[29 Pa.B. 3898]
[Continued from previous Web Page] (b) Except in cases where the delivery of a complete offering circular, before or concurrently with any offer of securities, is not required by order of the Commission as a condition of qualification under section 203(p) of the act (70 P. S. § 1-203(p)), every offering of debt securities pursuant to [such] this section shall be made by an offering circular containing complete information about the securities and the issuer, including the following:
* * * * * (15) A notice describing the provisions of section 207(m)(2) (70 P. S. § 1-207(m)(2)) and informing an offeree or purchaser of the method of exercising the rights created by that section and the regulations promulgated thereunder[;].
* * * * * § 203.171. Liquidations, dividends and distributions.
[(a)] The phrase ''bona fide distribution'' as used in section 203(q) of the act (70 P. S. § 1-203(q)) does not include a dividend or other distribution made for the purpose of avoiding the registration provisions of section 201 of the act (70 P. S. § 1-201) or made in violation of [sections 401--407,] the [anti-fraud] antifraud provisions of the act [(70 P. S. §§ 1-401--1-407), or both] (70 P. S. §§ 1- 401--1-409) or Subpart D (relating to fraudulent and prohibited practices.
[(b) The notice of distributions or dividends required in section 203(q) of the act shall be filed with the Commission by the Distributor on the Form, designated as Commission Form 203-Q.]
(Editor's Note: As part of this proposal, the Commission is proposing to delete FORM 203-Q as it appears in 64 Pa. Code pages 203-41--203.45, serial pages (200049)--(200053).)
§ 203.183. Agricultural cooperative associations.
* * * * * (b) The following words and terms [shall], have, for the purposes of this section, the following meanings:
* * * * * (2) [MembersFor] Members--For purposes of subsection (a)(2) only, includes patrons to the extent that the organic law or another law to which the agricultural cooperative association is subject requires the patrons to be treated as members.
(3) [Securitiesembership] Securities--Membership agreements, capital stock, membership certificates and an instrument or form of advice which evidences:
* * * * * (4) [Engaged in agriculturePersons] Engaged in agriculture--Persons engaged in farming, dairying, livestock raising, poultry raising, floriculture, mushroom growing, beekeeping, horticulture and allied occupations shall be deemed to be engaged in agriculture.
[(c) The provisions of § 209.010(b) (relating to required records; report on sales of securities and use of proceeds) and of § 606.011 (relating to financial reports to security holders) may not be applicable to the offer and sale of securities without registration in conformity with this section.]
§ 203.184. Offers and sales to principals.
* * * * * (b) For purposes of this section, the term ''principal,'' means the following:
* * * * * (5) A relative of a person specified in paragraphs (1)--(4). For purposes of this subsection, the term ''relative'' means one of the following:
* * * * * (iv) An aunt, uncle, child, child of a spouse, sibling, mother-in-law, father-in-law, brother-in-law [or], sister-in-law, son-in-law or daughter-in-law.
* * * * * [(e) Section 209.010 (relating to required records; report on sales of securities and use of proceeds) is not applicable to offers and sales of securities under this section.]
§ 203.185. Offers prior to effectiveness of registration by qualification exempt.
* * * * * (b) [Section 209.010(b) (relating to required records; report on sales of securities and use of proceeds) is not applicable to offers made without registration under this section] The exemption contained in this section may not be available for a transaction whose primary purpose is avoidance of the provisions of section 201 of the act (70 P. S. § 1-201) or a transaction made in violation of the antifraud provisions of the act (70 P. S. §§ 1-401-- 1-409) or Subpart D (relating to fraudulent and prohibited practices).
§ 203.186. Employe takeovers.
(a) Under section 203(r) of the act (70 P. S. § 1-203(r)), the Commission finds that it is not in the public interest nor necessary for the protection of investors to require the registration under section 201 of the act (70 P. S. § 1-201) of securities issued under an investment plan for employes of an existing person designed to purchase securities of a newly created person in transactions:
* * * * * (3) [Where both of the following conditions are met:
(i) Notice shall be given to the Commission with respect to form and terms of the investment plan at least 15 days prior to the commencement of the operation of the plan in this Commonwealth and the sale of securities thereunder. Such notice shall be on the following form, designated by the Commission as Form 203-R-6:]
(Editor's Note: As part of this proposal, the Commission is proposing to delete the FORM 203-R-6 as it appears in 64 Pa. Code pages 203-52--203-54, serial pages (200060)--(200062).)
