Current through Register Vol. 49, No. 9, September, 2024
14.010
Definitions.
As used in Rule 14:
1.
"Capital account" as reflected on the books of the partnership shall mean the
partner's initial and any subsequent contributions to the limited partnership;
as increased by the partner's pro rata share of net income of the partnership;
and decreased by the partner's pro rata share of net losses incurred by the
partnership, as well as any draws or distributions to the partner of any kind
or nature.
2. Unless otherwise
specified, "Commission" means the Arkansas Racing Commission or the
Commission's designee.
3.
"Certificate of limited partnership" means the certificate referred to in Ark.
Code Ann. §
4-47-201,
et seq., and the certificate as amended or restated, or in the
case of a foreign limited partnership, the substantial equivalent of a
certificate of limited partnership as required by the law of the jurisdiction
in which the limited partnership is formed.
4. "Contribution" means any cash, property,
services rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services, which a partner contributes
to a limited partnership in his or her capacity as a partner.
5. "Control," including the terms
"controlling," "controlled by" and "under common control with," means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract, or otherwise.
6. A "controlled affiliate" of a specified
person is another person which, directly or indirectly, is controlled by the
person specified.
7. A "controlling
affiliate" of a specified person is another person which, directly or
indirectly controls the person specified.
8. "Delayed licensing" means an approval
granted by the Commission to a limited partner of a limited partnership
licensee, enabling the limited partner to receive a share or percentage of
revenues derived from the conduct of gaming prior to the limited partner being
licensed.
9. "Holding company"
means, in addition to any corporation, firm, partnership, limited partnership,
limited-liability company, trust or other form of business organization not a
natural person which, directly or indirectly:
(a) owns;
(b) has the power or right to control;
(c) holds with power to vote any part of the
limited partnership interests, interests in a limited-liability company or
outstanding voting securities of a corporation which holds or applies for a
license, a limited partnership that owns or has the power or right to control
all or any part of the outstanding securities of a limited partnership that
holds or applies for a state Casino license.
10. "Limited partnership" means a partnership
formed by two or more persons pursuant to the terms of Title 4, Chapter 47 of
the Arkansas Code Annotated, having as members one or more general partners and
one or more limited partners.
11.
"Own," "hold" and "have" mean the possession of a record or beneficial interest
in a limited partnership.
12.
"Partnership agreement" means any valid, written agreement of the partners as
to the affairs of a limited partnership and the conduct of its
business.
13. "Sale" or "sell"
includes every contract of sale of, contract to sell, or disposition of, a
security or interest in a security whether or not for value. "Sale" or "sell"
includes any exchange of securities and any material change in the rights,
preferences, privileges or restrictions of or on outstanding
securities.
14. The term "security"
means any stock; membership in an incorporated association; partnership
interest in any limited or general partnership; bond; debenture or other
evidence of indebtedness; investment contract; voting trust certificate;
certificate of deposit for a security; or, in general, any interest or
instrument commonly known as a "security"; or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, or warrant
or right to subscribe to or purchase, any of the foregoing. All of the
foregoing are securities whether or not evidence of indebtedness reported under
these Rules is a security.
14.030
Powers of Commission.
The Commission shall have full and absolute power and authority, to the extent
permitted by law, to recommend the granting, denial, limitation, conditioning,
restriction, revocation, or delay of any license, registration, approval, or
finding of suitability required or permitted by this Rule, or any application
therefor, or to recommend other disciplinary action for any cause deemed
reasonable by the Commission. The Commission shall have full and absolute power
and authority, to the extent permitted by law, to grant, deny, condition,
restrict, revoke, suspend, or delay any license, registration, approval, or
finding of suitability required or permitted under this Rule, or any
application therefor, or to take other disciplinary action for any cause deemed
reasonable by the Commission.
14.040
Burden of proof. The
burden of proof with respect to the granting of any approval required or
permitted by this Rule is at all times upon the person applying for such
approval. Each applicant shall satisfy the Commission, as the case may be, that
the granting of an approval is consistent with the state policies regarding
gaming set forth in the Commission's Rules.
14.060
Prohibition with respect to
ownership of limited partnership licensees. Except as otherwise
provided, no person shall acquire any equity security issued by a limited
partnership licensee or a holding company, become a controlling affiliate of a
limited partnership licensee or a holding company, become a holding company of
a limited partnership licensee or of a holding company without first obtaining
the prior approval of the Commission in accordance with these Rules.
14.065
Registration of certain limited
partners of limited partnerships.
