The rules are proposed for amendment to clearly state the forms required for the registration of securities; broaden the types of offerings to be all-inclusive and increase consumer protection; allow companies to determine voting rights of common ...

 

DEPARTMENT OF FINANCIAL SERVICES

Securities

RULE NOS.:RULE TITLES:

69W-700.001Registration of Securities

69W-700.002Filing of Prospectus

69W-700.005Promoters Equity Investment Ratio

69W-700.006Voting Rights

69W-700.007Options or Warrants Granted Underwriters

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

69W-700.010Preferred Stock or Debt Securities

69W-700.014Real Estate Investment Trusts (REIT)

69W-700.015Offering Price of Equity Securities

69W-700.026Unsound Financial Condition

69W-700.028Small Corporate Offering Registration (“SCOR” Offering)

PURPOSE AND EFFECT: The rules are proposed for amendment to clearly state the forms required for the registration of securities; broaden the types of offerings to be all-inclusive and increase consumer protection; allow companies to determine voting rights of common stock when coupled with adequate disclosure; provide disclosure protections to allow the decision-making to be on the investor; disallow the transfer of options and warrants issued to underwriters to anyone outside of the underwriter; limit the number of shares covered by the underwriter's options and warrants to 10% of shares actually sold; define parameters to provide increased investor protections; add a definition for institutional investor; remove provisions duplicative of statute; incorporate contents and remove cross-reference to another rule; add disclosure language; remove discretion of the Office; repeal Rule 69W-700.028, F.A.C.; and update references to incorporated material to Rule 69W-200.002, F.A.C.

SUMMARY: 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.

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: 517.081(3), (5), (7) 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: Alisa Goldberg, Division of Securities, [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., and shall use the below forms which are incorporated by reference in subsection 69W-301.002(7), F.A.C.: the forms described in subsection 69W-301.002(7), F.A.C.

(a) Form OFR-S-1-91, Application for Registration of Securities or Form OFR-S-12-97, SCOR (Small Corporate Offering Registration) Application to Register Securities;

(b) OFR-S-7-91, Exhibit 1 (General Issue);

(c) An irrevocable written Uniform Consent to Service of Process, Form U-2 or Form OFR-S-5-91;

(d) Uniform Corporate Resolution, Form U-2A or Form OFR-S-6-91.

(2) No change.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(3) FS. History–(Formerly 3E-20.011) New 9-20-82, Formerly 3E-700.01, Amended 7-31-91, Formerly 3E-700.001, Amended_________.

 

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, or a letter of notification under Regulation A of the Securities Act of 1933 (17 C.F.R. §§ 230.251 through 230.263 (2010)) or Form U-7, Small Corporate Offering Registration, 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 incorporated by reference in subsection 69W-301.002(7), F.A.C. The federal regulations referenced in this rule are hereby incorporated by reference and may be obtained by mail from the Florida Office of Financial Regulation, Division of Securities, 200 E. Gaines Street, Tallahassee, Florida 32399. Copies of the Code of Federal Regulation are also available online through the U.S. Government Printing Office via GPO Access: http://www.gpoaccess.gov/cfr/index.html.

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

 

69W-700.005 Promoters Equity Investment Ratio.

(1) In corporate offerings where the issuer is in a development stage, the ratio of equity investment by promoters or insiders to the aggregate public offering shall be no less than:

(a) Ten percent (10%) of the first $1,000,000 of the aggregate public offering; and

(b) Seven percent (7%) of the next $500,000 of the aggregate public offering; and

(c) Five percent (5%) of the next $500,000 of the aggregate public offering; and

(d) Two and one-half percent (21/2%) of the balance over $2,000,000.

(2) Contributions of intangible assets may not be considered as promoters equity, however, any earned surplus that had been accumulated, but not paid out as dividends, shall be counted as promoters equity.

(3) In all limited partnership offerings, the following will be acceptable in lieu of a 15% ratio of equity investment:

(a) In order that a general partner(s) be sufficiently capitalized to indicate the ability to perform the commitments which are made in regard to such programs, the net worth of the individual general partner(s), excluding home, home furnishings and automobile or the net worth of the corporate general partner(s), must be equal to 15% of the aggregate amount of limited partnership interests to be sold with a maximum net worth requirement of $250,000. The net worth of a general partner(s) shall be revealed by a balance sheet prepared by an independent certified public accountant in accordance with United States generally accepted accounting principles as prescribed in Rule 69W-300.002, F.A.C. The general partner(s) shall make a direct investment, net of commissions, in the limited partnership(s) equal to 5% of the aggregate amount of limited partnership interests to be sold with a maximum participation requirement of $100,000. The required participation may be reduced by 10% of the general partner(s) net worth in excess of the amount required.