[(ii) Compulsory] When compulsory participation in the investment plan by the employe as a condition of employment is not required.
(4) When employes being solicited to purchase securities under the investment plan receive, at least 7 days prior to entering into a binding obligation to purchase or subscribe for the purchase of securities issued or to be issued under the investment plan, written offering materials that fully and adequately disclose all material facts about the investment plan, including detailed risk factors explaining the potential loss of their investment, and an opinion of counsel that the security when sold will be legally issued, fully paid and nonassessable and, if a debt security, a binding obligation of the issuer.
(5) When any prospective financial statements, as that term is defined in § 609.010 (relating to use of prospective financial statements), used in connection with soliciting the purchase of securities under the investment plan comply with § 609.010(d).
(b) [All employes being solicited to purchase securities under such plans shall receive in the written disclosure document required by item 9 of Commission's Form 203-R-6 full and adequate disclosure of all material facts as required by section 401(b) of the act (70 P. S. § 1-401(b)), including detailed risk factors relating to any material potential loss of investment.] The exemption contained in this section may not be available for a transaction whose primary purpose is avoidance of the provisions of section 201 of the act (70 P. S. § 1-201) or a transaction made in violation of the antifraud provisions of Part IV the act (70 P. S. §§ 1-401--1-409) and Subpart D (relating to fraudulent and prohibited practices).
§ 203.187. Small issuer exemption.
* * * * * (b) [The filing requirements of § 209.010(b) (relating to required records; report on sales of securities and use of proceeds) are not applicable to offers and sales of securities made under this section.
(c)] Integration.
(1) ***
(2) Offers and sales made by the issuer under this section shall be counted as offers and sales under the applicable numerical limitations in section 203(s) of the act (70 P. S. § 1-203(s)) if offers and sales under section 203(s) occur within a period of 6 consecutive months of an offer or sale made under this section.
[(d)] (c) Computation. Section 609.012 (relating to computing the number of offerees, purchasers and clients) applies to offers and sales of securities made under this section.
§ 203.189. Isolated transaction exemption.
* * * * * (c) Inclusion of prior offers and sales. Offers and sales which occurred within the preceding 12 months from the date of an offer or sale to be made under this section that were made in reliance upon section 203(d), [or] (f) or (s) of the act, §§ 203.187 and 204.010(a)(1) and (2) (relating to small issuer exemption; and increasing number of purchasers and offerees), SEC Rule 506 (17 CFR 230.506) or this section shall be counted against the numerical limitations in subsection (a)(1) and (2).
(d) Integration.
(1) Offers and sales made by the issuer under this section shall be counted as offers and sales under the applicable numerical limitations [set forth] in § 204.010(a)(1) and (2) if offers and sales occur under § 204.010 within a period of 12 consecutive months of an offer or sale made under this section.
(2) Offers and sales made by the issuer under this section shall be counted as offers and sales under the applicable numerical limitations in section 203(s) of the act (70 P. S. § 1-203(s)) if offers and sales under section 203(s) occur within a period of 6 consecutive months of an offer or sale made under this section.
* * * * * § 203.191. SEC Rule 505 offerings.
(a) Filing requirement. The notice required by section 203(s)(i) of the act (70 P. S. § 203(s)(i)) shall be filed with the Commission within the time period specified in that section on Commission Form E as set forth in § 203.041 (relating to limited offerings).
(b) Compensation. The term ''compensation,'' as used in section 203(s)(iv) of the act, is not limited to receipt of monetary consideration.
(c) Integration. Offers and sales made under this section shall be counted as offers and sales under the applicable numerical limitations in section 203(d) and (f) of the act (70 P. S. § 1-203(d) and (f)) and § 204.010 (relating to increasing number of purchasers and offerees).
(d) Beneficial ownership. For purposes of section 203(s)(v), whether a person is a beneficial owner of a security shall be determined in accordance with SEC Rule 13d-3 (17 CFR 240.13d-3 (relating to determination of beneficial owner).
(e) Amendments. During the period of the offering, the issuer shall take steps necessary to insure that all material information contained in the notice remains current and accurate in all material respects. If a material statement made in the notice, or an attachment thereto, becomes materially incorrect or inaccurate, the issuer shall file an amendment with the Commission in accordance with § 609.011 (relating to filing amendments with Commission) within 5 business days of the occurrence of the event which required the filing of the amendment.
