Ariz. Admin. Code § 14-4-134

Current through Register Vol. 30, No. 25, June 21, 2024

Section R14-4-134 - Guidelines for Securities Filings Under A.R.S. Section 44-1902

A. Uniform Limited Offering Registration ("ULOR"). An issuer may register securities by qualification under A.R.S. § 44-1902 in an aggregate amount not exceeding $5 million in any 12-month period as provided in this Section.

B. Form U-7 and the Issuer's Manual. Any reference in this Section to Form U-7 means the Small Company Offering Registration Form as adopted by the North American Securities Administrators Association, Inc. Any reference to the Issuer's Manual means the Small Company Offering Registration Issuer's Manual, which contains the requirements and general instructions for use of the Form U-7, as adopted by the North American Securities Administrators Association, Inc. Copies of Form U-7 and the Issuer's Manual are available from the Commission and from the North American Securities Administrators Association, Inc.

C. Qualification. To be eligible for registration under A.R.S. § 44-1902, the issuer shall comply with the following conditions:

1. The offering shall not be a blind pool offering as defined in A.R.S. § 44-1801.

2. The issuer shall not be an investment company subject to the Investment Company Act of 1940.

3. The issuer shall not be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

4. The issuer and offering must meet the qualifications for use set forth in the Issuer's Manual.

5. If the offering includes debt securities, the application for registration shall include information that demonstrates the ability of the issuer to service its debt.

D. Disclosure Document. The issuer shall apply for registration of securities by qualification under A.R.S. § 44-1902 by filing with the Commission Form U-7, with exhibits and such other documents as required by the Issuer's Manual.

E. Financial Statements. The financial statements included in the application for registration shall be in the form provided in the Issuer's Manual. All prospective financial information that is included in the Form U-7 must be prepared or reviewed by an independent accounting firm.

F. Registration Fee. An application for registration shall be accompanied by a nonrefundable fee as provided in A.R.S. § 44-1861.

G. Issuer-Dealer Registration. An application for registration of securities also shall constitute an application for registration under A.R.S. § 44-1941 of the issuer as a dealer who deals exclusively in securities of which the dealer is the issuer ("issuer-dealer") if accompanied by a duly completed Form BD, a brief description of the proposed method of sale, and other information required by A.R.S. § 44-1941. No bond shall be required for purposes of such issuer-dealer application. The Commission or the Director may require submission of additional information as to the issuer's previous history, record, or business experience as deemed necessary to determine whether the issuer should be registered as a dealer, as provided under A.R.S. § 44-1942. Appropriate examinations may be required.

H. Other Registration Requirements. The following applicable Sections shall apply to registration of securities by qualification under A.R.S. § 44-1902:

1.R14-4-103 (advertising and sales literature). The issuer shall not distribute advertising and sales materials prior to receipt of the Division's notification that the issuer may use the materials.

2.R14-4-105 (promotional securities). For purposes of this Section, R14-4-105(C) is revised as follows:

"Securities that are issued to promoters for consideration valued at less than the following percentages of the proposed public offering price, in an amount that represents an ultimate right of participation in excess of 60 percent of the securities to be outstanding at the completion of the proposed public offering, shall be promotional securities. The value of consideration other than cash received by the issuer for shares shall be established to the Commission's satisfaction by appraisals, evidence of amounts paid by others for substantially similar services or property, evidence of a bona fide offer to purchase such services or property, evidence of significant services rendered or contractually required to be rendered to the issuer, which may take into account the relevant experience, special skills, and other qualifications of the person rendering the service, or any other evidence. The value of noncash consideration that cannot be established to the satisfaction of the Commission shall be zero.

1." For all securities issued to a promoter within one year prior to and including the date of the offering of securities to the public: 85 percent.

2." For all securities issued to a promoter within two years but not less than one year prior to and including the date of the offering of securities to the public: 75 percent.

3." For all securities issued to a promoter within three years but not less than two years prior to and including the date of the offering of securities to the public: 65 percent."

3.R14-4-106 (options, warrants, and rights to purchase).

4.R14-4-107 (promoters equity).

5.R14-4-108 (sales commission and expenses). For purposes of this Section R14-4-108(A) is revised as follows: "No issuer shall incur a liability that must be paid by the issuer as a selling expense in connection with the offering of greater than 20 percent of the amount of the offering actually sold to the public."

6.R14-4-110 (installment sales).

7.R14-4-111 (commissions to officers and directors).

8.R14-4-112 (impoundment of funds) and R14-4-113 (impound dates).

9.R14-4-117 (debt offerings).

10.R14-4-118 (statements required in prospectus).

11.R14-4-119 (preferred stock).

I. Delivery Requirements. The issuer must deliver to each offeree a copy of any literature mandated by the Commission, along with a Form U-7 that has been declared effective by the Commission and any supplements. As long as any securities sold in the offering are outstanding, the issuer shall deliver to investors any reports required by Form U-7 or under the Securities Exchange Act of 1934, unless there are ten or fewer shareholders and all of such shareholders consent in writing to the cessation of such reporting.

J. Reporting. After registration under A.R.S. § 44-1902, the issuer shall cause the following reports to be delivered to the Commission. The Commission may specify the forms necessary to fulfill the reporting requirements stated below.

1. Within ten business days after every 90-calendar-day period following the effective date of the registration and on completion of the offering, a report stating the number of purchasers and the dollar amount of securities sold.

2. Within ten business days after every 90-calendar-day period following the effective date of the registration and on completion of the offering, a statement reflecting that the issuer has not made any changes in or amendments to the Form U-7 or sales and advertising materials provided to the Commission, other than any changes or amendments filed with and declared effective or cleared by the Division.

3. Within ten business days after every six-month period following the effective date of the registration and at such time as the proceeds have been completely used, a report stating in reasonable detail the issuer's use of the offering proceeds.

4. Within ten business days after delivery to investors, copies of any other reports, brochures, letters, or such similar documents furnished, through any medium, to investors.

Ariz. Admin. Code § R14-4-134

Adopted effective August 14, 1991 (Supp. 91-3). Amended by final rulemaking at 7 A.A.R. 729, effective January 17, 2001 (Supp. 01-1). Amended by final rulemaking at 9 A.A.R. 91, effective February 15, 2003 (Supp. 02-4).