DEPARTMENT OF FINANCIAL SERVICES
RULE NO.:RULE TITLE:
69W-200.001Definitions
NOTICE OF CHANGE
Notice is hereby given that the following changes have been made to the proposed rule in accordance with subparagraph 120.54(3)(d)1., F.S., published in Vol. 40, No. 97, May 19, 2014 issue of the Florida Administrative Register.
Following comments by the Joint Administrative Procedures Committee, the following revisions are made: the Summary and Purpose and Effect sections of the Notice is revised to add a more descriptive summary and strikes the word “all” in light of the fact that the Office’s forms continue to be incorporated in Rule 69W-301.002, F.A.C.; adds an additional statement as to why a SERC is not required; cross-references in subparagraph (11) are updated; a change is made in subparagraph (12) for clarity; an unused definition in subparagraph (13) is deleted and subsequent subparagraphs are renumbered; subparagraph (14) is amended to remove unbridled discretion by the Office in considering independent appraisal values; and several typographical errors are corrected.
PURPOSE AND EFFECT: The rule is proposed for amendment to: update references to incorporated material; amend the definition of an accredited investor to define it according to federal rule; remove one unused and one duplicative definition; and correct cross-references. The Office of Financial Regulation proposes to consolidate all material incorporated by reference in Chapter 69W, F.A.C. into a new proposed Rule 69W-200.002, F.A.C. that conforms with Section 120.54(1)(i), F.S. The proposed amendment would reference Rule 69W-200.002, F.A.C., where the material can be accessed via the FAR. The purpose and effect of the amendments is to incorporate the latest version of each material, and the purpose of placing material into Rule 69W-200.002 F.A.C., is to streamline the process by which the latest version of each material can be incorporated by reference pursuant to Section 120.54(1)(i), F.S. and therefore keep such regulations current.
SUMMARY: The rule is proposed for amendment to: update references to incorporated material; amend the definition of an accredited investor to define it according to federal rule; remove two unused and one duplicative definitions; correct cross-references and typographical errors; and remove unbridled discretion by the Office in considering independent appraisal values in subparagraph (14). See above.
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: 1) No requirement for a SERC was triggered under Section 120.541(1); and 2) The amendments will not exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S. The Agency expressly relies on an analysis of potential economic impact conducted by persons with subject matter knowledge of this rule.
69W-200.001 Definitions.
As used in the Rules and Regulations of the Financial Services Commission and Office of Financial Regulation, pursuant to Chapter 517, F.S., unless the context otherwise specifically requires:
(1) “Accredited Investor” is defined pursuant to S.E.C. Rule 501(a) of Regulation D (17 C.F.R. § 230.501(a)), which is incorporated by reference in Rule 69W-200.002, F.A.C..
(2) through (8) No change.
(9) “Carrying Dealer” means any dealer maintaining a fully/principally disclosed agreement/arrangement with an introducing dealer, whereby the carrying dealer is responsible for customer monies and securities, and confirms transactions to the customer accounts introduced; such dealer who carries carriers accounts for Florida residents must be registered pursuant to the provisions of Section 517.12, F.S.
(10) No change.
(11) “Dilution” for purposes of Rules 69W-700.008 and 69W-700.015, F.A.C., paragraph 69W-700.015(2)(b), F.A.C., shall be determined by subtracting the maximum sales commissions and expenses set forth in the prospectus from the gross proceeds of the offering and adding the net worth prior to the offering. Divide this sum by the total number of shares to be outstanding at the conclusion of the offering to determine book value. Subtract the book value from the proposed offering price and divide the result by the proposed offering price to arrive at the percentage of dilution. For the purpose of calculating “dilution” or “book value”, intangible assets such as patents, copyrights, franchises, trademarks, operating rights and goodwill are deducted from total assets.
Dilution Formula:
NP = Gross Proceeds minus Maximum Sales Commissions and Expenses
NW = Net Worth prior to the offering
TS = Total Number of shares to be outstanding after a successful offering
BV = Book Value
OP = Offering Price
Example:
NP + NW
________= BV
TS
OP – BV
_________= Dilution
OP
(12) “Established Market Price” for purposes of Rule 69W-700.015, F.A.C., shall be the OTC price for a security published in The Wall Street Journal in the Over-The-Counter Markets Section, Quotations from the NASDAQ System of such publication or the price for a security published on any stock exchange registered pursuant to the Securities Exchange Act of 1934.