§ 203.201. Accredited investor exemption.
(a) Filing requirement. The notice required by section 203(t)(i) of the act (70 P. S. § 203(t)(i)) shall be filed with the Commission within the time period specified in that section on Commission Form E as set forth in § 203.041 (relating to limited offerings).
(b) General solicitation. Use of general solicitation in a manner permitted by section 203(t) will not be considered to be an advertisement subject to section 606(c) of the act (70 P. S. § 606(c)) and § 606.031 (relating to advertising literature) but is subject to the antifraud provisions of the act (70 P. S. §§ 1-401--1-409) and Subpart D (relating to fraudulent and prohibited practices).
(c) Compensation. The term ''compensation,'' as used in section 203(t)(iv) of the act, is not limited to receipt of monetary consideration.
(d) Beneficial ownership. For purposes of section 203(t)(v) of the act, whether a person is a beneficial owner of a security shall be determined in accordance with SEC Rule 13d-3 (17 CFR 240.13d-3) (relating to determination of beneficial owner).
(e) Amendments. During the period of the offering, the issuer shall take steps necessary to insure that all material information contained in the notice remains current and accurate in all material respects. If a material statement made in the notice, or an attachment thereto, becomes materially incorrect or inaccurate, the issuer shall file an amendment with the Commission in accordance with § 609.011 (relating to filing amendments with Commission) within 5 business days of the occurrence of the event which required the filing of the amendment.
CHAPTER 204. EXEMPTION PROCEEDINGS § 204.010. Increasing number of purchasers and offerees.
(a) [Sales of securities. Under section 204(a) of the act (70 P. S. § 1-204(a)), the number of purchasers and offerees permitted by section 203(d) and (e) of the act (70 P. S. § 1-203(d) and (e)), respectively, are increased in the manner set forth in this section, except as provided in subsection (b), if all securities transactions made in this Commonwealth under section 203(d) and (e) of the act, including those made under paragraphs (1) and (2) are effected by broker-dealers registered under section 301 of the act (70 P. S. § 1-301):
(1) In addition to the 25 persons to whom sales of securities may be made under section 203(d) of the act, sales of securities under that section also may be made in this Commonwealth during a 12 consecutive month period to:
(i) Ten additional persons; and
(ii) An unlimited number of experienced private placement investors, as that term is defined in subsection (d)(1); or
(iii) As an alternative to, but not in combination with, subparagraphs (i) and (ii), an unlimited number of persons if all sales made under section 203(d) of the act (70 P. S. § 1-203(d)), including those made under this subparagraph, meet all of the following conditions:
(A) The securities are offered or sold in good faith reliance that the offering would qualify for exemption from the Securities Act of 1933 (15 U.S.C.A. §§ 77a--77aa) under Securities and Exchange Commission (SEC) Rules 501, 502, 503 and 505 or 506 of Regulation D (17 CFR 230.501, 230.502, 230.503, 230.505 and 230.506 (relating to rules governing limited offer and sale of securities without registration under the Securities Act of 1933)), as made effective in SEC Release No. 33-6389.
(B) Commission Form 203-D or, in the alternative, SEC Form D (as defined in subsection (d)(4) and Commission Form D Supplement found at § 203.041 (relating to limited offerings), accompanied by a copy of any offering circular, prospectus, memorandum or other document or brochure which has been or is proposed to be used in connection with the offer or sale of the securities, is filed with the Commission no later than the day on which the securities are first issued or the issuer first receives consideration from a person therefor, whichever is earlier.
(C) The purchaser satisfies the definition of accredited investor in subsection (d)(5) or has a net worth or, where applicable, joint net worth with his spouse (in either event exclusive of home, furnishings and automobiles) at the time of sale of five times the purchaser's total purchase price. The conditions of this subparagraph will be satisfied if the broker-dealer registered under section 301 of the act (70 P. S. § 1-301) who makes the sale satisfies the requirements of subsection (e).
