Okla. Admin. Code § 660:11-9-36

Current through Vol. 41, No. 19, June 17, 2024

Section 660:11-9-36 - Promoters' and organizers' equity contributions

(a)Requirement. Where an issuer is a promotional or development stage company as defined in 660:11-11-1, the ratio of equity investment by promoters or insiders must be determined as reasonable and equitable in light of the facts and circumstances presented in each particular case. Cases where the fair value of such equity investment is less than 10% of the total offering are discouraged, and in such instances, the proponents of the registration shall have the burden of establishing that the offering is being made without unfair or unreasonable amounts of promoters' profits or participation, as provided in Section 1-306.A.7.b of the Securities Act.

(b)Presumption. In those instances where only 5% or more has been contributed by promoters or organizers, but where they have entered into bona fide and binding subscription contracts exercisable within one year with the new enterprises for capital stock representing the difference between the amount contributed and 10%, then the burden of proof will be deemed to have been satisfied.

(c)Determination of equity investment. The fair value of equity investment shall be deemed to mean the total of all sums conveyed to the issuer in the form of paid-in or contributed cash or other assets with an established or determinable value. In those cases where the issuer has experienced losses from operations, the fair value of equity investment shall be the net worth of the issuer as of the date of the proposed offering determined in accordance with generally accepted accounting principles.

(d)Burden of proof. The burden of justifying as equitable the quantity of promotional securities to be issued for assets so conveyed, and of establishing reasonable or market value of said assets, shall rest with the applicant.

Okla. Admin. Code § 660:11-9-36

Added at 21 Ok Reg 2532, eff 7-1-04

Amended by Oklahoma Register, Volume 37, Issue 24, September 1, 2020, eff. 11/1/2020