Ariz. Admin. Code § 14-4-101

Current through Register Vol. 30, No. 50, December 13, 2024

Section R14-4-101 - Exempt Transactions - Existing Stockholders and Employees

A. An offering of securities within or from Arizona that is exclusively to bona fide employees or existing security holders of the issuer or a subsidiary of the issuer, or if the issuer is a subsidiary, is exclusively to the bona fide employees or existing security holders of the issuer and/or its parent, is added to the class of transactions exempt under A.R.S. § 44-1844. An issuer relying on this Section shall comply with all of the following conditions:

1. The aggregate amount of all offerings made by an issuer under this exemption within or from Arizona shall not exceed $500,000.

2. The issuer shall pay no commission or remuneration of any kind, other than transfer agent's fees, directly or indirectly, to any person in connection with the distribution or sale of such securities.

3. At least 10 business days before the offering is made, the issuer shall file with the Commission a verified statement of the details and purposes of the offering and the financial condition of the issuer. The issuer shall not make any material change in the details of the offering without the Commission's consent.

4. The issuer shall obtain Commission approval of any subscription contract calling for deferred payments.

5. An issuer that is not domiciled in Arizona or is not incorporated under the laws of this state shall file a consent to service (Uniform Form U-2) with the verified statement prescribed in subsection (A)(3) above.

B. This exemption shall not apply to an offering made in connection with or integrated with an offering otherwise subject to A.R.S. §§ 44-1841 and 44-1842. This Section is not available to any issuer for any transaction or any chain of transactions that, although in technical compliance with the Section, is part of a plan or scheme to evade the registration provisions of the Securities Act of Arizona.

C. The same issuer may file successive notices under this Section until the total amount encompassed in such filings equals $500,000.

D. The verified statement is not a prescribed form, but shall be executed by an authorized officer of the issuer whose signature shall be verified under oath and shall include all of the following:

1. The title "Notice of Intention to Sell Securities Under A.A.C. R14-4-101."

2. In the caption, the issuer's full name, the issuer's type of organization, and the state in which the issuer was organized.

3. The details and purposes of the offering, including but not limited to a description of the securities to be sold, the number of units and selling price per unit, the method of offering, and the allocation of proceeds

4. A statement of financial condition prepared in accordance with R14-4-123.

5. A recitation of the facts clearly indicating that all conditions affecting eligibility for this exemption exist.

6. A statement that the issuer has taken appropriate action to authorize the issuance of securities.

7. The issuer's principal business address and mailing address if different from the principal business address.

8. Below the verification of signature, the following form for acknowledgment by the Commission:

"Receipt of the foregoing Notice of Intention to Sell Securities is acknowledged as of the date indicated. The Commission enters no objection to the offering described therein, and such offering may be commenced __________________,20___.

ARIZONA CORPORATION COMMISSION

Securities Division

____________________"

E. Filing of notice, exhibits, and fee.

1. The issuer shall file two originally executed copies of the verified statement, except that only one copy of the financial statement is required if such statement is attached to, rather than included in, the verified statement. The Commission shall acknowledge one copy of the verified statement and return it to the issuer as evidence of filing.

2. The issuer shall file one copy of any subscription form or written material describing, or to be used in connection with, the offering.

3. The issuer shall file a nonrefundable fee as prescribed by A.R.S. § 44-1861(G).

F. The Commission may deny or revoke this exemption to any issuer for the reasons listed in A.R.S. §§ 44-1921(1) through 44-1921(6). The Securities Division shall notify the issuer of such denial or revocation. Such notice shall be given by certified mail.

G. This exemption shall be effective for one year from the date the Director acknowledges the Notice of Intention to Sell Securities.

Ariz. Admin. Code § R14-4-101

Former Order S-1; Amended effective May 16, 1978 (Supp. 78-3). Amended subsection (E) effective August 4, 1982 (Supp. 82-4). Amended effective July 18, 1985 (Supp. 85-4). Amended by final rulemaking at 7 A.A.R. 729, effective January 17, 2001 (Supp. 01-1).