Hawaii Administrative Rules
Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Chapter 38 - SECURITIES - REPEALED
Subchapter 6 - STATEMENTS OF POLICY RELATING TO REGISTRATION OF SECURITIES
Section 16-38-11.3 - Promotional securities

(1) Is in the promotional, exploratory, or development stage;

(2) Has been organized within three years prior to the date of filing the application for registration of securities;

(3) Has issued any equity securities of or substantially of the same class as those sought to be registered to promoters, officers, directors, or underwriters of the issuer within three years prior to the date of filing, or is or proposes to become committed to issue any equity securities of or substantially of the same class as those sought to be registered to any promoter, officer, director, or underwriter of the issuer, in any case at a price less than the public offering price of the securities sought to be registered; or

(4) Has issued any equity securities of or substantially of the same class as those sought to be registered within three years prior to the date of filing for a consideration other than cash:

then conditions and restrictions in subsection (b) shall apply unless good cause shall be shown to the commissioner for the waiver of one or more or all of the conditions and restrictions.

(1) The purchase price paid or payable for any securities referred to in subsection (a)(3) or (4) shall be not less than twenty-five per cent of the public offering price of the securities to be registered;

(2) Each promoter, officer, director, and underwriter who shall have acquired or to whom it is proposed to issue any security, or right or option to acquire a security, referred to in subsection (a)(3) or (4), shall file with the issuer and the commissioner a written representation that the security has been or upon the exercise of any right or option shall be acquired for investment and not for distribution, and that no security shall be transferred (other than by operation of law or by will or the laws of descent) for a period of one year after termination of the public distribution;

(3) The book value (determined in accordance with generally accepted accounting principles disregarding any operating losses incurred after the date of filing of the application for registration) of the equity securities outstanding upon completion of the public offering (assuming all securities so offered to be sold) shall be not less than two-thirds of the public offering price; and

(4) Shares issued for a consideration other than cash shall be required to be held in escrow pursuant to section 485-18, HRS, and a summary of the escrow provisions shall be required to be included in the prospectus.