N.M. Code R. § 12.11.12.16

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

Section 12.11.12.16 - SECTION 58-13C-202CC - TRANSACTIONS INVOLVING INTERESTS IN OIL, GAS AND MINING RIGHTS

A. Sponsors and persons selling programs and claiming therefor the exemption provided in Section 58-13C-202 CC shall make every reasonable effort to assure that the investment is suitable for the persons being offered or sold interests, taking into consideration each person's financial situation, investment objectives and business acumen.

B. For purposes of determining suitability, sponsors and persons offering or selling the investment shall ensure that the investors meet one of the following financial criteria:

(1) a minimum net worth of $100,000 (exclusive of home, furnishings and automobiles); or

(2) a minimum net worth of $50,000 (exclusive of home, furnishings and automobiles) and an annual income of $50,000.

C. An offer or sale claiming the exemption provided in Section 58-13C-202 CC must require a total minimum investment of $5,000 and a minimum initial investment of $2,500.

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

(1) a general description of the program and the business activity to be engaged in including: the general nature of the units being offered; the maximum aggregate amount of the offering; subscription price; the period of the offering; the maximum amount of any sales or underwriting commissions to be paid or the nature of any sharing arrangement and fees; and, the estimated amount to be paid during the first 12 months following commencement of operations for administrative and similar services;

(2) a carefully organized series of concise paragraphs, under subcaptions where appropriate, describing the risk factors to be considered before making an investment in the program;

(3) suitability requirements for investors;

(4) the business experience of the sponsors and affiliates, particularly with regard to the oil, gas or mining business;

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

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

(7) 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 statement describing the location and general character of all materially important oil, gas or mining interests now held or presently intended to be acquired by the program;

(9) a full description of any transactions and the dollar amount thereof which may be entered into between the program and sponsor or any affiliate, including a full description of the material terms of any agreement and the dollar amount thereof between the program and the sponsor or any affiliate; where the sponsor originates or promotes other programs, describe the equitable principles which will apply in resolving any conflict among the programs; in the case where the program has been in existence, include all transactions and contracts of the program with the sponsor or any affiliate during the period of such existence; all conflicts shall be set forth in one section and shall be entitled "Conflicts of Interest and Transactions with Affiliates"; and

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

E. For the purposes of Section 58-13C-202 CC, "principally operating in New Mexico" includes a limited liability company organized under the laws of this state or a limited liability company in which a majority in interest of the members are residents of this state.

N.M. Code R. § 12.11.12.16

12.11.12.16 NMAC - Rp, 12.11.11.17 NMAC, 1-1-2010