§ 230.606 Offering not in excess of $50,000.

No offering circular need be filed or used in connection with an offering of securities under §§ 230.601 to 230.610a if the aggregate offering price of all securities of the issuer offered or sold without the use of such an offering circular does not exceed $50,000, computed in accordance with § 230.603, provided the following conditions are met:

(a) There shall be filed as an exhibit to the notification four copies of a statement setting forth the information (other than financial statements) required by § 230.610a to be set forth in an offering circular.

(b) No advertisement, article or other communication published in any newspaper, magazine or other periodical and no radio or television broadcast in regard to the offering shall contain more than the following information:

(1) The name of the issuer of such security;

(2) The title of the security, amount offered, and the per-unit offering price to the public;

(3) The identity of the general type of business of the issuer; and

(4) By whom orders will be filled or from whom further information may be obtained.

§ 230.607

Sales material to be filed.

Four copies of each of the following communications prepared or authorized by the issuer or anyone associated with the issuer, any of its affiliates or any principal underwriter for use in connection with the offering of any securities under §§ 230.601 to 230.610a shall be filed with the Commission at least five days (exclusive of Saturdays, Sundays and holidays) prior to any use thereof, or such shorter period as the Commission, in its discretion, may authorize:

(a) Every advertisement, article or other communication proposed to be published in any newspaper, magazine or other periodical;

(b) The script of every radio or television broadcast; and

(c) Every letter, circular or other written communication proposed to be sent, given or otherwise communicated to more than ten persons.

tion with any offering under §§ 230.601 to 230.610a shall contain any language stating or implying that the Commission has in any way passed upon the merits of, or given approval to, guaranteed or recommended the securities offered or the terms of the offering or has determined that the securities are exempt from registration, or has made any finding that the statements in any such offering circular or other communication are accurate or complete.

§ 230.609 Reports of sales hereunder.

Within 30 days after the end of each six-month period following the date of the original offering circular, or of the statement required by § 230.606, the issuer or other person for whose account the securities are offered shall file with the Commission four copies of a report on Form 2-E' containing the information called for by that form. A final report shall be made upon completion or termination of the offering and may be made prior to the end of the six-month period in which the last sale is made. § 230.610 Suspension of exemption.

(a) The Commission may, at any time after the filing of a notification, enter an order temporarily suspending the exemption, if it has reason to believe that:

(1) No exemption is available under §§ 230.601 to 230.610a for the securities purported to be offered hereunder or any of the terms or conditions of §§ 230.601 to 230.610a have not been complied with, including failure to file any report as required by § 230.609.

(2) The notification, the offering circular or any other sales literature contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading;

(3) The offering is being made or would be made in violation of section 17 of the Act;

(4) Any event has occurred after the filing of the notification which would have rendered the exemption hereunder unavailable if it has occurred prior to such filing;

(5) Any person specified in paragraph (b) of § 230.602 has been indicted for any crime or offense of the character 1 Filed as part of original document.

specified in subparagraph (3) thereof, or any proceeding has been initiated for the purpose of enjoining any such person from engaging in or continuing any conduct or practice of the character specified in subparagraph (4) of such paragraph;

(6) Any person specified in paragraph (c) of § 230.602 has been indicted for any crime or offense of the character specified in subparagraph (1) thereof, or any proceeding has been initiated for the purpose of enjoining any such person from engaging in or continuing any conduct or practice of the character specified in subparagraph (2) of such paragraph; or

(7) The issuer or any officer, director or underwriter has failed to cooperate, or has obstructed or refused to permit the making of an investigation by the Commission in connection with any offering made or proposed to be made hereunder.

(b) Upon the entry of an order under paragraph (a) of this section, the Commission will promptly give notice to the persons on whose behalf the notification was filed (1) that such order has been entered, together with a brief statement of the reasons for the entry of the order, and (2) that the Commission, upon receipt of a written request within 30 days after the entry of such order, will, within 20 days after the receipt of such request, set the matter down for hearing at a place to be designated by the Commission. If no hearing is requested and none is ordered by the Commission, the order shall become permanent on the thirtieth day after its entry and shall remain in effect unless or until it is modified or vacated by the Commission. Where a hearing is requested or is ordered by the Commission, the Commission will, after notice of an opportunity for such hearing, either vacate the order or enter an order permanently suspending the exemption.

(c) The Commission may at any time after notice of and opportunity for hearing, enter an order permanently suspending the exemption for any reason upon which it could have entered a temporary suspension order under paragraph (a) of this section. Any such order shall remain in effect until vacated by the Commission.

