N.Y. Comp. Codes R. & Regs. tit. 13 § 50.1

Current through Register Vol. 46, No. 53, December 31, 2024

Section 50.1 - General provisions

(a) Chapter 876 of the Laws of 1983 when referred to in this Part and in all rules and regulations issued by the Attorney General relating thereto shall be referred to as the New York Theatrical Syndication Financing Act.

(b) The Bureau of Investor Protection and Securities of the Department of Law shall be responsible for the administration of the Theatrical Syndication Financing Act.

(c) Whenever in this Part there is reference to submission to or filing with the Department of Law, this shall mean the Bureau of Investor Protection and Securities at 28 Liberty Street, New York, NY 10005.

(d) The terms theatrical production and theatrical production company, as used in this Part shall be given the same meaning as in the definition thereof in subdivisions 1(a) and (f), respectively of section 23.03 of the Arts and Cultural Affairs Law.

(e) The term production purpose shall mean those expenditures incurred in connection with productions which are produced, co-produced, developed or invested in by the theatrical production company subsequent to the completion of the minimum offering and the formation of the partnership or other organization, including reimbursements for expenditures previously incurred by the offeror or other issuer, if such expenditures are demonstrably related to the theatrical production.

(f) The term preproduction purpose shall mean those expenditures incurred in connection with productions which are produced, co-produced, developed or invested in by the theatrical production company prior to the completion of the minimum offering; provided, however, that such term shall not include in its meaning the payment of any fees or expenses for travel, lodging and meals of the issuer or other offeror, of any affiliate of the issuer or other offeror, or of a third-party producer with whom the theatrical production company funds are invested.

(g) The term business of the theatrical production company may include all the activities which are permitted to be conducted by a theatrical production company pursuant to subdivision 1(f) of the Arts and Cultural Affairs Law and shall have the same meaning as set forth on behalf of the issuer or other offeror in section 50.4(a)(1) of this Part.

(h) The term organizational and offering expenses as used in this Part shall mean expenses incurred by the theatrical production company in connection with its registration and/or filing, and its offer and distribution of theatrical syndication interests (including filing fees, attorney fees, and disbursements); provided, however, that such costs are reasonable and in no event exceed 15 percent of the gross proceeds of the offering.

(i) The term offering literature shall mean a prospectus or offering circular or private placement memorandum.

(j) The term principal as used in this Part shall be given the same meaning as in the definition thereof in subdivision 1(d) of section 23.03 of the Arts and Cultural Affairs Law.

(k) The term affiliate shall refer to any person directly or indirectly controlling, controlled by or under common control with another person; or any officer, director, partner, co-partner or employee of such other person.

(l) The term executive officer means the president, secretary, treasurer or any vice-president in charge of a principal business function (such as sales administration or finance) and any other person who performs similar policymaking functions.

(m) Pursuant to the provisions of subdivision 3 of section 23.03 of the Arts and Cultural Affairs Law, the Attorney General shall permit the use of offering literature, for the purposes set forth in that section, if in the form of a prospectus filed with the Securities and Exchange Commission as part of a registration statement which has become and remains effective pursuant to the terms of the Securities Act of 1933 or, under authority of this Part, in the form of an offering circular filed with such commission as part of a notification which has become and remains effective pursuant to regulation A under the Securities Act of 1933; provided, however, that two true copies of such prospectus or offering circular, two true copies of the investment agreement, and proof by affidavit or otherwise be filed with the Department of Law of the effectiveness of such prospectus or offering circular prior to its use in New York. A proposed draft of a prospectus or offering circular and of the investment agreement may be submitted to the Department of Law at the time it is submitted to the Securities and Exchange Commission for the sole purpose of receiving comments thereon, prior to the commencement of the offering and the formal filing of the aforementioned documents pursuant to this Part and article 23 of the Arts and Cultural Affairs Law.

(n) Unless otherwise provided by this Part or article 23 of the Arts and Cultural Affairs Law:

(1) An offeror or other issuer of syndication interests in a theatrical production company shall file with the Department of Law and distribute to prospective investors offering literature prepared pursuant to the Securities Act of 1933, containing the applicable information required by section 50.3 and, if applicable, section 50.4 of this Part.

(2) Where not more than $500,000 is the total amount of the theatrical offering, including the right to an involuntary overcall, the provisions of this Part and subdivision 3 of section 23.03 of the Arts and Cultural Affairs Law shall be deemed to be satisfied by the use of an investment agreement clearly setting forth in easily readable print all of the terms of the offering. A copy of such document may be filed with the Department of Law in lieu of a prospectus or offering circular in the manner set forth in the aforesaid statute and this Part and shall be deemed to be offering literature. This provision shall not be applicable, however, to offerings subject to the requirements of section 50.4 of this Part.

