Rule 515-4-1-.15 - Negotiation or Competitive Bidding for Security Issues(1) This rule shall apply to all issuances of securities for which the Commission orders it to apply pursuant to the laws of Georgia except where: (a) Such securities are issued and sold prior to January 1, 1976, or are issued pursuant to authorization granted prior to the effective date of this rule.(b) The gross proceeds to the issuer of the securities will be less than $2,000,000.(c) Such securities consist of evidences of debt of a maturity of ten years or less, from date of issue to a commercial bank, insurance company or similar institution not for resale to the public provided no commission, fee, or remuneration is to be paid in connection therewith to any third person (except an associated service company charging only its cost of services) for negotiating the transaction.(d) Such securities are to be issued prorata to existing holders of securities of the applicant pursuant to any preemptive right or privilege, or in connection with any liquidation or reorganization, or recapitulation of surplus.(e) Such security is issued in exchange for outstanding securities where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.(f) The Commission, on application filed pursuant to this rule, finds that compliance with the competitive bidding requirements of this rule would not be appropriate or consistent with the public interest. Such findings will not be made where the issuer has engaged in negotiating for the sale or underwriting of the securities without having been authorized in writing by the Commission prior to such negotiation. Nothing in this section shall be deemed to preclude the Commission from entering any order which would otherwise be appropriate.(g) Such securities and loans are issued or guaranteed by the United States government or an agency of the United States government or by a State or local government or agency.(h) The exceptions contained in this rule shall not be construed as a waiver of the requirements of Section 93-414 of the 1933 Code of Georgia for Commission approval of security issues.(2) Except as provided in this rule, the Commission will not approve, pursuant to Section 93-414 of the 1933 Code of Georgia, the issuance of stocks, bonds, notes or other evidence of debt by any company or corporation over which the authority of the Commission is extended by law unless such securities be issued pursuant to competitive bidding. Where the Commission grants an application for authorization and approval to issue and sell securities through competitive bidding, the applicant shall publicly invite sealed, written proposals for the purchase or underwriting of such securities at least one week (or such other period as the Commission may by order fix), prior to entering into any contract or agreement for the issuance or sale of such securities. (a) The public invitation shall describe the type and amount of securities to be bid for, and shall state the date, time and place for opening of bids. Such invitation or the statement of terms and conditions relating to bids, shall reserve the right to reject any or all bids and, among other things, describe the arrangements made for independent counsel for bidders. No bids shall be invited, or accepted, from any person who, prior to the submission of bids, has performed any service for compensation in connection with the issuance and sale of the proposed securities, or who has received or will receive any fee or compensation in connection with the issuance and sale of the proposed securities (except as successful bidder), nor shall any bid be invited or accepted under which officers or directors would benefit from or share in the proceeds from the securities. Such proposals as may be received in response to the public invitation shall not be opened at any time or place other than as specified in the invitation. The duly authorized representative of any person making any such proposal shall be entitled to be present at the opening of such proposals and to examine each proposal submitted. The invitation or the statement of terms and conditions relating to bids shall refer to the limitation herein prescribed.(3) After receiving and opening all bids submitted as provided in paragraph (2) of this rule, the applicant shall within the period specified in the public invitation for proposals (unless all bids are rejected), accept that bid which shall be most favorable on the basis of the specifications set forth in the Commission's order. No bid shall be accepted from a person who directly or indirectly controls or is controlled by, or is under the same common control with the applicant without approval by further order of the Commission.(4) Promptly after the opening of the proposals the applicant shall report to the Commission by telephone or telegraph the information called for in paragraph (4)(b) hereof and shall file with the Commission a verified statement in writing, together with five conformed copies thereof, setting forth: (a) The action taken to comply with the Commission's order of authorization and paragraphs (2) and (3) of this rule, including a statement that the method of complying with the competitive bidding requirements as described in the application has been carried out.(b) A summary of the terms of the proposals received, including the name of each bidder or representative of a bidding group, the interest or dividends rate specified (where applicable), the price to be paid the issuer per share or per $100 principal amount, the cost of money to the issuer (except in the case of common stock), the name of the successful bidder, and the successful bidder's initial public offering price with the resulting yield to the public (except in the case of common stock), accompanied by a true and correct copy of the proposal accepted.(5) If the application to issue securities is deemed to fall within any of the exceptions contained in paragraph (1) of this rule, and such exception is relied upon as waiving the requirement for competitive bidding, the application shall specifically refer to such exception and show that it is applicable.(6) If the application to issue securities does not fall within clauses (a), (b), (c), (d), or (e) of paragraph (1) of this rule the application shall either: (a) Set forth the proposed method of complying with the competitive bidding requirements of paragraphs (2), (3), and (4) of this rule, including summarization of the principal terms of the proposed invitation as part of the application; or(b) Apply for exemption from the competitive bidding requirements of paragraphs (2), (3), and (4) of this rule upon findings as referred to in paragraph (1)(f). Such an application may be made only where the issuer has not, prior to the filing of the application, engaged in any negotiation for the sale or underwriting of the securities and does not so engage prior to Commission action on the application for exemption, and the application so shows, provided that engaging in negotiation may be permitted where the Commission has given its written authorization in advance. Such application for exemption may be filed as part of an application for securities approval, or as a separate application filed at any time prior to the filing of such an application for securities approval. Such application for exemption shall show the specific grounds relied on as warranting the finding referred to in paragraph (1)(f) of this rule. If an application for such exemption is denied by the Commission after the application for securities approval has been filed, the requirements of clause (a) of this paragraph shall be complied with by amendment to the application.(7) There shall also be set forth in the application or amendment thereto: (a) The name and address of any person receiving or entitled to receive a fee for services (other than attorneys, accountants, and similar technical services) in connection with the negotiation for or consummation of the issuance or sale of securities, or for services in securing underwriters, sellers, or purchasers of securities, other than fees included in any competitive bid; the amount of each such fee; and facts showing the necessity of the services and that the fee does not exceed the customary fee for such services in arms-length transactions and is reasonable in the light of the cost of rendering the service and any other relevant factors.(b) All facts showing or tending to show that the issuer or applicant directly or indirectly controls, or is controlled by, or is under the same common control as, any person named pursuant to the requirements of (7)(a), or showing or tending to show the opposite.(8) The evidence submitted shall include copies of any contract, underwriting, or other arrangement entered into for the sale or marketing of the securities. Where a contract or underwriting is not in final form so as to permit filing, a preliminary draft or a summary containing such identification of the parties thereto and such principal terms thereof as may be practicable, may be filed, pending filing of a conformed copy in the form executed.(9) An application for approval under this rule will ordinarily require a minimum of thirty days after it is filed to allow for public notice, investigation, opportunity for hearing, consideration by the Commission and issuance of its order.(10) The effective date of this rule is January 1, 1976.Ga. Comp. R. & Regs. R. 515-4-1-.15
Ga. L. 1878-79, p. 125; 1907, pp. 72, 75; 1922, pp. 143, 144; 1950, p. 311; 1956, pp. 104, 105; 1970, p. 104; 1972, pp. 138, 439, 615; 1973, pp. 200-220.
Original Rule was filed on December 29, 1975; effective January 1, 1976, as specified by Ga. L. 1975, p. 411.