Proyección de medidas de resistencia de asilamiento

4 . 1 RE G I S T R A T I O N O F SE C U R I T I E S

The Act states that it is unlawful for any person to offer or sell any security in a State unless the;

• Security is registered in the States it is being sold in; or

• Security is a federal covered security (registered under Federal Law); or • Security or transaction is exempt from registration

Filing fees must accompany all registrations. If the fee is not paid in full the registration will be stopped or denied. The State Administrators can also require filing of any advertising or sales literature to be used in conjunction with the offer- ing of the new security.

Registration is effective for a period of one year. During this time period the State Administrator can require filing of quarterly status reports on the progress of the new offering.

The registration application may only be made by the issuer or any person representing the issuer such as a broker-dealer selling shares or an officer of a company selling shares in a registered secondary offering.

If the registration statement is incomplete or inaccurate, an amendment must be filed prior to the registration becoming effective.

4 . 2 TY P E S O F SE C U R I T I E S RE G I S T R A T I O N

All securities that are classified as non-exempt (which means they are NOT exempt from registration) are required to be registered. The USA provides for the registration of securities by three methods.

They are as follows;

• Registration by Filing (Also known as Filing by Notification) • Registration by Coordination

• Registration by Qualification

4.2.1 Registration by Filing (Also known as Notification)

• This method can only be used by seasoned companies. This means that there must already be substantial trading activity and marketplace informa- tion available. This is a less rigorous registration method.

Registration of Securities

• A registration statement was filed under the Securities Act of 1933.

• Company has timely filed all required reports with the SEC during the past 36 months.

• The issuer must have a total net worth of $4,000,000 or a net pre tax income of $2,000,000 for 2 of the previous 3 years.

• Must have at least 4 registered market makers making a market in the issuer’s equity securities for 30 days out of the preceding 3 months.

• Underwriter commissions may not exceed 10% of the offering price of the security, and the minimum offering price is $5 per share.

• Issuer cannot have defaulted in any payment of principal, interest, divi- dends or lease payments for the fiscal year preceding the registration filing. • The offering price of a new equity security must be $5 or more.

4.2.1.1 Open-end investment company, known as mutual funds or Unit Investment Trusts to register by Filing must;

• Have a prior securities registration in the state within the previous 24 months.

• Remain in compliance with all material terms of such prior registrations. • Have no material change in the terms of the issuer’s securities, method of

selling securities, fund’s investment objectives or practices and the terms of sale of its securities.

4.2.1.2 Required Information for this Type of Registration • Filing a statement of eligibility for this type of filing.

• Provide the name, address and form of business of the issuer. • Provide a description of the security being registered.

• Provide a copy of a current prospectus on file for the security.

Note: Registrations will be effective at the same time as the federal regis- tration provided that no stop order is in effect, the required information and documents have been on file for at least 5 days, and the registration fee was paid.

If the federal registration became effective at an earlier time, the state regis- tration becomes effective when all required conditions are met.

Registration by filing for mutual funds and unit investment trusts are effe- tive on the day the required information is filed with the Administrator.

Registration of Securities

4.2.2 Registration by Coordination

Under this registration method the issuer can coordinate State registration with an SEC registration being made under the Securities Act of 1933. Filing the SEC information with the State will satisfy state registration requirements. This is a more stringent rigorous method than Registration by Filing and can be used by any company filing a registration statement with the SEC.

To register by Coordination, the issuer must file, in addition to the con- sent to service of process, the following with the State;

• 3 copies of the current prospectus on file with the SEC

• A copy of the Articles of Incorporation and By-Laws of the corporate issuer • A copy of any underwriter’s agreement

• Copy of any indenture relating to the issuer • A specimen of the security to be issued

• Any other information or documents requested by the State Administrator If no stop order is in effect, the State registration becomes effective when the Fed- eral registration is effective.

State Administrators require that an application be on file for a minimum of 10 business days before becoming effective. However, State Administrators can designate a shorter time period for the effective date. Many states have a 2 busi- ness day prior to the effective date minimum in effect.

4.2.3 Registration by Qualification

A registration by qualification is the most difficult method of registering and can be used by any security in any state.

4.2.3.1 The required information to be filed is as follows;

•General information such as the issuer’s name, address, type of organiza- tion, location, description of property and equipment and statement of com- petitive industry conditions.

•Information on all officers and directors of the issuer, including earnings for each director for the past and current year.

•Terms of the offering.

•Information on all shareholders of 10% or more of the issuer’s securities. •Amounts paid to promoters and non-issuers in the past 3 years and pro-

posed future payments. State Administrators can require stock given to pro- moters be held in escrow for up to 3 years after registration is effective to stop a promoter from immediately cashing out at a profit.

Registration of Securities

•Current financial records to include an income statement, balance sheet and description of the issuer’s capitalization and long-term debt.

•How sales proceeds will be used.

•A copy of any prospectus, advertisement and sales literature related to the offering.

•Description of any outstanding stock options.

•All contracts made within the past two years and disclosure of any litigation. •Issuer’s Article of Incorporation and any trust indenture related to the secu-

rities offering.

•Legal opinion and accountant’s opinion.

•Any additional information required by the State Administrator.

Test Clue: Registration becomes effective on a date determined by the Administrator. Normally this is 30 days after the date of filing, assuming there were no misstatements or omissions of material facts found.

4.2.4 General Rules Regarding Securities Registrations

• All purchasers must receive the prospectus at or before the time an offer is made in writing or a written confirmation of a sale is sent.

• Filing fees must be paid

• Any unusual fees paid to promoters may be required to be deposited into an escrow account for up to 3 years

• Registration is effective for 1 year from its effective date

• Administrator may require the filing of quarterly reports by the issuer to dis- close the progress of the offering

4 . 3 DE N I A L, SU S P E N S I O N A N D RE V O C A T I O N O F RE G I S T R A T I O N

The Administrator has the power to issue a stop order denying effectiveness to registration, suspending registration or revoking registration of an issue if it is in the public’s best interest to do so and/or;

• The registration statement is incomplete or contains false or misleading infor- mation concerning a material fact.

• The Act has been willfully violated by any person involved in the offering. • The security is already subject to a stop order or injunction by another state

Registration of Securities

• The issuer’s enterprise is illegal or tends to be fraudulent or deemed unfair or inequitable to the purchaser.

• Underwriter’s compensation in the offering is unreasonable.

• The issuer is ineligible for the registration method applied for or doesn’t meet the requirements.

• Proper filing fees have not been paid.

Note: An Administrator may not institute a stop order proceding against an effective registration statement on the basis of facts that were known to the Administrator when the registration statement became effective unless the proceedings are instituted within 30 days.

Test Clue: If the Administrator issues a stop order the issuer must be given an opportunity for a hearing. The issuer must request a hearing within 15 days. If no hearing is requested then the order remains in effect.

Exempt Securities and Transactions

Chapter 5: Exempt Securities and