(b) In the alternative, to paragraph (a) of this subsection, the general partner(s) may make a direct investment, net of commissions, in the limited partnership equal to 10% of the amount paid, or to be paid, into the partnership by the limited partners with a maximum participation requirement of $100,000.

(c) The election as to compliance with paragraph (a) or (b) must be made by the general partner(s) prior to effectiveness in Florida and shall be binding thereafter unless the Office of Financial Regulation consents to a change from paragraph (a) or (b).

(d) In a series of limited partnerships, the general partner(s) shall spread the required participation figure as equitably among the partnerships to be formed as possible.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (7) FS. History–(Formerly 3E-20.03) New 9-20-82, Formerly 3E-700.05, Amended 10-26-97, Formerly 3E-700.005, Amended 5-15-07,_________.

 

69W-700.006 Voting Rights.

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

(a) The cover of the Disclosure Document includes a specific warning and a cross reference to a specific, appropriate risk factor; and The corporation is not a “development stage entity” as defined in Rule 69W-200.001, F.A.C.; and

(b) Dividend rights on voting and non-voting stock are equal per share; and

(b)(c) 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.”

(d) Registration may not be granted for the sale of equity securities of which the voting ratio is inequitable, considering the offering price and voting rights of the outstanding equity securities at the time of filing an application for registration.

(2) Registration involving the sale of limited partnership interests will not be allowed unless:

(a) Meetings of the limited partnership may be called by the general partner(s) or the limited partner(s) holding more than 10% of the then outstanding limited partnership interests, for any matters for which the partners may vote as set forth in the limited partnership agreement.

(b) To the extent the law of the state in question is not inconsistent, the limited partnership agreement must provide that a majority of the then outstanding limited partnership interests may, without the necessity for concurrence by the general partner, vote to:

1. Amend the limited partnership agreement;

2. Dissolve the partnership;

3. Remove the general partner and elect a new general partner; or

4. Approve or disapprove the sale of all or substantially all of the assets of the partnership.

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________.

 

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) They are issued in connection with a best efforts underwriting only when the entire issue is sold, provided however, that options or warrants may be issued in connection with a minimum-maximum offering only if the amount of options or warrants to be issued to the underwriters is pro-rated in accordance with the amount of the underwriting which is sold; and

(c) Option or warrants may not be transferred, except: The options or warrants may not be assignable or transferable for a period of one (1) year from the date of issuance except to partners of the underwriters when the underwriter is a partnership, and officers or directors of the underwriters when the underwriter is a corporation.

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

(2) The number of shares covered by the underwriter’s options or warrants must not exceed ten percent (10%) of the shares of common stock actually sold in the public offering. The number of shares covered by the warrants or options do not exceed 10% of the shares being offered to the public in the offering under consideration.

(3) The initial exercise price of the options or warrants is at least equal to the public offering price with a “step-up” of the exercise price of 7% each year they are outstanding, or in the alternative, an overall 20% step-up. The step-up shall commence twelve (12) months after the grant of the option or warrant. The election as to the step-up rate must be made at the time the option or warrant is issued.

(4) The options or warrants do not exceed five (5) years in duration and are exercisable no sooner than twelve (12) eleven (11) months after issuance.

(5) When the options or warrants are issued by a relatively small company in the promotional stage it must appear from all the facts and circumstances that the issuance of such options is necessary to obtain competent investment banking service, provided that the direct commissions to the underwriters are lower than the usual and customary commissions would be in absence of such options.

(5)(6) The prospectus used in connection with the offering fully discloses the terms and the reason for the issuance of such options or warrants; provided that if such reason relates to future advisory services to be performed by the underwriter without compensation in consideration for the issuance of such options or warrants, a statement to that effect is placed in the prospectus.

(6)(7) It is hereby established that 20% of the original public offering price per security of the issue multiplied by the number or securities the underwriters have the right to purchase under the options or warrants shall be included by the Office of Financial Regulation in considering the overall cost limitation of the issue.

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

 

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) An issuer may not grant options or warrants at an exercise price that is less than 85% of the fair market value of the issuer’s underlying shares of common stock or similar securities on the date of grant. The number of shares, issued or reserved for issuance, covered by options and warrants shall be reasonable in number and the exercise price of such options and warrants shall not be less than fair market value at the date of granting. In the event such warrants and options exceed 10% of the shares to be outstanding upon completion of the offering, the issuer shall submit a written analysis supporting the reasonableness of the issuer’s warrant and option policy.

