La. Admin. Code tit. 10, § XIII-509 - Promotional Securities of "Cheap Stock"
A. Securities which have been issued within
two years of the date of filing, or are to be issued to underwriters, promoters
or insiders for an amount less than the public offering price or for a
consideration other than cash (unless the value of such consideration can be
conclusively established) will be subject to the following conditions and
restrictions.
1. The issue of such securities
in connection with a public offering may be permitted if the application
discloses:
a. a reasonable relationship
between:
i. the consideration paid by such
persons and the public offering price;
ii. the number of shares issued and the total
amount of securities to be outstanding upon completion of the offering;
and
iii. the ratio of the
promoters' equity to the amount of their investment;
b. a representation by the grantees that such
shares were acquired for investment and will not be traded, transferred or sold
for a period of at least one year from date of commencement of the offering, or
upon completion thereof, and until there has been compliance with all legal
requirements imposed for the redistribution thereof;
c. that the shares issued (together with
commission and expenses of sale) will not result in a dilution of more than 33
1/3 percent of the value of the shares outstanding in the hands of the public
at any time, based on the public offering price.
2. Such shares will ordinarily be required
held in escrow in accordance with the following provisions:
a. an escrow holder may be the commissioner
or a bank or trust company, approved by him in this or any other
state;
b. an application for escrow
arrangements shall contain, in addition to whatever other information the
commissioner may require, the following:
i. a
list of the owners of such shares and respective amounts held;
ii. copy of resolution of the board of
directors or letter of authorization selecting the agent, and written consent
of the latter to act as such;
iii.
copies of escrow agreements, instruments and instructions;
c. the escrow conditions shall provide that
the securities subject thereto will not be released without notification and
consent of the commissioner.
3. The same standards shall apply to shares
acquired from selling shareholders unless it appears that they are so separated
from the issuer and lacking in control as to permit waiver or modification of
these requirements.
Notes
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