Nev. Admin. Code § 90.538

Current through December 12, 2024

Section 90.538 - Certain offers of securities made to solicit interest

1. An offer to sell a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a prospectus or its equivalent for the security is exempt from NRS 90.460 and 90.560 if:

(a) The issuer:

(1) Is or will be a business entity organized under the laws of one of the states, territories or possessions of the United States or one of the provinces or territories of Canada; and

(2) Is engaged in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries and is not an offering for which the specific business or properties cannot now be described;

(b) The offeror intends to register the security in this State and conduct its offering pursuant to Regulation A or Rule 504 of Regulation D of the Securities and Exchange Commission;

(c) Ten business days before the initial solicitation of interest, the offeror files with the Administrator a Solicitation of Interest Form, provided by the Administrator, and any other materials to be used to conduct solicitations of interest, including, but not limited to, the script of any broadcast to be made and a copy of any notice to be published;

(d) Five business days before their usage, the offeror files with the Administrator any amendments to the materials filed pursuant to paragraph (c) or additional materials to be used to conduct solicitations of interest, except for materials provided to a particular offeree pursuant to a request by that offeree;

(e) No Solicitation of Interest Form, script, advertisement or other material which the offeror has been notified by the Administrator not to distribute is used to solicit indications of interest;

(f) Except for scripted broadcasts and published notices, the offeror does not communicate with any offeree about the contemplated offering unless the offeree is provided with the most current Solicitation of Interest Form at or before the time of the communication or within 5 days after the communication;

(g) During the solicitation of interest period, the offeror does not solicit or accept money or a commitment to purchase securities;

(h) No sale is made until 7 days after delivery to the purchaser of a prospectus; and

(i) The offeror does not know, and in the exercise of reasonable care, could not know that the issuer, any of the issuer's officers, directors or promoters or any of the issuer's shareholders who own at least 10 percent of its stock:

(1) Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any federal or state securities law within 5 years before the filing of the Solicitation of Interest Form;

(2) Has been convicted before the filing of the Solicitation of Interest Form of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

(3) Is currently subject to any federal or state administrative enforcement order or judgment entered by any state securities administrator or the Securities and Exchange Commission before the filing of the Solicitation of Interest Form or is subject to any federal or state administrative enforcement order or judgment entered before the filing of the Solicitation of Interest Form in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found;

(4) Is subject to any federal or state administrative enforcement order or judgment which prohibits, denies or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities; or

(5) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction permanently restraining or enjoining, such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered before the filing of the Solicitation of Interest Form.

2. The prohibitions of paragraph (i) of subsection 1 do not apply if the person subject to the disqualification is duly licensed or registered to conduct securities-related business in the state in which the administrative order or judgment was entered against such person or if the broker-dealer employing such person is licensed or registered in this State and Form B-D filed with this State discloses the order, conviction, judgment or decree relating to such person. No person disqualified pursuant to this section may act in a capacity other than that for which the person is licensed or registered. Any disqualification caused by this section is automatically waived if the agency which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

3. The failure to comply with any condition of subsection 1 will not result in the loss of the exemption from the requirements of NRS 90.460 for any offer to sell that is made to a particular person or entity if the offeror shows:

(a) The failure to comply did not pertain to a condition directly intended to protect that particular person or entity;

(b) The failure to comply was insignificant with respect to the offering as a whole; and

(c) A good faith and reasonable attempt was made to comply with all applicable conditions of subsection 1.

If an exemption is established only through reliance upon this section, the failure to comply is actionable as a violation of this section by the Administrator and constitutes grounds for denying or revoking the exemption as to a specific security or transaction.

4. The offeror shall comply with the following requirements:

(a) Any published notice or script for broadcast must contain at least the identity of the chief executive officer of the issuer, a brief and general description of its business and products and statements in substantially the following form:

NOTICE

No money or other consideration is being solicited and none will be accepted.

No sale of the securities or commitment to purchase will be made or accepted until an offering circular that includes complete information about the issuer and the offering has been received by the offeree.

An indication of interest made by a prospective investor does not constitute an obligation or commitment of any kind.

This offer is being made pursuant to an exemption from registration under the federal securities laws and the laws of this State. No sale may be made until the offering statements are qualified by the Securities and Exchange Commission and the securities are registered in this State.

(b) All communications with prospective investors made in reliance on this section must cease after a registration statement is filed in this State, and no sale may be made until at least 20 calendar days after the last communication made in reliance on this section.

(c) A preliminary prospectus or its equivalent may only be used in connection with an offering for which indications of interest have been solicited under this section if the offering is conducted by a licensed broker-dealer.

Failure to comply with these requirements will not result in the loss of the exemption from the requirements of NRS 90.460 and 90.560, but is a violation of the Securities Act of 1933, is actionable by the Administrator under NRS 90.630 and constitutes grounds for denying or revoking the exemption as to a specific security or transaction.

5. The Administrator may waive any condition of this exemption in writing, upon application by the offeror and cause having been shown. Compliance or attempted compliance with this section, or the absence of any objection or order by the Administrator with respect to any offer of securities undertaken pursuant to this section, shall not be deemed to be a waiver of any condition of this section or deemed to be a confirmation by the Administrator of the availability of this section.

6. An offer made in reliance on this section is not a violation of NRS 90.460 by virtue of being integrated with subsequent offers or sales of securities unless such subsequent offers and sales would be integrated under federal securities laws.

7. Issuers on whose behalf indications of interest are solicited under this section may not make offers to sell or sales in reliance on subsection 11 of NRS 90.530 until 6 months after the last communication with a prospective investor made pursuant to this section.

Nev. Admin. Code § 90.538

Added to NAC by Sec'y of State, eff. 10-30-97

NRS 90.530, 90.540, 90.550, 90.750