1.
All limited partners with a 5 percent or less ownership interest in a limited
partnership licensee must register in that capacity with the Commission and
affirmatively state in writing that they submit to the Commission's
jurisdiction. Such registration must be made on forms prescribed by the
Commission. A limited partner who is required to be registered by this section
shall apply for registration before the limited partner obtains an ownership
interest of 5 percent or less in a limited partnership licensee.
2. If the Commission finds a limited partner
unsuitable, denies an application of the limited partner, or revokes an
approval of the limited partner, the limited partner and the limited
partnership shall comply with the following:
a) If at any time the Commission finds that
an individual owner of any such interest is unsuitable to hold that interest,
the Commission shall immediately notify the limited partnership of that fact.
The limited partnership shall, within 10 days after the date that it receives
the notice from the Commission, return to the unsuitable owner, in cash, the
amount of the unsuitable owner's capital account as reflected on the books of
the partnership.
b) Beginning on
the date when the Commission serves notice of a determination of unsuitability
pursuant to subsection 2(a) upon the limited partnership, it is unlawful for
the unsuitable owner:
(i) To receive any share
of the profits or interest upon any limited partnership interest;
(ii) To exercise, directly or through any
trustee or nominee, any voting right conferred by such interest; or
(iii) To receive any remuneration in any form
from the limited partnership, for services rendered or otherwise.
3. An application for
registration with the Commission shall:
(a)
Include a completed application for registration form as prescribed by the
Commission;
(b) Include fully
executed waivers and authorizations as determined necessary by the Commission
to investigate the registrant;
(c)
Include an affirmative statement that the registrant submits to the
jurisdiction of the Commission;
(d)
Include an affirmative statement that the registrant has no intent to exercise
control over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under the Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00]
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
[] This fee does not include the application fee or
investigation costs should the Commission require the registrant to apply for
licensure; and
(g) Include such other information as the
Commission may require.
4. The Commission may require a limited
partner who is required to be registered by this section to apply for licensure
at any time in the Commission's discretion by sending notice through the United
States Postal Service to the registrant at the address on the registrant's
registration on file with the Commission and to the limited partnership at the
address on file with the Commission. A limited partner shall apply for
licensure as required by the Commission within 40 days of the limited partner's
receipt of notice. The notice shall be deemed to have been received by the
limited partner 5 days after such notice is deposited with the United States
Postal Service with the postage thereon prepaid.
5. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
6. If a limited partner of a limited
partnership licensee is a holding company and is required to register with the
Commission under this section, the limited partner is not also required to
register with the Commission as a subsidiary unless the Commission requires the
limited partner to apply for licensure.
7. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making this waiver, the Commission finds such waiver is consistent with state
policy because such waiver is for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waiver does not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still require, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
8. Upon the Commission requiring a limited
partner who is required to be registered by this section to apply for
licensure, the limited partner does not have any right to the granting of the
application. Any license hereunder is a revocable privilege, and no holder
acquires any vested right therein or thereunder.
14.070
Institutional investor.
1. An institutional investor that intends to
become subject to these Rules as a result of its ownership of an interest in or
equity security issued by a limited partnership licensee or a holding company,
may apply to the Commission for a waiver of the qualification and registration
requirements of these Rules with respect to the ownership of the interest in or
equity securities issued by the limited partnership licensee or a holding
company if such institutional investor intends to and does hold the interest or
equity securities for investment purposes only. An institutional investor shall
not be eligible to receive or hold a waiver if the institutional investor will
own, directly or indirectly, more than a 15 percent interest in or of the
equity securities issued by the limited partnership licensee or a holding
company on a fully diluted basis where any such interest or securities are to
be acquired other than through a debt restructuring. Limited partnership
interests or securities acquired before a debt restructuring or as a result of
an exchange, exercise or conversion, after a debt restructuring, of any
securities issued to an institutional investor through a debt restructuring,
shall be deemed to have been acquired through a debt restructuring. A waiver
granted under this section shall be effective only as long as the institutional
investor's direct or indirect ownership interest in or of the equity securities
issued by a limited partnership meets the limitations set forth
above.