(2) In addition to the 50 persons to whom offers of securities may be made under section 203(e) of the act (70 P. S. § 1-203(e)), offers of securities under that section also may be made in this Commonwealth during a 12 consecutive month period to:
(i) Forty additional persons; and
(ii) The number of additional persons equal to those experienced private placement investors, as that term is defined in subsection (d)(1), who actually purchase the securities being offered in the securities transaction; or
(iii) As an alternative to, but not in combination with subparagraphs (i) and (ii), an unlimited number of persons if all sales resulting therefrom meet the conditions of paragraph (1)(iii). The restriction contained in section 203(d)(ii) of the act (70 P. S. § 1-203(d)(ii)) concerning mass mailings is waived in connection with solicitations made in compliance with this subparagraph.
(3) Issuers which intend to rely on the provisions of subsection (a)(1)(i) and (ii) and have filed or will be timely filing SEC Form D with the SEC may, in lieu of filing Commission Form 203-D, file SEC Form D and Commission Form D Supplement found at § 203.041 with the Commission accompanied by a copy of any offering circular, prospectus, memorandum or other document or brochure which has been or is proposed to be used in connection with the offer or sale of the securities no later than the day on which the securities are first issued or the issuer first receives consideration from a person therefor, whichever is earlier.]
Increases in purchasers and offerees. Under section 204(a) of the act (70 P. S. § 1-204(a)), the number of purchasers and offerees permitted under section 203(d) and (e) of the act, respectively (70 P. S. § 1-203(d) and (e)) shall be increased as follows, if the issuer complies with all the conditions described in subsection (b):
(1) The total number of persons to whom securities may be offered in this Commonwealth during a period of 12 consecutive months under section 203(e) shall be 90 persons, except that offers made to experienced private placement investors, as that term is defined in subsection (d), who actually purchase the securities being offered are not included in the limitation established by this paragraph.
(2) The total number of persons to whom securities may be sold in this Commonwealth during a period of 12 consecutive months under section 203(d) shall be 35 persons, except that sales made to experienced private placement investors, as that term is defined in subsection (d) are not included in the numerical limitation established by this paragraph.
(b) [Disqualification] Conditions.
(1) [Subsections (a)(1)(i), (ii), (a)(2)(i) and (ii) are not available to an issuer if the] Disqualification. The issuer or a person who is an officer, director, principal, partner (other than a limited partner), promoter, or controlling person of the issuer or a person occupying a similar status or performing a similar function on behalf of the issuer, has not been convicted of a crime, made the subject of a sanction, or otherwise found to have met any of the criteria described in section 305 (a)(ii)--(xiii) of the act (70 P. S. § 1-305(a)(ii)--(xiii)) unless the person subject to the disqualification is registered under section 301 of the act (70 P. S. § 1-301).
(2) [Subsections (a)(1)(iii) and (a)(2)(iii) are not available, if any of the persons described in SEC Rule 252(c), (d), (e) or (f) of Regulation A (17 CFR 230.252(c)--(f)) (relating to securities exempted) promulgated under the Securities Act of 1933 (15 U.S.C.A. § 77c(b)):
(i) Has filed a registration statement which is the subject of a currently effective registration stop order entered under any state securities law within 5 years prior to the filing of the notice required under subsection (a)(1)(iii)(B).
(ii) Has, within 5 years prior to the filing of the notice required under subsection (a)(1)(iii)(B), been convicted of a felony or misdemeanor in connection with the purchase or sale of a security or a felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud.
(iii) Is currently subject to a state administrative enforcement order or judgment entered by that state's securities administrator within 5 years prior to the filing of the notice required under subsection (a)(1)(iii)(B) or is subject to a state administrative enforcement order or judgment in which fraud or deceit, including but not limited to, making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within 5 years of the filing of the notice required under subsection (a)(1)(iii)(B).
(iv) Is subject to a state administrative enforcement order or judgment which prohibits, denies or revokes the use of an exemption from registration in connection with the offer, purchase or sale of securities.
(v) Is currently subject to an order, judgment or decree of a court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to an order, judgment or decree of a court of competent jurisdiction, permanently restraining or enjoining, the party from engaging in or continuing conduct or practice in connection with the offer, purchase or sale of a security or involving the making of a false filing with the state entered within 5 years prior to the filing of the notice required under subsection (a)(1)(iii)(B).] Notice filing. With respect to reliance on subsection (a)(2), the issuer files with the Commission the notice required by section 203(d) of the act and § 203.041 (relating to limited offerings) and pays the filing fee required by section 602(b.1)(viii) of the act (70 P. S. § 1-602(b.1)(viii)).
