The purpose and effect is to incorporate updated forms, to replace “Federal Savings and Loan Insurance Corporation” with “Federal Deposit Insurance Corporation,” to clarify when registration involving the sale of non-voting ....

 

DEPARTMENT OF FINANCIAL SERVICES

Securities

RULE NO.: RULE TITLE:

69W-700.001: Registration of Securities

69W-700.002: Filing of Prospectus

69W-700.003: Content of Prospectus

69W-700.006: Voting Rights

69W-700.007: Options or Warrants Granted Underwriters

69W-700.008: Options and Warrants to Officers, Employees and Others

69W-700.012: Oil and Gas Participation Plans

69W-700.014: Real Estate Investment Trusts (REIT)

69W-700.015: Offering Price of Equity Securities

69W-700.030: Advertising and Sales Literature

PURPOSE AND EFFECT: The purpose and effect is to incorporate updated forms, to replace “Federal Savings and Loan Insurance Corporation” with “Federal Deposit Insurance Corporation,” to clarify when registration involving the sale of non-voting common stock or other equity security interest will not be permitted, to specifically include limited liability companies, to use consistent terms, to incorporate the definition of “promotional securities” from Rule 69W-200.001, F.A.C., and to clarify the requirements for use of advertising in connection with a registered securities offering.

SUMMARY: The rule is amended to incorporate updated forms, to replace “Federal Savings and Loan Insurance Corporation” with “Federal Deposit Insurance Corporation,” to clarify when registration involving the sale of non-voting common stock or other equity security interest will not be permitted, to specifically include limited liability companies, to use consistent terms, to incorporate the definition of “promotional securities” from Rule 69W-200.001, F.A.C., to clarify the requirements for use of advertising in connection with a registered securities offering.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Agency expressly relies on an analysis of potential economic impact conducted by persons with subject matter knowledge of these rules.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 517.03, FS.

LAW IMPLEMENTED: 517.03, 517.07, 517.081, 517.101 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL

BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Ryann

White, Office of General Counsel [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

69W-700.001 Registration of Securities.

(1) An applicant for registration of securities pursuant to Section 517.081, F.S., shall comply with the rules contained in Chapter 69W-700, F.A.C. An applicant shall file forms and fees electronically on the Office of Financial Regulation (Office) website at https://real.flofr.com through the Regulatory Enforcement and Licensing (REAL) System or through the North American Securities Administrators Association Electronic Filing Depository (EFD) at https://efdnasaa.org. An application filed through the REAL System shall be deemed received on the date the Office issues to the applicant a confirmation of submission and payment via the Office’s website. An application filed through the EFD shall be deemed received on the date the Office issues to the applicant a confirmation of submission and payment. The application shall include all information required by such forms and payment of the statutory fees, as required by Section 517.081(6), F.S. An application shall include the following:

(a) Form OFR-S-1-91, Application for Registration of Securities (XX-2023 12/15) or Form OFR-S-12-97, SCOR (Small Corporate Offering Registration) Application to Register Securities (XX-2023 12/15). These forms are hereby incorporated by reference and are available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-06082 or http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-06086;

(b) OFR-S-7-91, Exhibit 1 (General Issue) (XX-2023) (11/22/10). This form is hereby incorporated by reference and is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-06085;

(c) No change.

(2) No change.

(3) Financial Reporting Requirements for Securities Registration.

(a) All applicants for registration Registration of securities Securities pursuant to Section 517.081, F.S., shall file audited financial statements. An applicant offering securities pursuant to Regulation A, Tier I of the Securities Act of 1933, is not required to file audited financial statements unless audited statements have been prepared and submitted to the Securities and Exchange Commission in perfecting the Regulation A exemption.

(b) through (d) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.07, 517.081, 517.101 FS. History–New 9-20-82, Formerly 3E-20.011, 3E-700.01, Amended 7-31-91, Formerly 3E-700.001, Amended 9-22-14, 12-29-15, 11-25-19, 1-17-21, 8-8-21,               .