2. An institutional investor
shall not be deemed to hold an interest in or equity security issued by a
limited partnership licensee or a holding company, for investment purposes only
unless the interest or equity securities will be acquired and held in the
ordinary course of business as an institutional investor, is not a general
partnership interest, and does not, directly or indirectly, allow the
institutional investor to vote for the election or appointment of a general
partner(s), cause any change in the partnership agreement, certificate of
limited partnership, or other organic document, management, policies or
operations of the limited partnership licensee or the holding company, or cause
any other action which the Commission finds to be inconsistent with investment
purposes only. The following activities shall not be deemed to be inconsistent
with holding an interest or equity securities for investment purposes only:
(a) Serving as a member of any committee of
creditors or security or interest holders in connection with a debt
restructuring;
(b) Nominating any
candidate for election or appointment to a Creditors Committee or the
equivalent in connection with a debt restructuring;
(c) Making financial and other inquiries of
management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations;
and
(d) Such other activities as
the Commission may determine to be consistent with such investment
intent.
3. An
application for a waiver must include:
(a) A
description of the institutional investor's business and a statement as to why
the institutional investor is within the definition of "institutional investor"
set forth in section 11 of this Rule.
(b) A certification made under oath and the
penalty of perjury, that:
(1) The interest in
or equity securities of the limited partnership licensee or the holding company
will be acquired and held for investment purposes only as defined in subsection
2 and a statement by the signatory explaining the basis of the signatory's
authority to sign the certification and to bind the institutional investor to
its terms.
(2) The applicant agrees
to be bound by and comply with the Amendment and the Rules adopted thereunder,
to be subject to the jurisdiction of the courts of Arkansas, and to consent to
Arkansas as the choice of forum in the event any dispute, question, or
controversy arises regarding the application or any waiver granted under this
section.
(3) The applicant agrees
that it shall not grant an option to purchase, or sell, assign, transfer,
pledge or make any other disposition of any interest in or equity security
issued by the limited partnership licensee or the holding company without the
prior approval of the Commission.
(c) A description of all actions, if any,
taken or expected to be taken by the institutional investor relating to the
activities described in subsection 2.
(d) The name, address, telephone number and
social security number of the officers and directors, or their equivalent, of
the institutional investor as well as those persons that have direct control
over the institutional investor's holdings of an interest in or equity
securities of the limited partnership licensee or the holding
company.
(e) The name, address,
telephone number and social security or federal tax identification number of
each person who has the power to direct or control the institutional investor's
exercise of its rights as a holder of the interest in or equity securities of
the limited partnership licensee or the holding company.
(f) The name of each person that beneficially
owns more than 5 percent of the institutional investor's voting securities or
other equivalent.
(g) A list of the
institutional investor's affiliates.
(h) A list of all regulatory agencies with
which the institutional investor or any affiliate that owns any voting or
equity securities or any other interest in a company which is licensed or
registered with the Arkansas Racing Commission files periodic reports, and the
name, address, and telephone number of the person, if known, to contact at each
agency regarding the institutional investor.
(i) A disclosure of all criminal or
regulatory sanctions imposed during the preceding 10 years and of any
administrative or court proceedings filed by any regulatory agency during the
preceding 5 years against the institutional investor, its affiliates, and
current officer or director, or any former officer or director whose tenure
ended within the preceding 12 months. As to a former officer or director, such
information need be provided only to the extent that it relates to actions
arising out of or during such person's tenure with the institutional investor
or its affiliates.
(j) Any
additional information the Commission may request.
4. The Commission shall consider all relevant
information in determining whether to grant a waiver requested pursuant to
subsection 1, including but not limited to:
(a) Whether the waiver is consistent with the
policy set forth in these Rules; and
(b) Any views expressed to the Commission by
the limited partnership licensee or any affiliate thereof.
5. Any waiver granted pursuant to this
section may be limited or conditioned in any respect by the Commission,
including, but not limited to, requiring a certification, made under oath and
the penalty of perjury, which contains the following:
(a) A statement attesting that the
institutional investor holds and/or has held the interest in or equity
securities issued by the limited partnership licensee or the holding company
for (1) investment purposes only, and (2) in the ordinary course of business as
an institutional investor and not for the purpose of (A) causing, directly or
indirectly, the appointment of any general partner(s), or (B) effecting any
change in the partnership agreement, certificate of limited partnership, other
organic document, management, policies or operations of the limited partnership
licensee or any of its affiliates.
(b) A statement that the institutional
investor has not engaged in any activities inconsistent with the holding of an
interest in or equity securities of a limited partnership licensee or the
holding company for investment purposes only in accordance with the provisions
of section 2 hereof.
(c) The name,
title and telephone number of the persons having direct control over the
institutional investor's holdings of an interest in or equity securities issued
by the limited partnership licensee or the holding company.