(3) [Subsections (a)(1)(iii) and (a)(2)(iii) are not available for the securities of an issuer subject to the disqualification provisions of SEC Rule 252(c), (d), (e) or (f) of Regulation A (17 CFR 230.252(c)--(f)) promulgated under the Securities Act of 1933 (15 U.S.C.A. §§ 77a--77aa)] Broker-dealer requirement. All offers and sales made to persons in reliance on section 203(d) and (e) of the act, including the increased number of offerees and purchasers permitted by subsection (a), are effected by a broker-dealer registered under section 301 of the act (70 P. S. § 1-301), except that this condition does not apply if the issuer either is organized under the laws of the Commonwealth or has its principal place of business in this Commonwealth.
(4) Statutory requirement. With respect to all offers and sales made to persons permitted under this section, the issuer shall comply with the conditions imposed by section 203(d) and 203(e) of the act, respectively.
(c) Exceptions.
[(1)] Subsection [(b)(2)(i)--(iii) and (v) shall] (b)(1) does not apply if the person subject to the disqualification enumerated therein is licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against the person or if the broker-dealer employing the person is licensed or registered in this [state] Commonwealth and in the Form BD filed with [this state] the Commission has disclosed the order, conviction, judgment or decree relating to this person. Nothing in this paragraph shall be construed to allow a person disqualified under subsection [(b)(2)(i)--(iii) or (v)] (b)(1), to act in a capacity other than that for which the person is registered.
[(2) A disqualification created under this section is automatically waived if the state securities administrator or agency of the state which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.]
(d) Definitions. For purposes of this section, the following terms [,] have the following meanings:
* * * * * (4) [Form D. The form promulgated by the SEC (Reg. § 239.500 (17 CFR 239.500) under section 4(6) of the Securities Act of 1933 (15 U.S.C.A. § 77(d)(6)) and which, under SEC Rule 503 (17 CFR § 230.503), must be filed with the SEC by an issuer seeking to exempt securities transactions under SEC Regulation D.
(5)] Accredited investor. A person who meets the definition of accredited investor [set forth] in SEC Rule 501(a) (17 CFR 230.501(a)).
(e) [Broker-dealers] Due diligence obligation.
(1) A broker-dealer registered under section 301 of the act (70 P. S. § 1-301) [who makes a sale under subsection (a)(1)(ii) or (iii)] that sells a security to an experienced private placement investor in reliance on subsection (a) must receive a written representation that the purchaser [meets the standards set forth in subsection (a)(1)(iii)(C) or, where applicable,] meets the definition of ''experienced private placement investor'' [set forth] in subsection (d)(1)[;] and must have reasonable grounds to believe, and must believe after reasonable inquiry, that the written representation is correct.
(2) An issuer [relying on subsection (f) to make offers and sales under subsections (a)(1)(ii) and (a)(2)(ii)] that either is organized under the laws of the Commonwealth or has its principal place of business in this Commonwealth and sells its securities to experienced private placement investors in reliance on subsection (a) must receive a written representation that the purchaser meets the definition of experienced private placement investor set forth in subsection (d)(1) and must have reasonable grounds to believe, and must believe after reasonable inquiry, that the written representation is correct.
(f) [Principal place of business] Statutory basis for offers and sales under this section. [Where an issuer is organized under the laws of this Commonwealth or organized under the laws of another state but has its principal place of business in this Commonwealth, a broker-dealer registered under section 301 of the act is not required to effect the securities transactions under sections 203(d) and (e) of the act, including those made under subsections (a)(1) and (2), in order:
(1) For the issuer to rely upon subsection (a)(1)(i), (ii), (2)(i) and (ii).
(2) For the issuer to rely upon subsection (a)(1)(iii) and (2)(iii) if the issuer, in addition to filing Commission Form 203-D or SEC Form D, files Part B of Commission Form D Supplement with the Commission to waive the broker-dealer requirements in subsection (a), and the Commission does not deny the application within 5 business days from the date of the filing. The Commission may deny the waiver application if the offering appears to be in violation of the law or abusive.] All offers and sales made to persons permitted by this section are deemed to be offers and sales made under section 203(d) and (e) of the act and all conditions imposed by those sections of the act are applicable to offers and sales to persons permitted by this section.
§ 204.011. Waivers of the 12-month holding period.