 

69W-700.002 Filing of Prospectus.

(1) No change.

(2) Any prospectus which depicts the United States Securities and Exchange Commission’s statement pursuant to a registration statement filed under the Securities Act of 1933, a letter of notification under Regulation A of the Securities Act of 1933 (17 C.F.R. §§230.251 through 230.263) or Form U-7, Small Corporate Offering Registration, (Rev. 5-19-2019) (9/1999), will be considered to be in substantial compliance with the requirement of subsection (1), above. Regulation A is incorporated by reference in Rule 69W-200.002, F.A.C., and Form U-7 is hereby incorporated by reference and is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-11277.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3) FS. History–New 9-20-82, Formerly 3E-20.01, 3E-700.02, Amended 10-26-97, Formerly 3E-700.002, Amended 11-22-10, 9-22-14, 11-25-19,           .

 

69W-700.003 Content of Prospectus.

(1) through (6) No change.

(7) A prospectus which conforms with requirements of the Securities and Exchange Commission or the Federal Deposit Insurance Corporation Federal Savings and Loan Insurance Corporation will be considered to be in substantial compliance with this rule.

(8) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(3) FS. History–New 9-20-82, Formerly 3E-20.02, 3E-700.03, 3E-700.003, Amended                  .

 

 

69W-700.006 Voting Rights.

Registration involving the sale of non-voting common stock or other equity security interests will not be permitted unless full :

(1) The cover of the prospectus includes a specific warning and a cross reference to a specific, appropriate risk factor; and,

(2) Full and complete disclosure is made to the prospective purchaser and imprinted on the cover of the prospectus in bold face type in a contrasting color is the following notation: “THESE SECURITIES DO NOT ENTITLE THE HOLDER THEREOF TO VOTE.”

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–New 9-20-82, Formerly 3E-700.06, Amended 10-14-90, Formerly 3E-700.006, Amended 9-22-14,          .

 

69W-700.007 Options or Warrants Granted Underwriters.

The Office of Financial Regulation will permit the registration of securities where options or warrants are granted to underwriters only on the condition that such options or warrants meet the criteria set forth in subsections (1) through (6), hereafter:

(1)(a) They are issued to the underwriters under a firm underwriting agreement; or

(b) No change.

(c) Option or warrants may not be transferred, except:

1. To partners of the underwriter, if the underwriter is a partnership;,

2. To officers and employees of the underwriter, who are also shareholders of the underwriter, if the underwriter is a corporation; or

3. To managers and managing members of the underwriter, if the underwriter is a limited liability corporation; or

4. 3. By will, under the laws of descent and distribution, or by operation of law.

(2) through (6) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–New 9-20-82, Formerly 3E-20.06, 3E-700.07, 3E-700.007, Amended 9-22-14,         .

 

69W-700.008 Options and Warrants to Officers, Employees and Others.

The Office of Financial Regulation will permit the registration of securities where options and warrants are granted to officers, employees and others only on the condition that such options or warrants meet the criteria set forth below.

(1) No change.

(2) Limitations on the total number Total Number of options Options and warrants Warrants.

(a) through (b) No change.

(3) through (4) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.03, 517.081(5), (7) FS. History–New 9-20-82, Formerly 3E-20.07, 3E-700.08, 3E-700.008, Amended 9-22-14,          .

 

69W-700.012 Oil and Gas Participation Plans.

(1) No change.

(2) Compensation to dealers broker/dealers shall be a cash commission. Indeterminate compensation to dealers broker/dealers, such as overriding interests and net profit interests are not acceptable in the absence of a firm underwriting. Warrants or options to dealers broker/dealers are not acceptable in the absence of a firm underwriting.

(3) through (5) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–New 9-20-82, Formerly 3E-20.11, 3E-700.12, 3E-700.012,       .