(o) The provisions of subdivision (n) of this section shall not apply to offerings made to fewer than 36 persons where an express waiver in writing to the filing and offering circular requirements of subdivision 3 of section 23.03 of the Arts and Cultural Affairs Law is filed with the Department of Law by or on behalf of each investor, which shall be in the following or substantially similar form:

I am purchasing $__ in limited partnership (or other) interests from__for the theatrical production company of__. I am aware that no offering literature has been filed with or in any way examined by the Attorney General of the State of New York. I expressly waive my rights to have a prospectus, offering circular or private placement memorandum filed with the Attorney General, and I further expressly waive my right to receive information in a prospectus, offering circular or private placement memorandum that would otherwise be required by certain provisions of law.

Complete the following by checking the appropriate box.

[] This investment is being made on my own behalf only.

[] This investment is being made on behalf of the following persons, each of whom has executed this waiver by separate copy attached hereto: (Furnish names, addresses and amounts.)

______________________________________________________

______________________________________________________

______________________________________________________

[] This investment is being made on my own behalf in the amount of $__, and on behalf of the following persons, each of whom has executed this waiver by separate copy attached hereto: (Furnish names, addresses and amounts.)

______________________________________________________

______________________________________________________

/s/ ____________________________________________________

(Print name) _____________________________________________

Address ________________________________________________

Dated:

If the investor executing the above waiver is a partnership or corporation, set forth the names and residence addresses of the general partner or partners in the case of a partnership who made the investment decision or the executive officers, directors or majority shareholders, in the case of a corporation, the date of formation or incorporation and a representation by an attorney (or a principal of the investor) that the partnership or corporation was not formed for the sole purpose of investing in the theatrical production company. If the company was formed for such purpose, provide a list of partners or shareholders, each of whom shall be counted as a person for the purpose of the subdivision. Such information may be submitted in a letter to the Department of Law.

(p) Interest, if any, earned on investors' contributions shall be subject to the following conditions:

(1) Investors who authorize the use of their contributions prior to the completion of the offering, in accordance with section 50.2(a)(4) of this Part, will be deemed to have also authorized the expenditure of interest earned on their contributions. In the event the offering is not completed, any unexpended balances must be returned to such investors pro rata.

(2) Investors who do not authorize the use of their contributions prior to the completion of the offering will be deemed not to have authorized the expenditure of the interest earned on their contributions. In the event the offering is not completed, the contributions of such investors and all interest earned thereon must be returned in full.

(3) Investors who do not authorize the use of their contributions prior to the completion of the offering may nevertheless authorize the use of any interest earned thereon in accordance with section 50.2(a)(4) of this Part. In the event the offering is not completed, the contributions of such investors shall be returned in full together with their pro rata share of any interest earned thereon which has not been expended to meet the expenses of the theatrical production company.

(4) Upon completion of the offering, the interest earned on contributions of investors in paragraphs (1), (2) and (3) of this subdivision shall be considered as income to the theatrical production company.

(q) Notwithstanding any other provision in this Part, in the event an offering of interests in a theatrical production company is initially made to fewer than five persons for the sole purpose of obtaining "front money," as hereinafter defined, the provisions of subdivision (m) of this section shall not apply to such initial offering, regardless of the ultimate number of persons to whom the offering is eventually made or the amount of the offering. In the event additional interests are offered in the theatrical production company, all provisions of this Part shall then become applicable to the offering to additional participants. The term front money as used herein shall mean funds which may be used only for the following preproduction purposes of the proposed theatrical production company: fees; advances; deposits or bonds made for the purpose of purchasing options on a book, play or other underlying materials; engaging creative personnel; securing a theatre; retaining legal, accounting and other professional advisors; preparing offering documents; the costs of a workshop to be presented by the issuer or other purposes reasonably related to the business of the theatrical production company for which the front money was raised; provided, however, that such funds shall not be used to invest in another theatrical production company; and provided further however, that it shall not include in its meaning the payment of any fees or expenses for travel, lodging and meals of the issuer or other offeror of a theatrical production company or of any affiliate of such issuer or other offeror or of a third-party producer with whom the theatrical production company funds are invested, unless permission for such use is expressly granted by the front money investor in the front money agreement.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.1

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018