(a) Under section 204(a) of the act (70 P. S. § 1-204(a)), the restriction under section 203(d)(i) of the act (70 P. S. § 1-203(d)(i)) not to sell securities purchased under that section for 12 months after the date of purchase automatically is waived if:
(1) The restricted securities [subsequently] are registered under the act, the Securities Act of 1933 (15 U.S.C.A. §§ 77a--77aa) or the Securities Exchange Act of 1934 (15 U.S.C.A. §§ 78a--78kk) subsequent to a notice filed with the Commission under section 203(d) and § 203.041(relating to limited offerings).
* * * * * § 204.012. Waivers for [offerings where sales are made only to accredited investors] preeffective offers under section 203(h).
[(a) Waivers. When an issuer meets the conditions described in subsection (b), the Commission, under section 204(a) of the act (70 P. S. § 1-204(a)), waives the following requirements of section 203(d) of the act (70 P. S. § 1-203(d)) and increases the number of purchasers and offerees permitted by section 203(d) and (e) of the act.
(1) The condition of section 203(d)(i) of the act not to sell securities purchased for 12 months after the date of purchase (12-month holding period) is waived, if resales of the securities are made only to accredited investors or to the issuer during the 12-month holding period.
(2) The requirement under § 203.041 (relating to limited offerings) to file with the Commission a copy of the agreement of the investor to hold the securities purchased under section 203(d) for the 12-month holding period is waived, if a copy of the agreement between the issuer and the investor in accordance with the requirements of paragraph (1) is filed with the Commission.
(3) The condition contained in section 203(d)(ii) of the act concerning mass mailing or public media advertising made in connection with the solicitation of sales of securities to be made under section 203(d) is waived.
(4) The number of offerees permitted under section 203(e) to whom an issuer may offer securities if sales resulting from those offers are exempt under section 203(d) is increased to an unlimited number in this Commonwealth.
(5) The number of purchasers permitted under section 203(d) to whom the issuer may sell securities is increased to an unlimited number in this Commonwealth.
(b) Conditions.
(1) The securities are sold in good faith reliance that the offering would qualify for an exemption from registration under section 5 of the Securities Act of 1933 (1933 Act) (15 U.S.C.A. § 77e) under section 3(a)(11) of the 1933 Act (15 U.S.C.A. § 77c(a)(11)) or regulations adopted by the United States Securities and Exchange Commission (SEC) under section 3(b) of the 1933 Act, except an offering under Rule 505 of SEC Regulation D, and the securities sold, whether in or outside of this Commonwealth, will be sold only to accredited investors.
(2) The issuer specifies in any advertisement, communication, sales literature or other information which is publicly disseminated in connection with the offering of securities, including by means of electronic transmission or broadcast media, that the securities will be sold only to accredited investors. For purposes of this section, publicly disseminated means communicated to 100 or more persons or otherwise communicated, used or circulated in a public manner.
(3) The issuer does not engage in any solicitation of prospective purchasers by telephone until the issuer has reasonable grounds to believe that the person to be solicited is an accredited investor.
(4) The issuer places a legend on the cover page of any disclosure document proposed to be used in connection with the offering or on the cover page of the subscription agreement advising that the securities described in the disclosure document or the subscription agreement will be sold only to accredited investors.
(5) The issuer is not an investment company as defined in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80b-21).
(6) The issuer is not a development stage company with no specific business plan or purpose or a development stage company that has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.
(7) The issuer is not subject to the disqualifications in § 204.010(b) (relating to increasing the number of purchasers and offerees) nor are its promoters, officers or directors subject to any disqualification described in that section.
(c) Definition of accredited investor. For purposes of this section, the term accredited investor has the same meaning as that term is defined in § 204.010(d)(5).
(d) Exemption. Nothing in this section otherwise prohibits, in connection with the offering, the availability of the exemption in section 203(c) of the act (70 P. S. § 1-203(c)) or § 203.184 (relating to offers and sales to principals).]
Under section 204(a) of the act (70 P. S. § 1-204(a)), the Commission waives the requirement in section 203(h) of the act (70 P. S. § 1-203(h)) that a registration statement, including a prospectus, be filed with the Commission to make offers, but not sales, of securities in this Commonwealth if the issuer of the securities to be offered under the exemption in section 203(h) has filed a registration statement with the United States Securities and Exchange Commission under the Securities Act of 1933 (15 U.S.C.A. §§ 77a--77aa) prior to the time offers are made in this Commonwealth in reliance on section 203(h) of the act.
