N.M. Code R. § 12.11.12.11

Current through Register Vol. 35, No. 11, June 11, 2024

Section 12.11.12.11 - SECTION 58-13C-202X - SMALL OFFERINGS BY ISSUERS WITH LOCAL OPERATIONS

A. Pursuant to Section 58-13C-202 X, notification must be given on the securities division's form X and filed with the division ten business days prior to any offer of securities.

B. No commission, fee or other remuneration shall be paid or given, directly or indirectly, to any person for soliciting any prospective purchaser in this state unless such person is appropriately registered in this state.

C. No exemption shall be available under Section 58-13C-202 X for the securities of any issuer if any of the persons described in the Securities Act of 1933, Regulation A, Rule 230.262 (a), (b) or (c):

(1) has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any state's securities law within five years prior to the filing of the notice required under this exemption;

(2) has been convicted within five years prior to the filing of the notice required under this exemption 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 administrative enforcement order or judgment entered by any state's securities administrator within five years prior to the filing of the notice required under this exemption or is subject to any state's administrative enforcement order or judgment, in which fraud or deceit including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the notice required under this exemption;

(4) is subject to any state's 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, preliminarily or permanently restraining or enjoining such party from engaging in or continuing to engage in any conduct or practice involving fraud or deceit in connection with the purchase or sale of any security or involving the making of any false filing with any state entered within five years prior to the filing of the notice required under this exemption.

D. The requirements set forth in Subsection C of this section may be waived by the director if the director determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

E. At a minimum, the following information shall be disclosed to potential investors in offerings claiming the exemption provided in Section 58-13C-202 X:

(1) a general description of the offering and the business activity to be engaged in including:

(a) the general nature of the securities being offered;

(b) the maximum aggregate amount of the offering;

(c) the subscription price;

(d) the period of the offering;

(e) the maximum amount of any sales or underwriting commission to be paid and the nature of any sharing arrangement and fees;

(f) the federal exemption under the Securities Act of 1933 on which the issue is being offered;

(g) the specific purposes for which the registrant intends to employ its funds in the event that the minimum capital is received; and

(h) the estimated amount to be paid during the first 12 months following commencement of operations for administrative and similar services;

(2) for corporate offerings, a statement of dilution;

(3) for partnership offerings, suitability requirements for investors;

(4) the business experience of the sponsors and affiliates, particularly with regard to the business of the offeror;

(5) all compensation, direct or indirect, which is to be paid to the sponsor, officers, directors or control persons;

(6) a statement of the purposes for which the net proceeds of the offering are intended to be used and the approximate amount and percentages intended to be used for each such purpose;

(7) for partnership offerings, a statement prominently set forth as to whether additional assessments are provided for and, if so, the method of assessment and the penalty for default;

(8) a description of the proposed business activity including, where applicable, prior business history;

(9) a full description of any transactions and the dollar amount thereof which may be entered into between the offeror and the sponsor or control persons or affiliates, including a full description of the material terms of any agreement and dollar amount thereof between the offeror and the sponsor or control persons or affiliates;

(10) where the sponsor originates or promotes other offerings, a full description of the equitable principles which will apply in resolving any conflict between the offerings;

(11) in the case where the offeror has been in existence, a full description of all transactions and contracts of the offeror with the sponsor or any affiliate during the period of such existence;

(12) all conflicts set forth in one section entitled "Conflict of Interest and Transactions with Affiliates";

(13) in the case of offerings of direct participation programs as defined in Paragraph 2310(a)(4) of the FINRA manual, an opinion of counsel complying with American bar association opinion 346 as to the material tax consequences; and

(14) a brief description of any pending legal proceedings which might materially affect the venture.

F. Notice to prospective investors of material changes in the condition of the issuer occurring after the effective date of offering or when new information is substituted for that contained in the prospectus shall be effected through an amendment. Such amendments will not become effective until the director so orders and a corrected offering document will be sent to present stockholders including stockholders who may already have sold their shares. Post-effective amendments to change the price of securities will not be permitted. Post-effective amendments to lower the minimum amount of the offering will not be permitted. Amendments to increase the minimum amount of the offering, however, will be permitted.

G. Unless extended by the director, an offering shall be completed no later than one year from the date of acknowledgment by the director of the claim of exemption.

H. No offering document is required for sales of securities by a professional corporation or association to persons duly licensed in the corporation's area of business.

N.M. Code R. § 12.11.12.11

12.11.12.11 NMAC - Rp, 12.11.12.13 NMAC, 1-1-2010