(13) “Executing Dealer” means any dealer who executes transactions entered by another dealer; such dealer need not be registered under Section 517.12, F.S., unless such dealer confirms said transactions directly to Florida resident accounts, and/or maintains responsibility for such accounts as either introducing dealer or carrying dealer.
(13)(14) “Fair Value of the Equity Investment” for purposes of subsection 69W-700.005(1), F.A.C., of the promoters or insiders shall mean the total of all sums contributed to the issuer in cash together with the reasonable value of all tangible assets contributed to the issuer, and as adjusted by the earned surplus or deficit of the issuer subsequent to the dates of contribution. In determining the reasonable value of tangible assets contributed, the Office of Financial Regulation shall may take into consideration any values as determined by independent appraisal or otherwise.
(14)(15) “Independent Director” shall be defined as a member of the Issuer’s Board of Directors who:
(a) through (c) No change.
(15)(16) “Introducing Dealer” means any dealer maintaining a formal agreement/arrangement with another dealer whereby the introducing dealer does not carry (i.e., holds funds or securities, or confirms transactions) customer accounts; such dealer who introduces Florida resident accounts must be registered pursuant to Section 517.12, F.S.
(16)(17) “Issuer” in Rules 69W-400.001, 69W-500.005, 69W-500.006, and 69W-500.008, F.A.C., shall mean any person who proposes to issue or has issued or shall hereafter issue any securities. For purposes of this subsection only, the term “issuer” shall not include a promoter of the issuer for the purposes of these rules.
(17)(18) “Issuers” Within the Meaning of Section 517.021(14), F.S.
(a) through (b) No change.
(18)(19) “Issuer/Dealer” means any issuer who through either persons directly or indirectly compensated or controlled by the issuer engages, either for all or part of his time, directly or indirectly, in the business of offering or selling securities which are issued or are proposed to be issued by said issuer.
(19)(20) “Principal Office” or “Home Office” shall mean the place where the chief or principal affairs and business of the applicant or registrant are transacted.
(20)(21) “Promotional Securities” for purposes of Rule 69W-700.015, F.A.C., shall mean securities that are to be issued or were issued:
(a) through (b) No change.
(21)(22) “Publication” means advertising printed in any newspaper, magazine, periodical or other publication and mailed or delivered to its subscribers or addresses, or communicated by radio, television or similar means.
(22)(23) “Qualified Institutional Buyer” for purposes of Section 517.061(7), F.S., shall be defined as provided in Securities and Exchange Commission rule 144A(a) (17 C.F.R. § 230.144A(a)), which is incorporated by reference in Rule 69W-200.002, F.A.C.
(23)(24) “Reaffiliation” refers to those associated persons leaving one registered dealer or investment adviser and reaffiliating with another registered dealer or investment adviser.
(24)(25) “Registrant” shall mean an applicant for whom a registration has been declared effective by the Office of Financial Regulation.
(25)(26) “Reportable Act” shall mean:
(a) through (d) No change.
(26)(27) “Renewal Applicant” shall mean an applicant who is a registrant who seeks a timely renewal of the license.
(27)(28) “Securities Act of 1933”, 15 U.S.C. §§ 77a through 77mm, “Securities Exchange Act of 1934”, 15 U.S.C. §§ 78a through 78oo, “Investment Company Act of 1940”, 15 U.S.C. §§ 80a-1 through 80a-64, “Investment Advisers Act of 1940”, 15 U.S.C. §§ 80b-1 through 80b-21, and “Internal Revenue Code”, 26 U.S.C. Subtitles A through K, means the federal statutes of those names.
(28)(29) “State” means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.
(29)(30) “Total Equity Investment” for purposes of subsection 69W-700.005(1), F.A.C., shall mean the total of (1) par or stated values of all equity securities offered or proposed to be offered; and (2) the amount of surplus of any kind, regardless of description and whether or not restricted.
(30)(31) “Wholesaler” is defined as any dealer conducting business exclusively with other dealers in this State, and such dealer need not be registered as a dealer under Section 517.12, F.S.
Rulemaking Authority 517.03(1) FS. Law Implemented 517.07, 517.12, 517.021, 517.061, 517.051, 517.081, 517.161 FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-200.01, Amended 12-8-87, 10-14-90, 7-31-91, 6-16-92, 1-10-93, 5-5-94, 10-20-97, 8-9-98, 8-19-99, 10-30-03, Formerly 3E-200.001, Amended 5-15-07, 9-30-10, 11-11-13,__________.