(d) A statement of all complaints, arrests,
indictments or convictions of any officer or director of the institutional
investor regarding the rules and regulations of the Securities and Exchange
Commission and any regulatory agency of any State where it conducts business,
or any offense which would constitute a gross misdemeanor or felony if
committed in the State of Arkansas. The name, position, charge, arresting
agency, and a brief description of the event must also be included in the
statement.
(e) A Statement
indicating any change to the structure and/or operation of the institutional
investor which could affect its classification as an institutional investor as
defined within these Rules.
6. An institutional investor that has been
granted a waiver of licensing, registration or finding of suitability as
required by these Rules and that subsequently intends not to hold its interest
in or equity securities issued by the limited partnership licensee or the
holding company for investment purposes only, or that intends to take any
action inconsistent with its prior intent shall, within 2 business days after
its decision, deliver notice to the Commission in writing of the change in its
investment intent. The Commission may then take such action under these Rules,
or any other provisions of the Amendment or Rules of the Commission as the
Commission deems appropriate.
7. A
waiver that has been granted pursuant to this section and these Rules shall
subject the institutional investor to the requirements found in these Rules, as
applicable, in that any purported sale, assignment, transfer, pledge or other
disposition of any interest in or equity security issued by the limited
partnership licensee or the holding company, or the granting of an option to
purchase such an interest or equity security, shall be void unless approved in
advance by the Commission.
8. The
institutional investor shall be entitled to whatever economic advantage,
including, but not limited to, distributions, that may flow from ownership of
the interest or equity securities as though it has been licensed, registered or
found suitable.
9. If the
Commission finds that an institutional investor has failed to comply with the
provisions of this section, or should be subject to licensing, registration,
finding of suitability or any approval to protect the public interest, the
Commission may, in accordance with these Rules or any other provision of the
Amendment or Rules of the Commission the Commission deems appropriate, require
the institutional investor to apply for licensing, registration or a finding of
suitability. The institutional investor affected by the action taken by the
Commission may request a hearing on the merits of such action. The hearing
shall be included on the agenda of the next regularly scheduled Commission
meeting occurring more than 10 working days after the request for hearing. Upon
good cause shown by the institutional investor, the Commission may waive the
10-day requirement and place such hearing on an earlier Commission agenda. The
Commission, for any cause deemed reasonable, may by a majority vote, sustain,
modify or reverse the decision of the Commission, or remand the matter to the
Commission for such further investigation and reconsideration as the Commission
may order. While the application for licensure, registration or a finding of
suitability review of the Commission's action requiring the filing of such
application is pending, the institutional investor shall not directly or
indirectly, cause or attempt to cause any management, policy, or operating
changes in the limited partnership licensee or the holding company.
10. The limited partnership licensee or the
holding company shall immediately notify the Commission of any information
about, fact concerning or actions of, an institutional investor holding any
interest in or equity securities of the limited partnership licensee or the
holding company, that may materially affect the institutional investor's
eligibility to hold a waiver under this section.
11. For purposes of this Rule, "institutional
investor" shall have the meaning set forth in these Rules and "debt
restructuring" shall have the meaning set forth in these Rules.
14.110
Required provisions
in certificate of limited partnership. The following provisions must be
included in the certificate of limited partnership of every limited partnership
that receives a state Casino license:
1. A
purpose clause containing language substantially as follows:
The character and general nature of the business to be
conducted by the partnership is to operate, manage, and conduct gaming in a
gaming casino on or within the premises known as _________________ and located
at ____________________
2.
The certificate shall include language substantially as follows:
Notwithstanding anything to the contrary expressed or implied
in this agreement, the sale, assignment, transfer, pledge, or other disposition
of any interest in the partnership is void unless approved in advance by the
Commission. If at any time the Commission finds that an individual owner of any
such interest is unsuitable to hold that interest, the Commission shall
immediately notify the partnership of that fact. The partnership shall, within
ten days from the date that it receives the notice from the Commission, return
to the unsuitable owner the amount of the unsuitable owner's capital account as
reflected on the books of the partnership. Beginning on the date when the
Commission serves notice of a determination of unsuitability, pursuant to the
preceding sentence, upon the partnership, it is unlawful for the unsuitable
owner:
(a) to receive any share of
the profits or distributions of any cash or other property other than a return
of capital as required above;
(b) to
exercise, directly or through any trustee or nominee, any voting right
conferred by such interest; or
(c)
to receive any remuneration in any form from the partnership, for services
rendered or otherwise.
