Current through Register Vol. 48, 12, December 27, 2024
A.
To obtain a fairness hearing referenced in Section
35-1-202(9),
an application for such hearing must be filed with the Securities Commissioner.
The application for approval to issue securities or to deliver other
consideration shall be made in compliance with subsections F through H
below.
B. The Securities
Commissioner or his designee shall serve as the Hearing Officer (the "Hearing
Officer") and his or her authority under this regulation shall extend to the
issuance or the delivery of securities or other consideration:
(1) By any entity organized under the laws of
this State; or
(2) In any
transaction that is subject to the registration or qualification requirements
of Sections
35-1-301
through
35-1-306
and
35-1-504,
or that would be so subject except for the availability of an exemption under
Section
35-1-202, or
by reason that the security is a federal covered security.
C. The provisions of this regulation shall be
permissive only and no request for approval, failure to request approval,
withdrawal of a request for approval, or denial of approval by the Hearing
Officer shall affect the availability of any exemption from the registration or
qualification other than the exemption available under Section
35-1-202(9),
and shall not be admissible as evidence in any legal or administrative
proceeding.
D. This regulation is
intended to provide for a fairness hearing with respect to transactions which,
if approved by the Hearing Officer, would be exempt from the registration
requirements of the federal securities laws under Section
3(a)(10) of the Securities
Act of 1933, or any section comparable thereto which may subsequently be
enacted.
E. The applicant shall
have the burden of proving the applicability of its claim for exemption under
Section
35-1-202(9).
F. The application to issue securities or to
deliver other consideration pursuant to Section
35-1-202(9),
and all accompanying documents, shall be typed or printed and submitted to the
Securities Commissioner in duplicate. The application shall be signed and dated
by the applicant or by a person authorized to act on the applicant's
behalf.
G. The application shall
contain the following information:
(1) The
names, state of incorporation or organization, and principal office address of
any person proposing to issue securities or deliver other consideration in the
proposed exchange;
(2) A brief
description of the proposed transaction, including but not limited to a
description of all parties to the transaction, all major lines of business
engaged in by such parties, expected benefits of the transaction, a
chronological description of the transaction to date, and a projected timetable
and description of all events necessary to consummate the
transaction;
(3) A list and a
description of the securities or other consideration to be issued or delivered
in the proposed exchange;
(4) A
list and a description of the bona fide securities, claims or property
interests for which the securities or other consideration referred to in
subsection G(3) above are to be exchanged, including the name and state of
incorporation or organization of the issuer of any such bona fide
securities;
(5) A brief statement
of the terms and conditions under which the securities or other consideration
will be issued and exchanged or delivered and exchanged for the bona fide
securities, claims or property interests;
(6) A list of the names, addresses and
percentage interest owned of all persons to whom the securities will be issued
or other consideration delivered in the exchange. If some or all of such
persons are to receive the securities or other consideration by virtue of their
ownership of shares of stock in a corporation, the applicant may comply with
this requirement by submitting a list, which shows the shareholders of the
corporation and the number of shares held by each shareholder as of a date not
more than thirty (30) days prior to the filing of the application;
(7) A statement setting forth proposed
findings of fact which the applicant requests that the Hearing Officer find and
incorporate in the written decision with respect to the application;
(8) The date, which shall be within thirty
(30) days of the date of filing of the application, on which the applicant
requests that the hearing be held;
(9) A statement as to whether the applicant
intends to rely on the exemption from federal securities registration provided
for in Section
3(a)(10) of the Securities
Act of 1933; and
(10) Any
additional information which the applicant desires the Hearing Officer to
consider. The Hearing Officer may require the applicant to submit other
information in addition to the information required herein. The Hearing Officer
may also waive or modify these requirements by allowing the applicant to submit
less information than would otherwise be required.
H. The application shall be accompanied by
the following documents:
(1) Any written
agreement governing the proposed transaction;
(2) All press releases or other media
announcements regarding the proposed transaction disseminated by any party to
the proposed transaction;
(3) A
copy of the notice of the hearing which the applicant will mail to all persons
to whom the applicant proposes to issue securities or to deliver other
consideration in the proposed transaction;
(4) An audited balance sheet for the
preceding two fiscal years, or for the period of time of the corporation's
existence if less than two years, prepared in accordance with generally
accepted accounting principles, of any company whose securities will be issued
or exchanged in the proposed transaction;
(5) An audited income statement for each of
the preceding three fiscal years, or for the period of the corporation's
existence if less than three years, prepared in accordance with generally
accepted accounting principles, for the most recent fiscal year of any
corporation whose securities will be issued or exchanged in the proposed
transaction;
(6) All valuation or
fairness opinions obtained by the parties to the transaction, including all
materials supporting any parties' valuation of the securities or other
consideration to be issued or exchanged in the proposed transaction;
(7) A consent to service of process as
required by Section
35-1-611;
(8) A non-refundable filing fee of five
thousand ($5,000.00) dollars;
(9) A
written undertaking to pay, upon receipt of an invoice from the Hearing
Officer, the reasonable costs incurred in conducting the fairness hearing;
and
(10) Any other documents which
the applicant desires the Hearing Officer to consider. The Hearing Officer may
require the applicant to submit other documents in addition to the documents
required herein. The Hearing Officer may also waive or modify these
requirements by allowing the applicant to submit fewer documents other than
those which would otherwise be required;
I. The procedure following the application
shall be as follows:
(1) The Hearing Officer
shall inform the applicant of any deficiencies in the application or of any
additional information or documents required and may require the applicant to
amend or resubmit the application prior to setting a date for the
hearing;
(2) Upon the filing of a
complete application, or upon any resubmitted complete application under
subsection I(1) above, the Hearing Officer shall inform the applicant of the
date, hour and place of the hearing, which shall be within thirty (30) days
after the filing of the completed application;
(3) The applicant shall mail by United States
Mail, postage prepaid, notice of such hearing to all persons to whom it is
proposed to issue securities or to deliver such other consideration in such
exchange, not less than ten (10) days prior to such hearing, and such notice
shall be effective upon mailing. All persons to whom it is proposed to issue
securities or to deliver such other consideration in such exchange have the
right to appear. The applicant shall provide to the Hearing Officer, on or
before the date of the hearing, a certification that the notice of hearing has
been so mailed;
(4) Within ten
business days after holding the hearing, the Hearing Officer shall issue his
approval or a statement that his approval will not be forthcoming;
and
(5) Following the conclusion of
the hearing, the Hearing Officer shall transmit to the applicant an invoice for
the reasonable costs incurred throughout the fairness hearing process. These
costs may include, but are not limited to court reporter fees and costs, and
transcript costs.
