any securities or the use of the exemption by any dealer if it finds that the further sale in this state of the securities or by the dealer would work, or tend to work, a fraud or deceit on the purchaser. The Director may temporarily suspend this exemption with respect to any security or the use of the exemption by any dealer pursuant to the procedures for a temporary cease and desist order under R14-4-307.
C. For purposes of this rule, the following definitions shall apply:
1. "American
Depository Receipt" is a negotiable certificate issued by a U.S. depository
pursuant to an effective registration statement filed on Form F-6 with the
Securities and Exchange Commission, representing the securities of a non-U.S.
company, which securities are held in custody by a custodian in the company's
country of domicile; or a similar type of receipt or instrument issued in
respect of a security which receipt or instrument has been approved for sale by
order of the Commission.
2.
"Issuer" of an American Depository Receipt shall be deemed to be the non-U.S.
company that issued the securities represented by the American Depository
Receipt.
3. "U.S. or Foreign GAAP"
shall mean generally accepted accounting principles of the United States or of
the foreign country in which the issuer is domiciled.
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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