(2) Limitations on the Total Number of Options and Warrants. Options or warrants issued in connection with private placement financing arrangements made by the issuer may be excluded from the 10% computation if the exercise price of the warrant or option is not less than fair market value at time of issuance and the following conditions are met:

(a) For one year following the effective date of the offering, the total number of options and warrants that the issuer may issue or reserve for issuance may not exceed 15% of the sum of the issuer’s common stock outstanding at the date of the public offering plus: The options or warrants are issued contemporaneously with the issuance of the evidence of indebtedness of the ban and expire no later than the final maturity date of the loan;

1. The number of firmly underwritten shares being offered, or

2. The number of shares required to meet the minimum offering amount, if not firmly underwritten.

(b) The calculation in paragraph (a) excludes options and warrants that: The options or warrants are issued as a result of a bona fide negotiation between the issuer and parties not affiliated with the issuer;

1. The issuer issued or reserved for issuance to an unaffiliated “institutional investor” as defined in paragraph (4) of this rule, or a “business development company” as defined in Section 2(a)(48) of the Investment Company Act of 1940 (15 U.S.C. § 80a-2(a)(48), which is incorporated by reference in Rule 69W-200.002, F.A.C., in connection with a loan if:

a. The options or warrants are issued at the same time as the loan;

b. The options or warrants are issued as the result of negotiations between the issuer and an unaffiliated “institutional investor” as defined in paragraph (4) of this rule, or a “business development company” as defined in Section 2(a)(48) of the Investment Company Act of 1940 (15 U.S.C. § 80a-2(a)(48);

c. The exercise price of the options or warrants is not less than the fair market value of the issuer’s common stock or similar securities underlying the options or warrants on the date the loan was approved; and

d. The number of shares that can be issued on exercise of the options or warrants multiplied by the options or warrants’ exercise price does not exceed the face amount of the loan.

2. In connection with acquisitions, reorganizations, consolidations, or mergers, if:

a. The options or warrants are issued to persons that are unaffiliated with the issuer; and

b. Exercising the options or warrants will not materially dilute the issuer’s earnings at the time of grant after giving effect to the acquisition, reorganization, consolidation or merger.

3. The issuer issued or reserved for issuance to employees or consultants who are not promoters under an incentive stock option plan under Section 422 of the Internal Revenue Code (26 U.S.C. §422), which is incorporated by reference in Rule 69W-200.002, F.A.C.; or

4. A person may exercise at or above the offering price for public investors.

(c) The options or warrants are issued to obtain favorable financing arrangements in a private placement financing with persons not affiliated with the issuer; and

(d) The number of shares issuable upon exercise of the options or warrants multiplied by the exercise price thereof does not exceed the face amount of the loan.

(3) Options and warrants issued in connection with acquisitions, reorganizations, consolidations or mergers may be excluded in determining the reasonableness of the number of shares covered by warrants and options if they are issued to parties not affiliated with the issuer. In the event the earnings per share of the issuer would be diluted in excess of 10% by the issuance of shares upon exercise of such options and warrants, the issuer shall disclose such dilution as a specific risk factor in the Disclosure Document. submit an analysis upholding the reasonableness of the issuance of such options or warrants.

(4) For the purposes of this rule, “institutional investor” means any of the following, whether acting for itself or for others in a fiduciary capacity:

(a) A depository institution or international banking institution;

(b) An insurance company;

(c) A separate account of an insurance company;

(d) An investment company as defined in the Investment Company Act of 1940, which is incorporated by reference in Rule 69W-200.002, F.A.C.;

(e) A broker-dealer registered under the Securities Exchange Act of 1934;

(f) An employee pension, profit-sharing, or benefit plan if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under Chapter 517, Florida Statutes, a depository institution, or an insurance company;

(g) A plan established and maintained by a State, a political subdivision of a State, or an agency or instrumentality of a State or a political subdivision of a State for the benefit of its employees, if the plan has total assets in excess of $10,000,000 or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under Chapter 517, Florida Statutes, a depository institution, or an insurance company;

(h) A trust, if it has total assets in excess of $10,000,000, its trustee is a depository institution, and its participants are exclusively plans of the types identified in subparagraph (f) or (g), regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

(i) An organization described in Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Section 501(c)(3)), corporation, Massachusetts trust or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $10,000,000;