 

69W-700.014 Real Estate Investment Trusts (REIT).

A Real Estate Investment Trust (“Trust”) required to register its securities pursuant to Section 517.081, F.S., must have provisions in its Declaration of Trust, other organizational instruments or prospectus that satisfy the following conditions:

(1) No change.

(2)(a) Any property or asset purchased or sold on in behalf of the Trust in which the trustees Trustees or allied parties have an interest, directly or indirectly, must be so purchased or sold on the basis of independent appraisals of said property or asset; or

(b) No change.

(3) through (6) No change

(7) Any advisory contract entered into by the Trust prior to the initial public offering shall be for a period not longer than three (3) years and such contract entered into thereafter shall be for a period not longer than one (1) year. Any such advisory contract shall provide that it may be terminated at any time without penalty, by the trustees Trustees or majority of the holders of outstanding shares of beneficial interest, upon not less than sixty (60) days written notice to the adviser.

(8) through (10) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–New 9-20-82, Formerly 3E-20.13, 3E-700.14, 3E-700.014, Amended 9-22-14,         .

 

69W-700.015 Offering Price of Equity Securities.

(1) through (3) No change.

(4) “Promotional Securities” for purposes of Rule 69W-700.015, F.A.C., shall mean securities that are to be issued or were issued:

(a) By an issuer which is a development stage company to promoters for cash or other consideration, including services rendered, patents, copyrights, and other intangibles, that will be or were less than eighty-five percent (85%) of the proposed offering price; or

(b) Within three (3) years prior to the filing of an application to register securities with the Office of Financial Regulation by an issuer, which is not a development stage company, to promoters for cash or other considerations, including services rendered, patents, copyrights and other intangibles, that will be or were less than eighty-five percent (85%) of the proposed offering price. (Shares issued pursuant to conversion or exercise rights shall be included as promoters shares).

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (7) FS. History–New 9-20-82, Formerly 3E-20.15, 3E-700.15, Amended 11-30-97, Formerly 3E-700.015, Amended 11-22-10, 9-22-14,          .

 

69W-700.030 Advertising and Sales Literature.

(1) It is unlawful for any person, in connection with the offer or sale of any security registered pursuant to Section 517.081, F.S., to publish, circulate or use any advertising which contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. All advertising shall be filed with the Office of Financial Regulation not later than ten (10) days prior to the date of publication or circulation and except as the Financial Services Commission or Office of Financial Regulation may otherwise provide by rule or order. The Office of Financial Regulation may by order prohibit the publication, circulation or use of any advertising deemed false or misleading.

(2) Every advertisement used in connection with an offering of securities registered pursuant to section 517.081, F.S., must be authorized in writing by the Office of Financial Regulation before being published or circulated unless:

(a) It it is within the requirements of Financial Industry Regulatory Authority (FINRA) Rule 2210, which is incorporated by reference in rule 69W-200.002, F.A.C., concerning advertisements for use in newspapers or any other means of public communication, or

(b) Contains contains no more than the following:

1. (a) Date of issuance or release;

2. (b) Name and address of issuer;

3. (c) Identity or title of securities;

4. (d) Per unit offering price;

5. (e) Amount of offering;

6. (f) Brief statement of general character of the business;

7. (g) Address where prospectus or offering circular may be obtained.

(3) Any advertisement, except an offering circular or prospectus, intended to be used by a registered Florida dealer in connection with the public sale or offer for sale of any securities within the State of Florida shall be filed with the Office of Financial Regulation at least ten (10) days prior to publication or circulation if such advertisement contains more than the disclosure items listed in subsection (2), or does not meet the requirements of FINRA Rule 2210.

Rulemaking Authority 517.03 FS. Law Implemented 517.081 FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-100.07, 3E-100.007, Amended 9-30-10, 9-22-14,         .

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Alisa G. Goldberg, Director, Division of Securities

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 19, 2023

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: August 21, 2023