Missouri Code of State Regulations
Title 15 - ELECTED OFFICIALS
Division 30 - Secretary of State
Chapter 54 - Exemptions and Federal Covered Securities
Section 15 CSR 30-54.220 - Transaction Exemption for Securities Listed on Certain Quotation Systems
Universal Citation: 15 MO Code of State Regs 30-54.220
Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This rule prescribes the circumstances under which transactions in securities listed on the National Association of Securities Dealers, Inc., Automated Quotation System are exempt from the requirements of sections 409.3-301 and 409.5-504 of the Missouri Securities Act of 2003.
(1) The commissioner, pursuant to the provisions of section 409.2-203 of the Missouri Securities Act of 2003 (the Act), exempts the following transactions from the requirements of sections 409.3-301 and 409.5-504 of the Act:
(A) The offer or sale of a
security designated or approved for designation upon notice of issuance
(including initial public offerings) on the National Market of the National
Association of Securities Dealers, Inc., Automated Quotation System (NASDAQ)
and any other security of the same issuer that is of senior or substantially
equal rank, any security called for by subscription rights or warrants or any
warrant or right to purchase or subscribe to any of the foregoing
securities;
(B) The administrator
shall have the authority, after notice and hearing and upon written Findings of
Fact and Conclusions of Law subject to judicial review:
1. To terminate this exemption if the
administrator finds that the designation standards have been so changed or
insufficiently applied that the protection of investors contemplated by the
original designation standards is no longer afforded;
2. To deny the exemption from registration
of, or revoke, a specific issue of securities; and
3. To deny the exemption by rulemaking to a
category of securities when necessitated by the public interest and for the
protection of investors; and
(C) For purposes of the exemption granted in
this section of the Act, the commissioner shall apply the following standards
for designation of additional quotation systems:
1. The association providing the automated
quotation system (association) shall require at least the following standards
to be met for designation of securities of an issuer on the quotation system:
| Alt. No. 1 | Alt. No. 2 | |
| Net Tangible Assets 1/ | $4,000,000 | $12,000,000 |
| Public Float | $ 500,000 | $ 1,000,000 |
| Pretax Income | $ 750,000 | |
| Net Income | $ 400,000 | |
| Shareholders 2/ | 800/400 | 800/400 |
| Market Value of Float | $3,000,000 | $15,000,000 |
| Minimum Bid | $ 5/Share | |
| Operating History | 3 Years |
The rules of each association shall require at least two (2) authorized market makers for each issuer;
2. The association shall require at least the
following minimum corporate governance standards for its domestic issuers:
A. Distribution of annual and interim
reports.
(I) Each issuer shall distribute to
shareholders copies of an annual report containing audited financial statements
of the company and its subsidiaries. The report shall be distributed to
shareholders a reasonable period of time prior to the company's annual meeting
of shareholders and shall be filed with the association at the time it is
distributed to shareholders.
(II)
Each issuer which is subject to U.S. Securities and Exchange Commission (SEC)
Rule 13A-13 shall make available to shareholders copies of quarterly reports,
including statements of operating results, either prior to or as soon as
practicable following the company's filing its Form 10-Q with the SEC. If the
form of the quarterly report differs from the Form 10-Q, both the quarterly
report and the Form 10-Q shall be filed with the association. The statement of
operations contained in quarterly reports shall disclose, at a minimum, any
substantial items of an unusual or nonrecurrent nature and net income and the
amount of estimated federal taxes.
(III) Each issuer which is not subject to SEC
Rule 13A-13 and which is required to file with the SEC or another federal or
state regulatory authority interim reports relating primarily to operations and
financial position, shall make available to shareholders reports which reflect
the information contained in those interim reports. These reports shall be made
available to shareholders either before or as soon as practicable following
filing with the appropriate regulatory authority. If the form of the interim
report made available to shareholders differs from that filed with the
regulatory authority, both the report to shareholders and the report to the
regulatory authority shall be filed with the association;
B. Independent directors. Each issuer shall
maintain a minimum of two (2) independent directors on its board of directors.
For purposes of subsection (1)(C), independent director shall mean a person
other than an officer or employee of the company or its subsidiaries or any
other individual having a relationship which, in the opinion of the board of
directors, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director;
C. Audit committee. Each issuer shall
establish and maintain an audit committee, a majority of the members of which
shall be independent directors;
D.
Shareholder meetings. Each issuer shall hold an annual meeting of shareholders
and shall provide notice of the meeting to the association;
E. Quorum. Each issuer shall provide for a
quorum as specified in its bylaws for any meeting of the holders of common
stock; provided, however, that in no case shall the quorum be less than
thirty-three and one-third percent (33 1/3%) of the outstanding shares of the
company's common voting stock;
F.