3. The certificate shall include language
substantially as follows:
Any limited partner granted delayed licensing that is later
found unsuitable by the Commission shall return all evidence of any ownership
in the limited partnership to the limited partnership, at which time the
limited partnership shall refund to the unsuitable limited partner no more than
the amount that the unsuitable partner paid for his or her ownership interest,
and the unsuitable limited partner shall no longer have any direct or indirect
interest in the limited partnership.
14.120
Public offerings by limited
partnership licensees and holding companies. No limited partnership
licensee and no holding company shall make a public offering of securities of a
limited partnership licensee of a holding company except as is permitted by,
and in accordance with, these Rules.
14.130
Assignment of interest in a
security. The purported sale, assignment, transfer, pledge, exercise of
an option to purchase, including any transfer, whether or not for value, of any
interest in the profits or proceeds realized from the holding or disposition of
a security, or other disposition of any interest in a limited partnership which
holds a state gaming license or which is a holding company or an intermediary
company for an entity that holds a state gaming license is void unless approved
in advance by the Commission.
14.140
Procedure for obtaining
approval for transfer of securities. The provisions of these Rules shall
govern all transfers for which approval is required.
14.150
Persons who may be determined
to be unsuitable. If at any time the Commission finds that an
individual owner of any such interest is unsuitable to hold that interest, the
Commission shall immediately notify the limited partnership of that fact. The
limited partnership shall, within 10 days after the date that it receives the
notice from the Commission, return to the unsuitable owner, in cash, the amount
of the unsuitable owner's capital account as reflected on the books of the
partnership. Without in any manner limiting the foregoing, the following
persons may be determined to be unsuitable:
1.
Any person who, having been notified by the general partners, the Commission,
or the Commission of the requirement that such persons be licensed, fails,
refuses, or neglects to apply for such licensing within 30 days after being
requested to do so by the Commission.
2. Any record holder of a security issued by
a limited partnership licensee or a holding company who fails, refuses, or
neglects, upon request of the Commission, to furnish to the Commission within
30 days after such request, full, complete, and accurate information as to the
owner of any beneficial interest in such security.
3. Any record owner of a security that is
beneficially owned, in whole or in part, by a person determined to be
unsuitable by the Commission.
14.160
Limited partnership
non-compliance. Whenever the Commission determines that the public
interest will be served by requiring any or all of the limited partnership's
lenders, holders of evidences of indebtedness, underwriters, key executives and
agents, employees or other persons dealing with the limited partnership and
having the power to exercise a significant influence over decisions by the
limited partnership to be licensed, the Commission shall serve a notice of such
determination upon the limited partnership either personally or by certified
mail. If the person or entity that is the subject of such determination shall
not have, within 30 days following the receipt of such notice, applied for a
license, the limited partnership may be deemed to have failed to
comply.
14.170
Approval by
Commission required for all issues or transfers by a holding company of its
securities. No holding company shall issue or transfer any security of
which it or its controlled affiliate is the issuer without the prior approval
of the Commission. As used herein, the terms "issue or transfer" extend to
transactions involving any type of ownership referred to in these
Rules.
14.180
Commission
approval required for dispositions of outstanding securities issued by holding
companies. No person other than the issuer shall sell, assign, transfer,
pledge or make any other disposition of any security issued by any holding
company without the prior approval of the Commission. As used herein, the terms
"sale, assignment, transfer, pledge or other disposition" extend to disposition
of any type of ownership referred to in these Rules.
14.190
Licensing of general partners
and limited partners of limited partnership holding companies.
1. Except as otherwise provided in this
section, each general partner of a limited partnership holding company must be
licensed. Each limited partner of a limited partnership holding company must be
licensed if the limited partner owns more than 5 percent of any licensee owned
by the limited partnership holding company, except to the extent delayed
licensing is approved by the Commission. For the purposes of this section,
"own" means the possession of a record or beneficial interest in any business
organization.
2. All limited
partners of a limited partnership holding company which own 5 percent or less
of any licensee owned by the limited partnership holding company must register
in that capacity with the Commission and affirmatively state in writing that
they submit to the Commission's jurisdiction. Such registration must be made on
forms prescribed by the Commission. A limited partner who is required to be
registered by this section shall apply for registration before the limited
partner obtains an ownership interest in the limited partnership holding
company.
3. A general partner of a
limited partnership holding company is not required to be licensed and must
register in that capacity with the Commission if both of the following apply:
(a) The general partner owns 5 percent or
less of each licensee owned by the limited partnership holding company;
and
(b) The limited partnership
holding company is not, directly or indirectly, a general partner or manager of
any licensee and does not control any licensee.