(d) All notices required by this part shall be given to the person or persons on whose behalf the notification was filed by personal service, registered or certified mail or confirmed telegraphic no

tice at the addresses of such persons given in the notification.

[23 F.R. 10484, Dec. 30, 1958, as amended at 29 F.R. 16982, Dec. 11, 1964]

§ 230.610a Schedule A: Contents of offering circular.

The offering circular required by § 230.605 shall contain the following information:

1. The following statement shall be set forth on the outside front cover page of the offering circular in capital letters in type as large as that used generally in the body of the circular:

These securities are offered pursuant to an exemption from registration with the United States Securities and Exchange Commission. The Commission does not pass upon the merits of, or approve, guarantee or recommend, any securities nor does it pass upon the accuracy or completeness of any offering circular or other selling literature.

2. State the exact name and adderss of the issuer, the name of the State or other jurisdiction under the laws of which it was incorporated and the date of its incorporation.

3. (a) Give the following information, in the tabular form indicated, on the outside front cover page of the offering circular on a per-share or other unit basis.

(b) If any of the securities are to be offered for the account of any person other than the issuer, give the name and address of each such security holder, the total amount he owns and the amount to be offered hereunder for his account.

4. (a) State the amount of securities to be offered pursuant to this regulation, the aggregate offering price to the public, the aggregate underwriting discounts or commissions, the amount of expenses of the issuer and the amount of expenses of the underwriters to be borne by the issuer, and the aggregate proceeds to the issuer or security holders for whose account the securities are to be offered.

(b) If the securities are not to be offered for cash, state the basis upon which the offering is to be made.

5. Describe briefly the method by which the securities are to be offered and if the offering is to be made by or through underwriters, the name and address of each underwriter and the amount of the participation of each such underwriter, indicating the nature of any material relationship between the issuer and such underwriter.

6. Furnish a reasonably itemized statement of the purposes for which the net cash proceeds to the issuer from the sale of the securities are to be used and the amount to be used for each such purpose, indicating in what order of priority the proceeds will be

used for the respective purposes. If the issuer has not yet obtained a license from the Small Business Administration, state whether the funds paid in by investors for the securities to be offered will be returned to them in the event such license is not obtained and describe the arrangements made to assure such return.

7. Give a brief description of the securities to be offered pursuant to this regulation. Include the following information:

(a) In the case of shares, the par or stated value, if any; the rate of dividends, if fixed, and whether cumulative or noncumulative; a brief indication of the preference, if any; and if convertible, the conversion rate.

(b) In the case of debt securities, the rate of interest; the date of maturity, or if the issue matures serially, a brief indication of the serial maturities, such as "maturing serially from 1965 to 1975", if the payment of principal or interest is contingent, an appropriate indication of such contingency; a brief indication of the priority of the issue; and if convertible, the conversion rate.

(c) In the case of any other kind of securrities, appropriate information of a parable character.

com

8. State whether the issuer is a closed-end open-end investment or company, and whether it proposes to operate as a diversified or nondiversified investment company.

Instruction. The issuer may reserve freedom of action to change from a non-diversifiled to a diversified investment company.

9. Furnish the information which would be required by Items 2 and 3 of Form N-5 if a registration statement on that form were currently being filed.

10. (a) Give the full names and complete resident addresses of all directors, officers and members of the advisory board of the issuer, any investment adviser of the issuer and any persons who own of record or are known to own beneficially more than ten percent of any class of securities of the issuer, other than the Small Business

Administration.

(b) State the aggregate annual remuneration of all directors and officers of the issuer as a group and the annual remuneration of each of the three highest-paid officers of the issuer.

(c) Describe all direct and indirect interests (by security holdings or otherwise) of each person named in answer to (a) above (1) in the issuer and (ii) in any material transactions within the past two years or in any material proposed transactions to which the issuer was or is to be a party. Include the cost to such persons of any assets or services for which any payment by or for the account of the issuer has been or is to be made.

11. Furnish appropriate financial statements of the issuer as required below. Such statements shall be prepared in accordance with generally accepted accounting principles and practices but need not be certified.

(a) A balance sheet as of a date within 90 days prior to the date of filing the notification with the Commission.

(b) A profit and loss or income statement for each of the last three fiscal years and for any subsequent period up to the date of the balance sheet furnished pursuant to (a) above.

REGULATION F: EXEMPTION FOR ASSESSMENTS ON ASSESSABLE STOCK AND FOR ASSESSABLE STOCK OFFERED OR SOLD TO REALIZE AMOUNT OF ASSESSMENT THERE

ON

AUTHORITY: §§ 230.651 to 230.656 issued under sec. 19, 48 Stat. 85, as amended; 15 U.S.C. 77s.