(j) A small business investment company licensed by the Small Business Administration under Section 301(c) of the Small Business Investment Act of 1958 (15 U.S.C. Section 681(c)) with total assets in excess of $10,000,000;

(k) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(22)), which is incorporated by reference in Rule 69W-200.002, F.A.C., with total assets in excess of $10,000,000;

(l) A federal covered investment adviser acting for its own account;

(m) A "qualified institutional buyer" as defined in Rule 144A(a)(1), other than Rule 144A(a)(1)(H), adopted under the Securities Act of 1933 (17 C.F.R. 230.144A), which is incorporated by reference in Rule 69W-200.002, F.A.C.;

(n) A "major U.S. institutional investor" as defined in Rule 15a-6(b)(4)(i) adopted under the Securities Exchange Act of 1934 (17 C.F.R. 240.15a-6), which is incorporated by reference in Rule 69W-200.002, F.A.C.;

(o) Any other person, other than an individual, of institutional character with total assets in excess of $10,000,000 not organized for the specific purpose of evading Chapter 517, Florida Statutes; or

(p) Any other person specified by rule adopted or order issued under Chapter 517, Florida Statutes. The requirements of this rule shall apply to applications for registration of equity securities or securities convertible into equity securities. In the event that a written analysis supporting the reasonableness of a warrant and option policy is unacceptable, the Office of Financial Regulation may disregard the number of shares reserved for issuance covered by options and warrants if it is stated in the prospectus that the issuer will not grant options or warrants to purchase shares which would result in their being outstanding options or warrants covering a total of shares in excess of 10% of the then outstanding shares.

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

 

69W-700.010 Preferred Stock or Debt Securities.

Issuers in a promotional or development phase will not normally qualify to issue preferred stock or debt securities.

(1) through (4) No change.

(5) All debt securities issued by a corporation, which corporation was created by a spin-off or was separately chartered as a wholly owned subsidiary of a listed company, will be considered on its own merits by the Office of Financial Regulation.

Rulemaking Authority 517.03 FS. Law Implemented 517.081(7) FS. History–(Formerly 3E-20.09) New 9-20-82, Formerly 3E-700.10, 3E-700.010, Amended_________.

 

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

A Real Estate Investment 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) through (9) No change.

(10) The foregoing listed terms and conditions shall apply unless such term or condition is directly contradictory to the intent of sections 856, 857 and 858 of the Internal Revenue Code of 1954 (26 U.S.C. §§ 856, 857, 858), which are incorporated by reference in Rule 69W-200.002, F.A.C., as amended, and applicable or pending rules of the Treasury Department.

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

 

69W-700.015 Offering Price of Equity Securities.

(1) The offering price of securities that an issuer is seeking to register shall not exceed:

(a) The established market price, for the securities of the same class as that proposed to be offered; or

(b) A proposed price that reflects a price earnings ratio of securities of similar issuers in the same industry; and further provided that the issuer has a consistent record of earnings for the preceding three (3) fiscal years; or

(c) The proposed offering price established by an underwriter under a firm underwriting commitment, if the underwriter is registered under the Securities Exchange Act of 1934 (15 U.S.C. §§ 78a through 78pp), which is incorporated by reference in Rule 69W-200.002, F.A.C. (15) U.S.C. §§ 78a through 78oo (2006 & Supp. III)) and has the financial ability to perform its commitment in light of its net capital position. The federal statutes referenced in this rule are hereby incorporated by reference and may be obtained by mail from the Florida Office of Financial Regulation, Division of Securities, 200 E. Gaines Street, Tallahassee, Florida 32399. Copies of the United States Code are also available online through the U.S. House of Representatives, Office of the Law Revision Counsel: http://uscode.house.gov/download/downloadPDF.shtml.

(2) In offerings where the issuer is in the development phase, or the issuer fails to comply with subsection (1) of this rule:, a specific risk factor entitled “Immediate Substantial Dilution” in the Disclosure Document stating the book value per share before and after completion of the offering and the dilution percentage to purchasers of the offering.

(a) The offering price shall not exceed five (5) times the book value of the company; and

(b) The issuance of such securities being registered shall not have dilution greater than fifty percent (50%).

(3) In offerings where the issuer is complying with the registration provisions of Section 517.081(3)(g)2., and F.S., subsection 69W-700.002(2) Rule 69W-700.028, F.A.C., the Office of Financial Regulation shall allow the offering to be offered and sold at a minimum of $5 per share provided that all promotional securities are escrowed.

