Ariz. Admin. Code § R14-4-127 - Guidelines for Securities Filings Under A.R.S. Section 44-1846
A. Petition for
exemption. The issuer shall file a petition for exemption from registration
under A.R.S. §
44-1846,
which shall contain specific facts demonstrating why registration is not
essential to the public interest or the protection of the investors. The
petition shall indicate and explain in detail which one or more of the
following reasons are relied upon for the exemption.
1. The special characteristics of the
securities or transactions.
2. The
limited character and duration of the offering.
3. The special characteristics or limited
number of offerees or investors.
B. Offers, sales, exchanges, or
distributions. No offer, sale, exchange, or distribution of the securities
shall be made under A.R.S. §
44-1846
until the Commission has entered a written order granting the
exemption.
C. Disclosure document.
The issuer shall file a disclosure document with the petition for exemption in
a form complying with the terms of this Section. The disclosure document shall
contain all material facts relating to the proposed issue including but not
limited to the investment objectives, a description of the type of person who
could benefit from the investment, the applicable suitability standards under
subsection (E), the legend required under subsection (H), and the information
required for a prospectus under A.R.S. §
44-1894(A)(1)
through (A)(5), (A)(7), and (A)(8). The
issuer shall deliver and all offerees shall receive the disclosure document at
least 72 hours prior to the sale of any securities.
D. Financial statement. The disclosure
document shall include the financial statements required under
R14-4-123.
E. Investor suitability
standards. Petitions under this Section shall include minimum investor
suitability standards for the persons to whom the securities will be offered.
The standards may consist of one or more of the following criteria: minimum net
worth, minimum income, and income tax bracket. Standards may be stated in the
alternative. The Commission will review the standards and may approve or modify
the standards based on such factors as, without limitation, liquidity, risk,
transferability, specific tax shelter orientation of the investment, leverage,
compensation of promoter, cash flow, conflict of interest, unproven nature of
the product or mineral or oil reserves, lack of business history, management
experience, and financial stability.
F. Final confidential report of the offering.
The issuer shall make a final confidential report to the Commission within 30
calendar days after the conclusion of the offering. The final report shall be
verified under oath by a company officer and shall include the following
information:
1. The names and addresses of
purchasers, the number of shares purchased, the date and amount paid.
2. The occupations of the
purchasers.
3. An affidavit by the
issuer that the purchasers have affirmed in writing that they meet the
suitability standards set forth in the Order of Exemption.
G. Sales completion. Sales made under Orders
of Exemption under A.R.S. §
44-1846
and this Section shall be completed within one year from the Commission's grant
of the exemption. In the event sales are not completed, the issuer shall submit
a new petition, which shall be treated as an original filing.
H. Legend on disclosure document. The outside
front cover page of every disclosure document used in connection with the offer
or sale of securities under A.R.S. §
44-1846
shall contain a prominent legend in plain and concise language stating that the
securities are exempt from registration under A.R.S. §
44-1846,
but that such exemption is not a finding by the Commission that the disclosure
document is true or accurate or that the Commission has passed upon the merits
or approved the securities.
I.
Promotional securities and promoters' equity. The provisions of
R14-4-105
and
R14-4-107 shall
be applied to this Section when the imposition of such restrictions is
necessary because of the speculative nature of the offerings, as defined in
R14-4-118(C).
J. Prohibition against advertising and sales
commission. The issuer shall not advertise in connection with any offering made
under this Section. The issuer shall not pay, directly or indirectly, any
remuneration for sales under this Section, other than transfer agent's fees, to
any salesman, underwriter, officer, director, or employee of the issuer or to
any other person.
K. Limited number
of purchasers. Under this Section, issuers may make sales to no more than 35
purchasers.
L. Integration with
other offerings. The Commission shall grant exemptions under this Section only
once in a six-month period to any corporation, limited liability company,
subsidiary, affiliate, or partnership. An issuer shall not use this exemption
if an offering was made under this Section by entities controlled by,
controlling, or under common control with the issuer within the previous six
months. An issuer may not use this exemption if the securities sold under this
Section are part of the same program of financing as securities sold under
another exemption or a registered offering by virtue of identity of the use of
the proceeds, similarity in the method of offering, identity of purchasers, and
similarity of security offered.
M.
Impound account. The Commission may impound the proceeds of offerings under
this Section under the same guidelines and conditions set forth in A.R.S.
§
44-1878
and may release the proceeds from impound back to investors after notice and
opportunity for hearing is afforded to the issuer.
N. Revocation, suspension, or denial of
exemption. The Commission may issue an order denying a petition for exemption
under A.R.S. §
44-1846
and this Section, or suspending or revoking an exemption previously issued by
the Commission under A.R.S. §
44-1846
and this Section after notice and opportunity for hearing in accordance with
A.R.S. §
44-1972,
for any grounds set forth in A.R.S. §
44-1921
or for any violation of the Securities Act of Arizona or the rules,
regulations, or orders of the Commission issued or promulgated
thereunder.
Notes
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