CHAPTER 205. REGISTRATION BY COORDINATION § 205.040. [Automatic effectiveness for] Series of unit investment trusts as separate issuers.
[(a) Under section 205(d) of the act (70 P. S. § 1-205(d)), the requirements of section 205(b) and (c)(1)(iii) of the act (70 P. S. § 1-205(b) and (c)(1)(iii)) are waived for a registration statement filed under section 205 of the act by a unit investment trust, as the person is classified in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80a-64), which complies with the following:
(1) The unit investment trust is registered under the Investment Company Act of 1940.
(2) The unit investment trust is not engaged in the business of investing in securities issued by one or more open-end management investment companies, as those persons are classified in the Investment Company Act of 1940.
(3) Each series underlying a unit investment trust constitutes a separate and distinct issuer under the act and shall individually file the following materials with the Commission. If a unit investment trusts offers multiple series, Form U-1 shall identify which series is being offered in this Commonwealth.
(i) One completed and properly executed Uniform Application to Register Securities (Form U-1), including the name and address of the trustee.
(ii) A statement identifying one or more previous series of the unit investment trust for which the effective date of the registration statement was determined under section 205(b) and (c) of the act (70 P. S. § 1-205(b) and (c)).
(iii) A copy of any adverse order, judgment or decree entered in connection with the offering by the regulatory authorities of any state or by any court or the United States Securities and Exchange Commission (SEC).
(iv) Information required by section 205(d) of the act (70 P. S. § 1-205(d)), including notice of SEC effectiveness, price amendment and post-effective amendment containing one copy of the final prospectus.
(v) The appropriate fee as prescribed in section 602(b)(iv) of the act (70 P. S. § 1-602(b)(iv)).
(vi) The representation filed with the SEC under SEC Rule 487 (17 CFR 230.487) (relating to effectiveness of registration statements filed by certain unit investment trusts), which includes the following:
(A) The portfolio securities deposited in the series with respect to which the registration statement or pre-effective amendment is being filed do not differ materially in type or quality from those deposited in such previous series identified by the registrant.
(B) Except to the extent necessary to identify the specific portfolio securities deposited in, and to provide essential financial information for, the series with respect to which the registration statement or pre-effective amendment thereto is being filed, the registration statement or pre-effective amendment thereto does not contain disclosures that differ in any material respect from those contained in the registration statement of the previous series identified by the registrant.
(b) The Commission may deny, suspend or revoke the availability of this section to a unit investment trust if it appears to the Commission that a registration statement which has, or intends to become effective in this Commonwealth in reliance upon this section, is incomplete or inaccurate in any material respect or the registrant has not complied with the requirements set forth in subsection (a).]
For purposes of complying with the requirements of sections 201 and 211(a) of the act (70 P. S. §§ 1-201 and 1-211(a)), each series underlying a unit investment trust, as that person is classified in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80a-64), constitutes a separate and distinct issuer under the act and shall be required to make a separate filing with the Commission under section 211(a).
CHAPTER 207. GENERAL REGISTRATION PROVISIONS § 207.071. Escrow of promotional securities.
* * * * * (b) For the purposes of this section, the term ''promotional securities'' includes securities which are:
(1) Issued within the [2-] 5-year period immediately preceding the date of the filing of a registration statement for a consideration substantially different from the proposed public offering price and for which price differential there is no commensurate change in the earnings or financial position of the issuer.
* * * * * (4) Issued within the [2-] 5-year period immediately preceding the date of the filing of a registration statement to a promoter or proposed to be issued to a promoter at a price substantially lower than or on terms and conditions substantially more favorable than those on which securities of the same or a similar class or series have been or are to be sold to public investors.
* * * * * (c) The escrow of promotional securities shall be covered by an agreement which shall be subject to the [written] approval of the Commission [, in substantially the format and in accordance with the provisions set forth in the following form, designated by the Commission as Form SE:].
(Editor's Note: As part of this proposal, the Commission is proposing to delete FORM SE as it appears in 64 Pa. Code pages 207-3--207-7, serial pages (200089)-- (200092) and (234901).)
One manually signed copy of the [form] agreement shall be filed with the Commission prior to the effectiveness of a registration of the issuer's securities.