[] A general partner who is required to be registered by this
section shall apply for registration before the general partner obtains an
ownership interest in the limited partnership holding company.
4. If the Commission
finds a limited partner or general partner unsuitable, denies an application of
the limited partner or general partner, or revokes an approval of the limited
partner or general partner, the limited partner, general partner, and the
limited partnership holding company shall comply with the following:
a) If at any time the Commission finds that
any person owning, controlling or holding with power to vote any part of any
class of security of, or any interest in, any holding company or intermediary
company is unsuitable to be connected with a licensed gaming enterprise, it
shall so notify the unsuitable person, the holding company or intermediary
company, or both. The unsuitable person shall immediately offer the security to
the issuing corporation, or the interest to the firm, partnership, trust or
other business organization, for purchase. The corporation shall purchase the
security so offered, or the firm, partnership, trust or other business
organization shall purchase the interest so offered, for cash at fair market
value within 10 days after the date of the offer.
b) Beginning upon the date when the
Commission serves notice of a determination of unsuitability, it is unlawful
for the unsuitable person:
i. To receive any
dividend or interest upon any such securities, or any dividend, payment or
distribution of any kind from any holding company or intermediary
company;
ii. To exercise, directly
or indirectly or through any proxy, trustee or nominee, any voting right
conferred by such securities or interest; or
iii. To receive any remuneration in any form
from the corporation, partnership, limited partnership, limited-liability
company or other business organization holding a license or from any holding
company or intermediary company with respect thereto, for services rendered or
otherwise.
c) If any
officer, employee, director, partner, principal, manager, member, trustee or
direct or beneficial owner required to be found suitable fails to apply for a
finding of suitability or a gaming license within 30 days after being requested
so to do by the Commission, is not found suitable or is denied a license by the
Commission, or if his or her license or the finding of his or her suitability
is revoked after appropriate findings by the Commission, the holding company or
intermediary company, or both, shall immediately remove that person from any
position in the administration or supervision of, or any other significant
involvement with, the activities of a licensee. If the Commission suspends the
suitability or license of any officer, employee, director, partner, principal,
manager, member, trustee or owner, the holding company or intermediary company,
or both, shall, immediately and for the duration of the suspension, suspend the
person from performing any duties in administration or supervision of the
activities of the licensee and from any other significant involvement
therewith.
5. An
application for registration with the Commission shall:
(a) Include a completed application for
registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00];
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
[] This fee does not include the application fee or
investigation costs should the Commission require the registrant to apply for
licensure; and
(g) Include such other information as the
Commission may require.
6. The Commission may require a limited
partner or general partner who is required to be registered by this section to
apply for licensure at any time in the Commission's discretion by sending
notice through the United States Postal Service to the registrant at the
address on the registrant's registration on file with the Commission and to the
limited partnership holding company at the address on file with the Commission.
A limited partner or general partner shall apply for licensure as required by
the Commission within 40 days of the limited partner or general partner's
receipt of notice. The notice shall be deemed to have been received by the
limited partner or general partner 5 days after such notice is deposited with
the United States Postal Service with the postage thereon prepaid.
7. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
8. If a limited partner or general partner of
a limited partnership holding company is also a holding company and is required
to register with the Commission under this section, the limited partner or
general partner is not also required to register with the Commission as a
subsidiary unless the Commission requires the limited partner, officer,
director or general partner to apply for licensure.
9. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making these waivers, the Commission finds such waivers are consistent with
state policy because such waivers are for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waivers do not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still require, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
10. Upon the Commission requiring a limited
partner or general partner who is required to be registered by this section to
apply for licensure, the limited partner or general partner does not have any
right to the granting of the application. Any license hereunder is a revocable
privilege, and no holder acquires any vested right therein or
thereunder.
14.200
Certain payees required to be found suitable, licensed or
approved. The Commission may require any person who receives payments
from a limited partnership holding company computed on the basis of the
earnings or profits of the holding company or on the basis of the receipts from
gaming of the subsidiary limited partnership licensee of such holding company
to be found suitable, licensed or approved.
14.210
Delayed licensing for limited
partners. Pursuant to the provisions of this Rule, the Commission may
waive licensing of limited partners and, in lieu thereof, grant approval of
delayed licensing for any limited partner.
14.220
Eligibility for delayed
licensing.
