Current through Register Vol. 54, No. 39, September 28, 2024
Section 202.051 - Equity securities of nonprofit organizations(a) For the purpose of section 202(e) of the act (70 P. S. § 1-202(e)), the exemption is not applicable to a proposed offering of nondebt securities by an issuer when: (1) a promoter transfers, directly or indirectly, assets to the issuer at a price substantially in excess of the cost (in cash or other tangible property) to the promoter or the reasonable current value thereof;(2) a promoter enters into or expects to enter into an employment, management or consulting arrangement with the issuer for compensation or remuneration in excess of that normally paid for services of like kind and quality in the geographical area where such services are to be rendered;(3) a promoter, directly or through an affiliate, enters into or expects to enter into a construction or other service contract with the issuer whereby the promoter or its affiliate will or proposes to make a profit by providing the materials or services in excess of normal profit for such materials or services in the geographical area where such services are to be rendered; or(4) a promoter will receive a substantial portion of the proceeds of the offering under circumstances which result in the conferring of substantial financial benefits on a promoter.The provisions of this §202.051 adopted June 14, 1974, effective 6/15/1974, 4 Pa.B. 1227; amended July 11, 2003, effective 7/12/2003, 33 Pa.B. 3365; transferred and renumbered from 64 Pa. Code § 202.051, December 14, 2012, effective 12/15/2012, 42 Pa.B. 7533.The provisions of this §202.051 amended under sections 202(a), (c), (e) and (i) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P. S. §§ 1-202(a), (c), (e) and (i) and 1-609(a)).