SOURCE: §§ 230.651 to 230.656 appear at 24 F.R. 6386, Aug. 8, 1959, unless otherwise noted. § 230.651 Scope of exemption.

(a) The following shall be exempt from registration under the Act, subject to the terms and conditions of §§ 230.651 to 230.656:

(1) Assessments on assessable stock of any corporation incorporated under the laws of, and having its principal business operations in, any State or Territory of the United States, or the District of Columbia;

(2) Assessable stock of any such corporation offered or sold at public auction or otherwise for the purpose of realizing the amount of an assessment levied thereon, or reoffered to the public by an underwriter or dealer.

(b) The amount of the following shall not exceed $300,000 in any period of one year commencing on or after July 1, 1959.

(1) The aggregate amount of all assessments levied on assessable stock of the issuer;

(2) The aggregate offering price of all securities of the issuer offered under §§ 230.651 to 230.656 or any other rule or regulation adopted pursuant to section 3(b) of the Act; and

(3) The aggregate sale price of all securities of the issuer sold in violation of section 5(a) of the Act.

(c) Notwithstanding the foregoing, no exemption under §§ 230.651 to 230.656 shall be available to an issuer so long as the issuer is subject to a suspension order issued pursuant to § 230.656, or any similar order issued pursuant to any other rule or regulation under the Act, unless the Commission determines, upon a showing of good cause, that it is not necessary under the circumstances that the exemption be denied. Any such determination by the Commission shall be

without prejudice to any other action by the Commission in any other proceeding or matter with respect to the issuer or any other person.

§ 230.652 Filing of notification.

At least 10 days (Saturdays, Sundays, and holidays excluded) prior to the date on which the initial offering of any securities is to be made under §§ 230.651 to 230.656, there shall be filed with the Regional Office of the Commission for the region in which the issuer conducts its principal business operations four copies of a notification on Form 1-F containing the information specified in that form. The Commission may, in its discretion, authorize the commencement of the offering prior to the expiration of such ten-day period upon a written request for such authorization.

§ 230.653 Information to be given stockholders and others.

Every notice or advertisement of the assessment or of any delinquent assessment sale which is sent to holders of the issuer's assessable stock or otherwise published shall include or be accompanied by a reasonably detailed statement of the purposes for which the proceeds from the assessment and from any delinquent assessment sales are to be used.

§ 230.654 Sales material to be filed.

Four copies of each of the following communications prepared or authorized by the issuer or anyone associated with the issuer or any of its affiliates or by any underwriter, for use in connection with the offering of any securities under §§ 230.651 to 230.656 shall be filed, with the Office of the Commission with which the notification is filed, at least ten days (exclusive of Saturdays, Sundays and holidays) prior to any use thereof, or such shorter period as the Commission, in its discretion, may authorize:

(1) Every notice or advertisement proposed to be published in any newspaper, magazine or other periodical;

(2) The script of every radio or television broadcast; and

(3) Every letter, circular or other written communication proposed to be sent, given or otherwise communicated to more than ten persons.

§ 230.655 Prohibition of certain state

ments.

No written or oral communication used in connection with any offering

under §§ 230.651 to 230.656 shall contain any language stating or implying that the Commission has in any way passed upon the merits of, or given approval to, any securities of the issuer, has determined that the assessment or proposed assessment is necessary or desirable or that the offering is exempt from registration, or has made any finding that the statements contained in such communication are accurate or complete. § 230.656 Suspension of exemption.

(a) The Commission may, at any time after the filing of a notification, issue an order temporarily suspending the exemption if it has reason to believe that:

(1) No exemption is available under §§ 230.651 to 230.656 for the securities proposed or purported to be offered hereunder, or any of the terms or conditions of §§ 230.651 to 230.656 have not been complied with;

(2) Any written communication or radio or television broadcast used or proposed to be used in connection with the offering contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading;

(3) The offering is being made or would be made in violation of section 17 of the Act;

(4) The issuer or any promoter, director or officer thereof has failed to cooperate, or has obstructed or refused to permit the making of any investigation by the Commission in connection with any offering made or proposed to be made hereunder.

(b) Upon the issuance of an order under paragraph (a) of this section, the Commission will promptly give notice to the issuer (1) that such order has been issued, together with a brief statement of the reasons for the issuance of the order, and (2) that the Commission, upon receipt of a written request within 30 days after the issuance of such order, will within 20 days after the receipt of such request, set the matter down for hearing at a place to be designated by the Commission. If no hearing is requested and none is ordered by the Commission, the order shall become permanent on the thirtieth day after its issuance and shall remain in effect unless or until it is modified or vacated by the Commission. Where a hearing is requested or is ordered by the Commission.