Ariz. Admin. Code § 14-4-141

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

Section R14-4-141 - Solicitation of Interest Prior to the Filing of the Registration Statement

A. The following definitions shall apply to this Section:

1. "Securities Act" means the Securities Act of Arizona, A.R.S. § 44-1801 et seq.

2. "SEC" means the United States Securities and Exchange Commission.

3. "Solicitation of Interest Form" means the document used to solicit indications of interest in a security, which must contain, in all material respects, the information set forth in subsection (J).

B. An offer, but not a sale, of a security made by an issuer, or on behalf of an issuer by a dealer registered under Article 9 of the Securities Act, for the sole purpose of soliciting an indication of interest in receiving a prospectus, or its equivalent, for such security is exempt from A.R.S. § 44-1841, and the issuer and its employees are exempt from A.R.S. § 44-1842, if all of the following conditions are satisfied:

1. The issuer is, or will be, a business entity organized under the laws of one of the states or possessions of the United States or one of the provinces or territories of Canada or one of the states of Mexico, and is not conducting or intending to conduct a blind pool offering as defined in A.R.S. § 44-1801.

2. The issuer intends to register the security in Arizona prior to sale or the securities will be sold under a valid exemption in Arizona.

3. Ten business days prior to the initial solicitation of interest under this Section, the issuer files with the Commission a Solicitation of Interest Form along with any other items to be used, directly or indirectly, to conduct solicitations of interest, including, but not limited to, the script of any broadcast to be made and a copy of any notice or advertisement to be published, and a nonrefundable fee as prescribed by A.R.S. § 44-1861(G).

4. Five business days prior to usage, the issuer files with the Commission any material amendments to the foregoing items or additional items to be used to conduct solicitations of interest, except for items provided to a particular offeree pursuant to a request by that offeree.

5. The issuer does not use any Solicitation of Interest Form, script, advertisement or other item to solicit indications of interest, which the Securities Division has notified the issuer not to distribute.

6. During the solicitation of interest period, the issuer, or the dealer on behalf of the issuer, does not solicit or accept money or a commitment to purchase securities.

7. Any published notice, published advertisement or script for broadcast must contain at least the identity of the chief executive officer of the issuer, a brief general description of the issuer's business and products, and the first paragraph of the legend required in the Solicitation of Interest Form under subsection (J)(2)(g).

8. All communications with prospective investors made in reliance on this Section must cease after a registration statement is filed in Arizona.

C. The issuer, or the dealer on behalf of the issuer, may communicate with any offeree about the contemplated offering provided the offeree is supplied the most current Solicitation of Interest Form no later than five business days from the communication. The requirements of this subsection do not apply to issuer communications made solely in the form of scripted broadcasts, published notices or published advertisements.

D. Unless the disqualification is waived or ceases to exist under subsection (E), the exemption of subsection (B) is not available if the issuer or any of its predecessors, affiliates, directors, officers, general partners, or beneficial owners of 10% or more of any class of its equity securities:

1. Has been convicted of a felony of which fraud is an essential element, or which involves racketeering, or a transaction in securities, or an offense listed in A.R.S. § 13-2301(D)(4).

2. Has been convicted within 10 years of the date of the filing of the Solicitation of Interest Form of a misdemeanor of which fraud or dishonesty is an essential element, or involving racketeering, or a transaction in securities.

3. Is subject to an order, judgment, or decree of any court of competent jurisdiction entered within 10 years of the date of the filing of the Solicitation of Interest Form, which temporarily, preliminarily or permanently enjoins or restrains such person from engaging in, or continuing, any conduct or practice in connection with the sale or purchase of securities, or involving fraud, deceit, racketeering or consumer protection laws.

4. Has been subject to any state or federal administrative order or judgment in connection with the purchase or sale of securities entered within five years of the date of the filing of the Solicitation of Interest Form.

5. Is subject to the reporting requirements of the Securities Exchange Act of 1934 and has not filed all required reports during the 12 calendar months before the filing of the Solicitation of Interest Form.

6. Is subject to an SEC order denying or revoking registration as a broker or dealer in securities under the Securities Exchange Act of 1934, or is subject to an order denying or revoking membership in a national securities association registered under the Securities Exchange Act of 1934, or has been suspended for a period exceeding six months, or expelled from membership in a national securities exchange registered under the Securities Exchange Act of 1934.