1. A limited partnership
that has filed an application to be registered with the Commission may file an
application for approval of delayed licensing of its limited
partners.
2. Only limited partners
whose aggregate effective ownership percentage in the limited partnership is no
more than 10 percent will be considered for delayed licensing approval. For
purposes of determining aggregate effective ownership percentage, a natural
person who is part of a legal entity that is a limited partner shall be deemed
to have the percentage ownership interest held by the legal entity.
3. A general partner is not eligible for
delayed licensing.
4. A limited
partnership seeking delayed licensing of its limited partners shall apply for a
ruling from the Commission, upon recommendation of the Commission, that it is
eligible for delayed licensing of its limited partners. Such application may be
made at the same time that the limited partnership applies for a state Casino
license or registers with the Commission, and must include the information from
limited partners required by these Rules.
14.225
Application for delayed
licensing by individual limited partners. Once a limited partnership has
been found eligible for delayed licensing pursuant to these Rules, each limited
partner seeking delayed licensing shall file an application for delayed
licensing pursuant to these Rules. A limited partner may file an application
for delayed licensing prior to the Commission's ruling on the eligibility of
the limited partnership, but the application will not be considered by the
Commission until the Commission rules that the limited partnership is eligible
for delayed licensing.
14.230
Procedure for consideration of application for delayed licensing.
Any application for delayed licensing, whether by the limited partnership
pursuant to these Rules, or by an individual limited partner pursuant to these
Rules, shall be made to the Commission on forms furnished by the Commission and
in accordance with these Rules. The Commission shall investigate the applicant
and act upon the application pursuant to these Rules.
14.240
Information to be provided by
applicant for delayed licensing. In addition to filing a completed
personal history record and personal financial questionnaire, along with all
required releases and fingerprint cards, each limited partner applying for
approval of delayed licensing shall provide the following information:
1. A listing of any other business interest
between the applicant and a general partner existing prior to, at the time of,
or after the formation of the limited partnership.
2. Whether the applicant has a familial
relationship, either by blood, marriage or adoption, with a general
partner.
3. A certification that
the applicant does not have and will not have a material relationship to, or
material involvement with, a general partner of the limited partnership with
respect to gaming operations of the limited partnership, except in another
licensed capacity under Commission Rules in accordance with Commission Rules. A
person may be deemed to have a material relationship to, or material
involvement with, a general partner if the person is a shareholder, controlling
person or key employee of a legal entity that is a general partner, or if the
person, as an agent, consultant, advisor or otherwise, exercises a significant
influence upon the management or affairs of such general partner.
14.250
Effect of the
Commission's ruling on a limited partnership's application for delayed
licensing. If the Commission rules that a limited partnership is
eligible for delayed licensing of its limited partners, the Commission shall
direct the Commission, based upon such investigation as the Commission deems
appropriate, to recommend to the Commission which of the limited partners who
have applied for delayed licensing, if any, should be granted delayed
licensing.
14.260
Standards. The Commission shall consider all relevant material facts in
determining whether to grant an approval of delayed licensing to a limited
partnership, and thereafter to a limited partner, as permitted by this Rule.
The Commission may further consider the effects of the action or approval
requested by the applicant, the benefits to the State of Arkansas, and whether
other facts are deemed relevant, including, but not limited to, the following:
1. Whether the applicant, either individually
or in conjunction with other limited partners, has any direct or indirect
control or significant influence over a general partner, or over the management
of the limited partnership's business or gaming operations, or the ability to
acquire such control. The limited partnership agreement will be scrutinized to
determine if it has clear and specific provisions covering the following:
(a) Restricting the priority rights with
respect to income, losses, or other distributions, whether during the term of
the limited partnership or upon its dissolution, of limited partners seeking
delayed licensing;
(b) Vesting the
general partner(s) with the sole and exclusive right to manage and control the
limited partnership's business;
(c)
Defining the scope of the general partner's (or partners') authority and any
limitations thereon;
(d)
Restricting the right of the limited partners to remove or elect general
partners, except to the extent necessary to elect a general partner upon the
retirement, death, or disability of a general partner who is a natural person;
and
(e) Whether any additional
assessment or capital contribution can be required of the limited
partners.
2. Whether the
applicant has, or has had, a material relationship with a general partner.
Applicants who have a familial relationship, either by blood, marriage or
adoption, to a general partner may be deemed to have such a material
relationship.
3. The commonality of
other business interests between a general partner and any limited partners
prior to, or existing at, formation of the limited partnership.
