Okla. Admin. Code § 85:10-13-2

Current through Vol. 42, No. 4, November 1, 2024

Section 85:10-13-2 - Offering circular

(a)Definitions. When used in this subchapter, the word "security" shall have the following meaning, unless the text clearly indicates otherwise.

"Security" means any note, stock, bond, debenture, evidence of indebtedness, certificate of interest, trust certificate, thrift certificate, subscription, investment contract, voting trust certificate, certificate of deposit and other such instruments as defined in the Oklahoma Securities Act. However, the term security does not mean any deposit in an institution whose deposits are insured by the Federal Deposit Insurance Corporation.

(b)Offering circular requirements.

(1)General prohibition. No bank or trust company shall, directly or indirectly, offer, offer to sell, offer for sale or sell any security of which it is the issuer unless the offer, offer to sell, offer for sale or sale is made through the use of an offering circular which has been filed with the Bank Commissioner and that complies with the provisions of this section. Every sale must contain a statement that the offering circular was disclosed. Thereafter the bank or trust company shall be required to maintain permanent records to substantiate that the offering was made by the offering circular only.

(2)New bank. In the case of banks in organization, no subscriptions shall be taken, nor stock offered for sale, until and after the Commissioner shall have accepted the offering circular and then offering can only be made by divulging to the prospective purchaser of the stock the offering circular and his/her subscription to the offering must contain a signed statement that said offering circular was disclosed. Thereafter, the bank or trust company shall be required to maintain permanent records to substantiate that the offering was made by offering circular only.

(3)When effective-update. The effective date of the offering circular shall be the date on which it is declared effective by the Commissioner. The offering circular shall be effective for a period of six (6) months, which period may be extended for two (2) consecutive ninety (90) day periods upon request to the Commissioner. The offering circular must be updated during the course of the offering period by attaching the most recent Sheet balance sheet and statement of income of the bank or trust company filed with the Commissioner as part of the most recent report of condition.

(4)Noninsured disclosure. The noninsured status of non-equity securities issued and deposits received by institutions under the jurisdiction of the Department must be disclosed to the public clearly, conspicuously, and prominently on the face of any offering circular required and on the face of any written communication acknowledging sale or receipt.

(5)Exception-FDIC. All deposit accounts of trust companies, and other securities of both banks and trust companies, whether representing an equity interest in, or debt of, the institution, are subject to the disclosure requirements of this section unless the individual security or deposit account being advertised, offered for sale, sold or accepted is insured by the Federal Deposit Insurance Corporation.

(6)Effect of circumstances. In no event shall an offering circular be used which is false or misleading in light of the circumstances then existing.

(c)Exempt transactions. This section shall not apply to:

(1) Any nonpublic offering by a bank or trust company..

(2) Any reorganization, merger, consolidation or acquisition of assets by a bank where constituent security holders who will receive securities in the transaction are furnished with a proxy statement or information statement prepared substantially in accordance with the requirements of this section.

(3) Any transaction by a bank or trust company with its existing security holders which involves an exchange of a security pursuant to the exercise of a right of conversion.

(4) Any transaction in which the securities of a bank or trust company are offered to its employees or directors pursuant to a stock purchase, stock option, stock warrant, or stock savings plan.

(5) Any offering by a bank or trust company of its securities solely to its existing equity security holders or where the amount of the securities offered for sale, when aggregated with the amount of all other sales by the bank or trust company of its securities within the twelve (12) months immediately preceding commencement of the subject offering, does not exceed $1,000,000. However, no offer of securities may be made in reliance on this paragraph (5) unless the bank or trust company prepares and distributes to all offerees prior to sale a document describing the bank and the offer. The items of an offering circular should be used merely as a guide. In addition, the offering document and a notice containing the following information shall be filed with the Commissioner not later than twenty (20) days prior to commencement of the offering:

(A) The name of the bank or trust company and location of its principal place of business;

(B) The class of security to be offered;

(C) The aggregate offering price of the securities;

(D) The class and aggregate offering price of all securities sold within the months prior to the proposed commencement date of the offering; and

(E) The date on which the offering will commence and a brief statement of the bank or trust company's plan as to the use and distribution of the offering document and any other offering materials. The offering document described in this paragraph (5) above shall be filed with the Commissioner. While the offering document will not be declared effective by the Commissioner, the Commissioner has the right to review the document and take such regulatory action as is appropriate against a bank or trust company, its officers, directors or employees if basic disclosure has not been made or the document contains statements which are false or misleading in light of the circumstances.

(6) An offer, offer to sell, offer for sale or sale of securities of a bank or trust company to its parent holding company.

(d)Nonpublic offerings. Transactions by a bank or trust company involving the offer, offer to sell, offer for sale, or sale of securities of a bank or trust company shall be deemed to be transactions not involving any public offering if all of the following conditions are satisfied.

(1) The bank or trust company shall have reasonable grounds to believe the offeree has the knowledge or experience in financial matters capable of evaluating the risk of the prospective investments.

(2) All offerees and sales are negotiated transactions through direct communication.

(3) Each offeree shall have access to all the information generally contained in an offering circular.

(4) The securities are sold to not more than twenty-five (25) persons during any continuous twelve (12) month period.

(5) The minimum denomination of any security shall be $100,000 and each offeree shall sign a statement that the securities are being purchased for investment and not distribution.

(6) Notice is given to the Commissioner at least twenty (20) days prior to any such offering of the facts and the circumstances surrounding such an offer which will justify the exemption.

Okla. Admin. Code § 85:10-13-2

Amended at 25 Ok Reg 1064, eff 5-25-08