Section 26-B205. SMALL CORPORATE OFFERINGS REGISTRATION

 

205.1Applicants that are eligible for small corporate offerings registration may register by using the Form U-7 (Small Corporate Offering Registration Form), if the conditions set forth in this section and in the instructions to Form U-7 are satisfied.

 

205.2An application for registration under this section shall be filed with the Commissioner.

 

205.3An application for registration under this section shall contain:

 

(a)All forms and exhibits required by the instructions in the Form U-7:

 

(b)If the issuer does not make the offering through a registered broker-dealer, an application for issuer agent registration prepared in accordance with § 246, unless the agents are exempt from registration; and

 

(c)A filing fee as provided in § 249.3.

 

205.4An application to register securities under this section shall be prepared in accordance with the instructions set forth in the Form U-7 (Small Corporate Offering Registration Form) adopted by the Financial Industry Regulatory Authority (FINRA), on April 29, 1989, as it may be amended from time to time.

 

205.5A completed Form U-7 that has been declared effective by the Commissioner shall serve as the prospectus for an offering registered under this section.

 

205.6

 

(a)To be eligible to register securities under this section, the issuer shall satisfy the following conditions:

 

(1)The issuer is a corporation organized under the laws of the District or one of the states or possessions of the United States;

 

(2)The issuer engages in, or proposes to engage in, a business other than petroleum exploration or mining or other extractive industries;

 

(3)The issuer is not an investment company subject to the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1--80a-52;

 

(4)The issuer is not subject to the reporting requirements of § 13 or § 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78m, 78o(d).

 

(b)To be eligible for registration under this section, an offering shall satisfy the following conditions:

 

(1)The aggregate offering price in any 12-month period does not exceed $ 1,000,000 for an offering under 17 CFR § 230.504 (SEC Rule 504), or $ 5,000,000 for an offering under 17 CFR § 230.531 through 230.262 (SEC Regulation A), less the aggregate offering price for all securities sold within the 12 months prior to the commencement of, and during, the offering of the securities.

 

(2)The offering is not a "blind pool" offering or other offering for which the specific business or properties cannot be described at the time of the offering;

 

(3)The securities are to be offered and sold only on behalf of the issuer and not on behalf of any selling security holder;

 

(4)If the securities are common stock, the offering price equals or exceeds $ 1.00 per share;

 

(5)If the securities are options, warrants, or rights for common stock, the exercise price equals or exceeds $ 5 per share;

 

(6)If the securities are convertible into common stock, the conversion price equals or exceeds $ 5 per share; and

 

(7)The offering is exempt from registration with the SEC under 17 CFR § 230.501--230.508 (SEC Regulation D, Rules Governing the Limited Offer and Sale of Securities Without Registration Under the Securities Act of 1933).

 

205.7An issuer may not register an offering under this section if the issuer, any of its officers, directors, beneficial owners of 10 per cent or more of any class of its equity securities, any promoters currently connected with it in any capacity, any selling agents of the securities to be offered, or any officer, director, or partner of such selling agent:

 

(a)Within 5 years before the filing of the application for registration under this section, has filed a registration statement which is currently the subject of a stop order under any state's or District's securities law;

 

(b)Within 5 years before the filing of the application for registration under this section, has been convicted of any felony or misdemeanor in connection with the offer, purchase, or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;

 

(c)Is currently subject to any federal, state, or District administrative enforcement order or judgment?

 

(1)That was entered within 5 years before the filing of the application for registration under this regulation; and

 

(2)In which fraud or deceit, including untrue statements of material facts or omissions of material facts, was found;

 

(d)Is subject to any federal, state, or District administrative enforcement order or judgment that prohibits, denies, or revokes the use of any exemption from registration in connection with the current offer, purchase, or sale of securities; or

 

(e)Is currently subject to any order, judgment, or decree of any court of competent jurisdiction, entered within 5 years before the filing of the application for registration under this regulation, temporarily, preliminarily, or permanently restraining or enjoining, the party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with a district, state, or federal agency.

 

205.8The disqualifications set forth in § 205.7 of this section do not apply if the:

 

(a)The license of the person subject to the disqualification has not been suspended or revoked, and there are no pending proceedings against the person; and

 

(b)Form BD or Form U-4 filed with the Commissioner discloses the disqualifying event.

 

205.9The Commissioner, by order, may waive a disqualification set forth in § 205.7 if the Commissioner finds that the waiver is consistent with the public interest and within the purposes fairly intended by the policy and provisions of the Act.

 

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Amended by Emergency Rulemaking published at 47 DCR 9910 (December 15, 2000) [EXPIRED]; as amended by Emergency Rulemaking published at 48 DCR 1987 (March 2, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 3952 (May 4, 2001) [EXPIRED]; as amended by Emergency and Proposed Rulemaking published at 48 DCR 9177 (October 5, 2001) [EXPIRED]; as amended by Final Rulemaking published at 48 DCR 10879 (November 30, 2001).