4. Whether the applicant had a key role in
forming the limited partnership.
5.
The relative level of risk for each general partner.
6. The business probity of each general
partner, in gaming or otherwise.
7.
The presence or absence of restrictions on the limited partners.
8. Whether a substantial portion of the
assets of the limited partnership were owned by only one or more limited
partners prior to formation of the limited partnership.
9. Whether substantial portion of the
depreciable assets involved in the proposed gaming operation will be owned by
the limited partnership.
10. The
number of persons and entities involved in the limited partnership. The
Commission will not ordinarily grant delayed licensing status to a limited
partnership with fewer than 25 limited partners.
11. The various percentage ownership
interests in the limited partnership.
12. Whether any limited partner has obligated
his or her personal assets as a guarantee for the limited partnership or made
any loans to the limited partnership in any manner whatsoever.
13. The terms of any agreement that provides
for a buyout of a limited partner's interest in the event that a limited
partner is found unsuitable for licensing.
14. The presence or absence of any tax
benefits to the limited partner.
14.270
Post-approval monitoring after
approval of delayed licensing. The partnership agreement of a limited
partnership that seeks delayed licensing must contain language to the effect
that the licensing of any limited partner granted delayed licensing may be
activated at any time pursuant to this Rule. The granting of delayed licensing
to a limited partner by the Commission shall be a revocable approval. The
Commission shall not relinquish jurisdiction. Any limited partner receiving
approval for delayed licensing from the Commission has no legal vested right or
privilege inherent in that approval, nor shall the limited partners that have
been granted delayed licensing accrue any privilege from the licensing of the
limited partnership.
14.280
Powers of the Commission after delayed licensing approval. The
Commission may exercise, without limitation, any of the following powers:
1. After the granting of delayed licensing to
a limited partner, the Commission may activate the licensing process for any
limited partner granted delayed licensing if it determines that:
(a) A limited partner has thereafter
developed a material relationship with or to a general partner;
(b) A limited partner, individually or in
conjunction with other limited partners, has acquired the ability to exercise
significant control or influence over the management of the limited
partnership's gaming operations or business affairs;
(c) A limited partner, individually or in
conjunction with other limited partners, has exercised, for any reason,
significant control or influence over the management of the limited
partnership's gaming operations, either directly or indirectly, even if such
control is contemplated or authorized by the partnership agreement;
(d) There is reason to believe that a limited
partner cannot demonstrate his or her suitability;
(e) The aggregate effective ownership
percentage held by a limited partnership granted delayed licensing has
increased to more than 10 percent; or
(f) Any other cause it deems
reasonable.
2. The
Commission, after considering the recommendation of its Director or staff, may
activate the licensing process for any limited partner granted delayed
licensing at any time.
3. The
Commission may delegate to its Director or staff the authority to activate,
without Commission approval, the licensing process for any particular limited
partner granted delayed licensing.
4. The Commission may issue an order
requiring escrow of the funds, profits, or other monies due any limited partner
granted delayed licensing from the licensed limited partnership for any cause
deemed reasonable. Any such escrow ordered by the Commission automatically
terminates at the conclusion of the next regular Commission meeting unless:
(a) The Commission recommends that the
Commission activate the licensing process for the limited partner that is the
subject of the order;
(b) The
Commission continues discussion of whether it should recommend that the
licensing process be activated to a future meeting at the request of the
limited partner that is the subject of the order; or
(c) The Commission activates the licensing
process pursuant to a delegation of authority from the Commission under these
Rules.
5. Any escrow
ordered by the Commission pursuant to subsection 4 automatically terminates if
the Commission decides not to activate the licensing process for the limited
partner that is the subject of the order or if the Commission licenses the
limited partner.
14.290
Nontransferability of delayed licensing approval. Delayed
licensing approval shall be personal to the limited partnership or limited
partner granted delayed licensing. A limited partnership interest that is held
under delayed licensing may not be transferred, assigned, encumbered or
hypothecated in any manner without the prior approval of the Commission, upon
recommendation of the Commission.
14.300
Exclusion of public limited
partnerships. This Rule shall not apply to the limited partnership
interest or securities of, nor other interest in, any limited partnership
holding company that has been permitted to comply with the regulations
governing public limited partnerships, nor to its general partners, limited
partners, agents, employees, underwriters, lenders, and other holders of
evidence of indebtedness, as such.
14.310
Waiver of requirement of
Rule. The Commission may waive one or more requirements of these Rules
if it makes a written finding that such waiver is consistent with state
policy.