[(d) For the purpose of section 207(g) of the act, in determining whether the issuer has been in existence for more than 3 years the following factors, by way of illustration, are to be considered:
(1) Whether the issuer has significant revenues or earnings or both prior to the date of the filing of the registration statement.
(2) Whether the current officers and directors have been directing the operations of issuer for a significant period of time prior to the date of the filing of the registration statement.
(3) Whether the current or proposed business operations of the issuer are substantially similar to those conducted for a significant period of time prior to the date of the filing of the registration statement.]
§ 207.072. Escrow of proceeds.
(a) The Commission, when it deems necessary for the protection of investors, and subject to the limitation of section 207(g) of the act (70 P. S. § 1-207(g)), may require as a condition to the registration of securities, whether to be sold by the issuer or another person, that the proceeds from the sale of the registered security in this Commonwealth be escrowed until the issuer receives a specified amount from the sale of the security either in this Commonwealth or elsewhere; or that the proceeds from the sale of the registered security be escrowed for a specific use as set forth in the prospectus. The escrow depository shall be a bank or trust company acceptable to the Commission.
(b) The escrow of proceeds shall be covered by an agreement acceptable to the Commission which, at a minimum, meets the following conditions:
(1) The specified amount of proceeds shall be deposited in an interest bearing escrow or trust account, the terms of which are consistent with this subsection, particularly paragraph (7).
(2) The escrow depository may not be affiliated with the issuer or any officer, director, promoter or affiliate of the issuer or the underwriter of the securities which are the subject of the escrow or trust account.
(3) The agreement shall provide that the escrowed proceeds are not subject to claims by creditors of the issuer, affiliates of the issuer or underwriters until the proceeds have been released to the issuer pursuant to the terms of the agreement.
(4) A manually signed copy of the agreement shall be filed with the Commission and shall become part of the registration statement.
(5) The agreement shall be signed by an authorized officer of the issuer, an authorized officer of the underwriter, if applicable, and an authorized officer of the escrow depository.
(6) A summary of the principal terms of the agreement shall be included in the prospectus.
(7) If the minimum amount of proceeds is not raised within the specified time period or for the specific purpose set forth in the prospectus, the escrowed proceeds shall be released and returned directly to investors by the escrow depository by first class mail together with interest earned and without deductions for expenses (including commissions, fees or salaries), except that payment of interest shall be waived on proceeds held in escrow for less than 90 days.
§ 207.101. Effective period of registration statement.
* * * * * (d) Except with respect to an open-end or closed-end investment company, face amount certificate company or unit investment trust, as those persons are classified in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80a-64), the effective period of a section 205 registration statement may be extended [for additional periods of 1 year each] beyond the initial 1-year effectiveness period specified in subsection (a)(1) in increments of 1-year periods up to a maximum of 3 years from the initial effectiveness date of the registration statement in this Commonwealth by filing the following form designated as Form 207-J with the Commission prior to the expiration of the currently effective period of registration. [The filing of Form 207-J will not extend the offering for a period beyond the effective period of the registration statement with the Securities and Exchange Commission.] The provisions of this section are not available if the issuer, during the 3 year period from the initial effectiveness date of the registration statement in this Commonwealth, is required to file a new registration statement with Securities and Exchange Commission.
FORM 207-J
Instruction Sheet* * * * * WHO MUST FILE: Issuers that want to extend the effective period of a Section 205 registration statement for an additional period of one year provided, however, that filing Form 207-J shall not extend the offering for a period beyond [the effective period of the registration statement with the] three years from the initial effective date of the registration statement in this Commonwealth. Form 207-J may not be used if the issuer was required to file a new registration statement with the United States Securities and Exchange Commission.
* * * * * 4. (A) Initial effective date of registration statement in Pennsylvania:
__________(B) Description of securities registered:
__________[(C) Dollar amount of securities registered:
______ in Pennsylvania;
______ in all States.(D) Dollar amount of securities sold to date in Pennsylvania:
______ .(E) Dollar amount of securities proposed to be sold during remainder of offering:
______in Pennsylvania;
______in all States.(F) Expected date of termination of offering in Pennsylvania:
______ .]* * * * * IN WITNESS WHEREOF, this Form has been duly executed [this ____ day of ______ , 19__]
______ .
(Insert Date)
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