(4) As a condition to registration, the Office of Financial Regulation shall require an escrow of all promotional securities issued where the Office of Financial Regulation determines that the promoters are unfairly benefiting at the expense of the public shareholders. The escrow agreement shall comply with Section 517.181, F.S., on Form OFR-S-14-97, SCOR (Small Corporate Offering Registration) Application to Register Securities, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., and shall include but not be limited to the following:

(a) The escrow agent depository shall be limited to state banks with trust powers, trust companies, and national banks with trust powers which are located within the United States or any territory or insular possession thereof.

(b) The owners of such stock shall not be entitled to sell or transfer the stock or withdraw the stock from escrow until the issuer has submitted financial statements prepared in accordance with subsection 69W-300.002(6), F.A.C., evidencing that the issuer has net earnings, after tax and before extraordinary items, based on the shares to be outstanding after a successful completion of the offering of five percent (5%) of the public offering price for two (2) consecutive fiscal years, or ten percent (10%) for one (1) fiscal year, following the public offering.

(c) The maximum length of time for shares escrowed shall be five (5) years from the date of completion of the offering at which time the escrow agreement shall automatically be terminated and the shares released.

(d) When the offering fails to raise the minimum amount as set forth in the prospectus and the proceeds collected are returned to investors as prescribed in Rule 69W-700.009, F.A.C., all shares held in escrow shall be released and the escrow agreement terminated.

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

 

69W-700.026 Unsound Financial Condition.

(1) Registration of an issuer may not be permitted if the financial statements demonstrate the issuer to have an unsound financial condition.

(2)(a) Such unsound financial condition is determined by:

(b) An explanatory paragraph in the independent auditor’s report or in a footnote to the financial statements regarding the issuer’s ability to continue as a going concern; and

(a)1. An accumulated deficit; or

(b)2. Negative shareholders equity; or

(c)3. An inability to satisfy current obligations as they become due; or

(d)4. Negative cash flow; (or revenues not being generated from operations, but from financing and borrowing activities.) or

(e) Financial statements that include a footnote or explanatory paragraph in the independent auditor’s report regarding the issuer’s ability to continue as a going concern. 

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (7) FS. History–New 10-26-97, Formerly 3E-700.026, Amended_________.

 

69W-700.028 Small Corporate Offering Registration (“SCOR” Offering).

(1) For the purpose of compliance with the registration provisions of Section 517.081(3)(g)2., F.S., the issuer shall file an application on Form OFR-S-12-97, SCOR (Small Corporate Offering Registration) Application to Register Securities, which is incorporated by reference in subsection 69W-301.002(7), F.A.C. The application shall include:

(a) Three (3) copies of Form U-7, Small Corporate Offering Registration Form, which is incorporated by reference in subsection 69W-301.002(7), F.A.C.;

(b) An irrevocable written Uniform Consent to Service of Process, Form U-2 or Form OFR-S-5-91, and Uniform Corporate Resolution, Form U-2A or Form OFR-S-6-91, which are incorporated by reference in subsection 69W-301.002(7), F.A.C., as described in Section 517.101, F.S. It shall be the choice of the applicant to file either the Form U-2 or the Form OFR-S-5-91, either of which are acceptable to the office. It shall also be the choice of the applicant to file either the Form U-2A or Form OFR-S-6-91;

(c) Payment of the statutory fee as required in Section 517.081, F.S.;

(d) Exhibits, where applicable, as prescribed in Part II to Form OFR-S-12-97, SCOR (Small Corporate Offering Registration) Application to Register Securities, which is incorporated by reference in subsection 69W-301.002(7), F.A.C.

(2) Self-underwritten offerings shall be offered and sold by the issuer registered with the Office of Financial Regulation in compliance with Section 517.12, F.S. All offerees shall be furnished with a prospectus approved by the Office of Financial Regulation and a copy of Florida’s Guide to Small Business Investments.

(3) Annual financial reports shall be filed with the Office of Financial Regulation within 90 days after the close of the issuer’s fiscal year for a period of 5 years following the effective date of the registration. In the event the corporation ceases operations, such financial reports shall continue to be furnished to the Office of Financial Regulation unless the corporation is dissolved and all remaining assets distributed, if any. In such an event, the issuer shall furnish documentation to the Office of Financial Regulation to close the file.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (7) FS. History–New 11-30-97, Formerly 3E-700.028, Amended 11-22-10, Repealed_________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Pamela Epting, Director, Division of Securities

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

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: May 13, 2014

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: April 15, 2014