The purpose and effect is to implement Chapter 2024-168, Laws of Florida, to consolidate rules concerning the same subject matter, to remove an inaccurate citation, to use consistent terms, and to update cross-references.....

 

DEPARTMENT OF FINANCIAL SERVICES

Securities

RULE NOS.:RULE TITLES:

69W-700.001Registration of Securities

69W-700.002Filing of Prospectus

69W-700.003Content of Prospectus

69W-700.005Promoters Equity Investment Ratio

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

69W-700.015Offering Price of Equity Securities

69W-700.019Submission of Sales Reports

69W-700.022Amendments Subsequent to Effectiveness

69W-700.031Offer of Securities Prior to Registration

PURPOSE AND EFFECT: The purpose and effect is to implement Chapter 2024-168, Laws of Florida, to consolidate rules concerning the same subject matter, to remove an inaccurate citation, to use consistent terms, and to update cross-references.

SUMMARY: The purpose and effect is to implement Chapter 2024-168, Laws of Florida, which revises the securities registration provisions of chapter 517, F.S., to consolidate rules concerning the registration of securities offerings and their prospectuses, to remove an inaccurate citation, to use consistent terms, and to update cross-references.

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(8) 517.081(6), F.S. An application shall include the following:

(a) Form OFR-S-1-91, Application for Registration of Securities (10-2024 03-2024) or Form OFR-S-12-97, SCOR (Small Corporate Offering Registration) Application to Register Securities (10-2024 03-2024). 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-16506, http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-16507, or from the Office at https://flofr.gov/sitePages/MaterialsDS.htm;

(b) OFR-S-7-91, Exhibit 1 (General Issue) (10-2024 03-2024). 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-16508 or from the Office at https://flofr.gov/sitePages/MaterialsDS.htm;

(c) No change.

(2) No change.

(3) Financial Reporting Requirements for Securities Registration.

(a) through (c) No change.

(d) For purposes of Rule 69W-700.005, F.A.C., Individual General Partners shall submit an unaudited balance sheet which conforms to United States generally accepted accounting principles. Such balance sheet should be prepared on a cost basis. A two-column presentation showing both cost in the first column paralleled by a second column presenting estimated values will also be acceptable. However, the Office will not base the net worth computation on estimated values unless satisfactory evidence of the estimated values is presented to the Office.

(4)(a) The Office of Financial Regulation may allow amendment(s) to an application for registration subsequent to the approval of such application by the Office of Financial Regulation if the amendment(s) does not materially change the terms of the offering, thereby requiring a re-examination of an application to determine compliance with Section 517.081(9), F.S., and the rules prescribed by Chapter 69W-700, F.A.C.

(b) All requests for material changes to a registration subsequent to approval by the Office of Financial Regulation shall be accompanied by a new application, filing fee and exhibits as required by Section 517.081, F.S.

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, 3-21-24,            .

 

69W-700.002 Filing of Prospectus.

(1) through (2) No change.

(3) The information required in a prospectus need not follow any definite order. Such information shall not, however, be set forth in such fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading.

(4) All information contained in a prospectus shall be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth thereunder. Except as to financial statements and other tabular data, all information set forth in a prospectus shall be divided into reasonably short paragraphs or sections.

(5) Every prospectus shall include a reasonably detailed table of contents showing the subject matter of the various sections or subdivisions of the prospectus and the page number on which each such section or subdivision begins.

(6) Except as to financial statements and information required in tabular form, the information set forth in a prospectus may be expressed in condensed or summarized form.

(7) Illustrations and comparative graphs making comparisons with other companies or that incorporate projected data concerning any subject matter may not be used in a prospectus to be filed with any application for registration of securities unless the same are necessary to a full disclosure of material facts enabling an investor to make an informed judgment of the offering.

(a) Graphs or charts used in addition to the textual description, illustrating the dilution of the investor’s equity, the difference of the public offering price and price paid by promoters and insiders, the percentage of equity purchased by the public investor and the percentage purchased by the insiders and/or the use of the proceeds from the offering will be acceptable to the Office of Financial Regulation.

(b) Photographic reproductions of principal properties or important products in prospectuses are permissible where they do not create a misleading impression.

(c) Artists, architects or engineers’ conceptions or renderings are not permissible since they may be misleading in that there is not assurance of completion of the structure or because of a lack of accuracy in the conception or rendering, but accurate maps or surveys are permissible where they do not create a misleading impression.

(d) Established corporate symbols or trademarks may be used if they do not create misleading impressions.

(8) If a prospectus is complex or lengthy, an understandable and readable summary shall be included in the forepart of the prospectus.

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

(10) The prospectus shall disclose whether the issuer proposes to furnish to the security holders annual reports and whether such reports will contain certified audited or unaudited financial statements. The nature and frequency of other reports to be issued by the registrant shall be disclosed and whether or not such reports shall contain certified audited or unaudited financial statements. The disclosure is not necessary if registrant is required to send annual reports containing financial statements to security holders pursuant to the statutes or regulations administered by the Securities and Exchange Commission or pursuant to a listing agreement with a national securities exchange.

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, 3-21-24,              .

 

69W-700.003 Content of Prospectus.

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 3-21-24, Repealed             .

 

69W-700.005 Promoters Equity Investment Ratio.

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

(1) Seven Ten percent (7%) (10%) of the first $1,000,000 of the aggregate public offering; and,

(2) $70,000 plus two and one-half percent (2.5%) Seven percent (7%) of the next $4 million $500,000 of the aggregate public offering; and,

(3) $170,000 for offerings greater than $5 million Five percent (5%) of the next $500,000 of the aggregate public offering; and,

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

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (9) (7) FS. History–New 9-20-82, Formerly 3E-20.03, 3E-700.05, Amended 10-26-97, Formerly 3E-700.005, Amended 5-15-07, 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) through (3) No change.

(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) through (e) No change.

(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, which is incorporated by reference in Rule 69W-200.002, F.A.C., 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 Section Sections 517.021(14)(a) and 517.12, F.S., a depository institution, or an insurance company;

(g) through (o) 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, 3-21-24,                  .

 

69W-700.015 Offering Price of Equity Securities.

(1) No change.

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

(3) through (4) No change.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3), (9), (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, 3-21-24,               .

 

69W-700.019 Submission of Sales Reports.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.081(3) FS. History–New 9-20-82, Formerly 3E-20.18, 3E-700.19, Amended 12-8-87, 7-31-91, Formerly 3E-700.019, Amended 10-29-12, Repealed               .

 

69W-700.022 Amendments Subsequent to Effectiveness.

Rulemaking Authority 517.03 FS. Law Implemented 517.03(1) FS. History–New 9-20-82, Formerly 3E-700.022, Repealed           

 

69W-700.031 Offer of Securities Prior to Registration.

Rulemaking Authority 517.03(1) FS. Law Implemented 517.07 FS. History–New 12-5-79, Formerly 3E-100.08, Amended 10-1-96, 10-20-97, Formerly 3E-100.008, Formerly 69W-100.008, Repealed              .

 

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: June 12, 2024

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: June 20, 2024