Chapter 2 Part 5 Flashcards
A secuity may be registered by coordination if
the same offering is being registered under the Securities Act of 1933. The state registration statement is coordinated with federal registration, but does not need to be filed at the same time.
A registration statement under coordination must be filed with
the Administrator along with three copies of the latest prospectus that was filed with the SEC. The Administrator may also request a copy of the articles of incorporation, any unde1writing agreements, any indenture relating to the security, or other information or documents the Administrator deems appropriate. Any amendments to the federal prospectus must also be forwarded to the Administrator promptly.
Registration by coordination is effective when
the federal registration statement becomes effective, provided that no stop order has been entered by the SEC or the Administrator. The registration statement is on file with the Administrator for at least 10 days.
In addition, a statement must be filed with the Administrator at least
two business days before the effective date, indicating: • Minimum and maximum offering prices • Maximum underwriting discounts • Commissions that are being charged
If the federal registration becomes effective prior to the satisfaction of all of the requirements of the Administrator, the state registration will become effective
once the requirements have been met, unless otherwise waived by the Administrator.
Registration by filing, also called registration by notification, was used by well-established corporations meeting stringent financial requirements. This method of registration was reserved for
the largest issuers with high-quality securities issued through additional {follow-on) offerings.
Not all states permit registration by filing, but in those states where it is allowed, the following conditions must exist (8)
• A registration statement must have been filed under the Securities Act of 1933, • The issuer must be a registered issuer under the Securities Exchange Act of 1934 and have a registered class of equity securities held by 500 or more shareholders. • The issuer must have a total net worth of at least $4,000,000 or a total net worth and net pretax income of $2,000,000 for at least rwo of the previous three years. • The issuer must have been in business for at least 36 calendar months preceding registration. • there must have been at least four market makers for the issuer’s securities registered pursuant to the ‘34 Act, for a period of at least 30 days during the three months preceding filing. • The aggregate commissions or discounts received by underwriter may not exceed 10% of the aggregate offering price. • The issuer or a subsidiary may not have failed to pay a dividend on preferred stock or have defaulted on any bond or long-term lease since the end of the last fiscal year before it filed the registration statement. • In the case of an equity security, the offering price must be $5 a share or more.
The application for registration by filing must contain the following information (4)
• A statement of eligibility • The name, address, and form of organization of the issuer • A statement describing the offering • A copy of the prospectus filed with the SEC
If all or part of the offering is for the benefit of someone other than the issuer (a nonissuer distribution), the statement n1ust also contain
the name, address, and amount of securities held by that person, and the reasons for making the offering
Registration by filing becomes effective at the same time as the federal registration, provided that no stop order has been entered by the SEC or the Administrator. In addition, the required information and documents must have been
on file for at least five days and the registration fee must have been paid.
If the federal registration became effective at an earlier time, the state registration becomes effective
when all required conditions are met
The 1956 Uniform Securities Act referenced the provisions for registration by notification. However, all mention of this form of registration has been eliminated in the 2002 USA update. This is because
it has rarely been used in recent years. Essentially, the issuers who would have used this method are categorized as federal covered therefore, the securities they issue are exempt from state registration requirements.
Hegistration by qualification is used when
a security’s [ederal registration has already become effective, or when no federal registration will be filed-as in the case of intrastate offerings.
The following disclosures are required under registration by qualification 10
“• General data about the issuer or a significant subsidiary • Information on the issuer’s directors and officers • Information on all holders or 10% or more of the issuer’s securities • For any nonissuer distributions, the name and address of the person on whose behalf the offering is to he made and the amount of securities owned • A description of the issuer’s capitalization and long-term debt • The type and amount of securities to be offered, the price of the securities, estimated selling fees, and underwriting agreements • The estimated cash proceeds to be received and the purposes for which the proceeds will be used • A copy of every prospectus, letter, advertisement, or other literature to be used in connection
with the offering, and a legal opinion if it is a debt offering • A recent balance sheet and a profit and loss statement for each of the last three years • Any additional information required by the Administrator”
One of the unique characteristics of registration by qualification is that the registration becomes effective
only when determined by the Administrator
