Tenn. Comp. R. & Regs. 0780-04-02-.19

Current through June 26, 2024

Section 0780-04-02-.19 - MANUAL EXEMPTION

(1) By the authority delegated to the commissioner in T.C.A. §§ 48-1-103(b)(11) and 48-1-116, the following non-issuer transaction is exempt from the registration requirement provided in T.C.A. § 48-1-104.

(2) Any non-issuer transaction by a registered agent of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety (90) days, provided, at the time of the transaction:

(a) The issuer of the security is actually engaged in business and not in the organizational stage or in bankruptcy or receivership and is not a blank check, blind pool or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;

(b) The security is sold at a price reasonably related to the current market price of the security;

(c) The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;

(d) There exists a nationally recognized securities manual or its electronic equivalent designated by rule or order of the commissioner or a document filed with the U.S. Securities & Exchange Commission (SEC) which is publicly available through the SEC's Electronic Data Gathering and Retrieval System (EDGAR), containing:

1. A description of the business and operations of the issuer,

2. The names of the issuer's officers and the names of the issuer's directors, if any, or, in the case of a non-U.S. issuer, the corporate equivalents of such persons in the issuer's country of domicile,

3. An audited balance sheet of the issuer as of a date within eighteen (18) months, or in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet, and

4. An audited income statement for each of the issuer's immediately preceding two (2) fiscal years, or for the period of existence of the issuer, if in existence for less than two (2) years or, in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statement, a pro forma income statement; and

(e) The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System (NASDAQ), unless:

1. The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940, or

2. The issuer of the security has been engaged in continuous business (including predecessors) for at least three (3) years, or

3. The issuer of the security has total assets of at least two million dollars ($2,000,000) based on an audited balance sheet as of a date within eighteen (18) months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet.

(3) Definition. For the purposes of this Manual Exemption rule, "nationally recognized securities manuals or its electronic equivalent" shall include: Mergent's Investor Service, and OTC Markets Group Inc. with respect to securities included in the OTCQX and OTCQB markets.

Tenn. Comp. R. & Regs. 0780-04-02-.19

Original rule filed September 30, 2019; effective 12/29/2019.

Authority: T.C.A. §§ 48-1-103(b)(11), 48-1-104, and 48-1-116.