E. The Commission may, at its discretion, waive any disqualification caused by subsection (D). In addition, a disqualification under subsection (D) ceases to exist if:

1. The basis for the disqualification is removed by the jurisdiction creating it;

2. The jurisdiction in which the disqualifying event occurred issues a written waiver of the disqualification; or

3. The jurisdiction in which the disqualifying event occurred declines in writing to enforce the disqualification.

F. A failure to comply with all of the requirements of subsections (B) and (C) will not result in the loss of the exemption from A.R.S. §§ 44-1841 and 44-1842 for any offer to a particular individual or entity if the issuer shows all of the following:

1. The failure to comply did not pertain to a condition directly intended to protect that particular individual or entity;

2. The failure to comply was insignificant with respect to the offering as a whole; and

3. A good faith and reasonable attempt was made to comply with all applicable conditions of subsections (B) and (C).

G. Any issuer, or other person on behalf of an issuer, who solicits indications of interest under this Section, may not make offers or sales in reliance on A.R.S. § 44-1844(A)(1) or A.A.C. R14-4-126 until six months after the last communication with a prospective investor made pursuant to this Section.

H. All offers and communications, including but not limited to, the Solicitation of Interest Form, made in reliance on this Section are subject to the anti-fraud provisions of the Securities Act.

I. The Director of Securities may revoke the availability of this exemption prior to any particular solicitation of interest with respect to a particular issuer or transaction if the Director of Securities determines that there is a reasonable likelihood that the solicitation of interest would tend to work a fraud or deceit upon the offerees. In the event the Director of Securities makes such a determination, the issuer of the solicitation of interest may request a hearing in accordance with the provisions of Article 11 of the Securities Act by notifying the Commission within 10 days after written notice of the Director's determination.

J. The following sets forth the minimum information that must be included in a Solicitation of Interest Form. Additional information may be included. Except for the title, the required information may be presented graphically in any manner.

1. The title of the Solicitation of Interest Form must include the phrase: "Solicitation of Interest."

2. The Solicitation of Interest Form must include each of the following items:

a. Name of the issuer;

b. Street address of the issuer's principal office;

c. Issuer's telephone number;

d. Date and place of organization of the issuer;

e. Dollar amount of the proposed offering;

f. Name of the issuer's chief executive officer or equivalent;

g. The following legend, or a legend which is substantially equivalent in plain and concise language:

"THIS IS A SOLICITATION OF INTEREST ONLY. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED.

NO SALES OF THE SECURITIES WILL BE MADE, OR COMMITMENT TO PURCHASE ACCEPTED, UNTIL THE DELIVERY OF A FINAL OFFERING CIRCULAR [PROSPECTUS] THAT INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING. AN INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND.

THIS OFFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS. NEITHER THE FEDERAL NOR THE STATE AUTHORITIES HAVE CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT OR ANY OTHER DOCUMENT PRESENTED TO YOU IN CONNECTION WITH THIS OFFER. NO SALE MAY BE MADE UNTIL THE OFFERING CIRCULAR [PROSPECTUS] IS REGISTERED IN THIS STATE AND IS QUALIFIED OR REGISTERED BY THE SECURITIES AND EXCHANGE COMMISSION."

h. A statement indicating whether the issuer is in the development stage, is conducting operations, has never conducted operations, or other applicable description;

i. A general description of the issuer's business or proposed business including the products or goods that are, or will be, produced or services that are, or will be, rendered, how these products or services are, or will be, produced or rendered, and how and when the issuer intends to carry out its activities;

j. A general description of the purposes for which the issuer intends to use the proceeds of the proposed offering;

k. The following information for all executive officers and directors: name, title, office, street address, telephone number, employment history (employers, titles and dates of positions held during the past five years), and education if less than five years of business experience (degrees, schools and dates).

Ariz. Admin. Code § R14-4-141

Adopted effective September 11, 1998 (Supp. 98-3). Amended by final rulemaking at 7 A.A.R. 729, effective January 17, 2001 (Supp. 01-1).