Solicitation of proxies. Each issuer shall solicit proxies and provide proxy
statements for all meetings of shareholders and shall provide copies of the
proxy solicitation to the association;
G. Conflicts of interest. Each issuer shall
conduct an appropriate review of all related party transactions on an ongoing
basis and shall use the company's audit committee or a comparable body for the
review of potential conflict of interest situations where appropriate;
and
H. Shareholder approval policy.
Each issuer shall require shareholder approval of the issuance of securities in
connection with the following:
(I) Options,
plans or other special remuneration plans for directors, officers or key
employees;
(II) Actions resulting
in a change in control of the issuer; and
(III) The acquisition, direct or indirect, of
a business, a company, tangible or intangible assets or property or securities
representing any such interests-
(a) From a
director, officer or substantial security holder of the company (including its
subsidiaries and affiliates) or from any company or party in which one of these
persons has a direct or indirect interest; and
(b) Where the present or potential issuance
of common stock or securities convertible into common stock could result in an
increase in outstanding common shares of twenty-five percent (25%) or
more;
3. Voting rights.
A. The rules of each association shall
provide as follows: No rule, stated policy, practice or interpretation of this
association shall permit the designation on the NASDAQ System's National Market
(authorization), or the continuance of authorization, of any common stock or
other equity security of a domestic issuer if, on or after July 7, 1988, the
issuer of the security issues any class of security or takes other corporate
action with the effect of nullifying, restricting or dis-parately reducing the
per share voting rights of holders of an outstanding class(es) of common stock
of the issuer registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
B. For purposes of
subparagraph (1)(C)3.A., the following shall be presumed to have the effect of
nullifying, restricting or disparately reducing the per share voting rights of
an outstanding class(es) of common stock:
(I)
Corporate action to impose any restriction on the voting power of shares of the
common stock of the issuer held by a beneficial owner or record holder based on
the number of shares held by the beneficial or record holder;
(II) Corporate action to impose any
restriction on the voting power of shares of the common stock of the issuers
held by a beneficial or record holder based on the length of time the shares
have been held by that beneficial or record holder;
(III) Any issuance of securities through an
exchange offer by the issuer for shares of an outstanding class of common stock
of the issuer, in which the securities issued having voting rights greater than
or less than the per share voting rights of any outstanding class of the common
stock of the issuer; and
(IV) Any
issuance of securities pursuant to a stock dividend, or any other type of
distribution of stock, in which the securities issued have voting rights
greater than the per share voting rights of any outstanding class of the common
stock of the issuer.
C.
For purposes of subparagraph (1)(C)3.A., the following, standing alone, shall
be presumed not to have the effect of nullifying, restricting or disparately
reducing the per share voting rights of holders of an outstanding class(es) of
common stock:
(I) The issuance of securities
pursuant to an initial registered public offering;
(II) The issuance of any class of securities,
through a registered public offering, with voting rights not greater than the
per share voting rights of any outstanding class of the common stock of the
issuer;
(III) The issuance of any
class of securities to effect a bona fide merger or
acquisition, with voting rights not greater than the per share voting rights of
any outstanding class of the common stock of the issuer; and
(IV) Corporate action taken pursuant to state
law requiring a state's domestic corporation to condition the voting rights of
a beneficial or record holder of a specified threshold percentage of the
corporation's voting stock on the approval of the corporation's independent
shareholders.
D.
Definitions. The following terms shall mean, for purposes of this subsection,
and the rules of each association shall include these definitions for the
purposes of the prohibition in subparagraph (1)(C)3.A. of this rule:
(I) The term common stock shall include any
security of an issuer designated as common stock and any security of an issuer,
however designated which, by statute or by its terms, is common stock (for
example, a security which entitles the holders of the security to vote
generally on matters submitted to the issuer's security holders for a
vote);
(II) The term domestic
issuer shall mean an issuer that is not a foreign private issuer as defined in
Rule 3b-4 under the Securities Exchange Act of 1934 (
17
CFR 240.3b-4 );
(III) The term equity security shall include
any equity security defined as such pursuant to Rule 3a11-1 under the
Securities Exchange Act of 1934 ( 17 CFR 240.3a11-1 ); and
(IV) The term security shall include any
security defined as such pursuant to Section 3(a)(10) of the Securities
Exchange Act of 1934, but shall exclude any class of security having a
preference or priority over the issuer's common stock as to dividends, interest
payments, redemption or payments in liquidation, if the voting rights of the
securities only become effective as a result of specified events, not relating
to an acquisition of the common stock or the issuer, which reasonably can be
expected to jeopardize the issuer's financial ability to meet its payment
obligations to the holders of that class of securities;
4. Maintenance criteria. After
designation or authorization for quotation on a quotation system, a security
must meet the following criteria to continue to be designated or authorized for
quotation on the quotation system:
A. The
issuer of the security has net tangible assets of at least-
(I) Two (2) million dollars if the issuer has
sustained losses from continuing operations or net losses, or both, in two (2)
of its three (3) most recent fiscal years; or
(II) Four (4) million dollars if the issuer
has sustained losses from continuing operations or net losses, or both, in
three (3) of its four (4) most recent fiscal years;
B. There are at least two hundred thousand
(200,000) publicly held shares;
C.
There are at least four hundred (400) shareholders or at least three hundred
(300) shareholders of round lots; and
D. The aggregate market value of publicly
held shares is at least one (1) million dollars;
5. The associations promptly shall notify the
commissioner of the revocation of designation of an issue of securities by
their marketplace; and
6. The
marketplace receiving an exemption will use its best efforts to make available
on a timely basis information from existing data bases regarding offerings of
securities subject to the exemption.
*Original authority: 409.2-203, RSMo 2003; 409.6-605, RSMo 2003.
Disclaimer: These regulations may not be the most recent version. Missouri 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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