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tion to providing investment advice, the investment adviser or persons employed by or associated with the investment adviser are, subject to the authority of the board of directors, responsible for overall management of issuer's business affairs, it is sufficient to state that fact in lieu of listing all services provided.)

(iii) A brief description of the investment adviser's compensation. (If the issuer has been in operation for a full fiscal year, provide the compensation paid to the adviser for the most recent fiscal year as a percentage of average net assets. No further information is required in response to this Item if the adviser is paid on the basis of a percentage of net assets and if the issuer has neither changed investment advisers nor changed the basis on which the adviser was compensated during the most recent fiscal year. If the fee is paid in some manner other than on the basis of average net assets, briefly describe the basis of payment. If the registrant has not been in operation for a full fiscal year, state generally what the investment adviser's fee will be as a percentage of average net assets, including any breakpoints, but it is not necessary to include precise details as to how the fee is computed or paid.)

Item 5. Portfolio Companies

Furnish the following information, in the tabular form indicated, with respect to the portfolio companies of the issuer, as of a specified date within 90 days prior to the date of filing the notification with the Commission pursuant to an offering of securities under Regulation E.

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Item 6. Capital Stock and Other Securities (a) Describe concisely the nature and most significant attributes of the security being offered, including: (i) a brief discussion of voting rights; (ii) restrictions, if any, on the right freely to retain or dispose of such security; (iii) conversion rights, if applicable; and (iv) and any material obligations or potential liability associated with ownership of such security (not including risks).

(b) If the rights of holders of such security may be modified otherwise than by a vote of majority or more of the shares outstanding, voting as a class, so state and explain briefly.

(c) If issuer has any other classes of securities outstanding (other than bank borrowings or borrowings that are not senior securities under Section 18(g) of the Investment Company Act of 1940 identify them and state whether they have any preference over the security being offered.

(d) Describe briefly the issuer's policy with respect to dividends and distributions, including any options shareholders may have as to the receipt of such dividends and distributions.

(e) Describe briefly the tax consequences to investors of an investment in the securities being offered. Such description should not include detailed discussions of applicable law. If the issuer intends to qualify for treatment under Subchapter M, it is sufficient, in the absence of special circumstances, to state briefly that in that case: (1) the issuer will distribute all of its net income and gains to shareholders and that such distributions are taxable income or capital gains; (ii) shareholders may be proportionately liable for taxes on income and gains of the issuer but that shareholders not subject to tax on their income will not be required to pay tax on amounts distributed to them; and that (iii) the issuer will inform shareholders of the amount and nature of such income or gains.

(f) Where there is a material disparity between the public offering price and the effective cash cost to officers, directors, promoters and affiliated persons for shares acquired by them in a transaction during the past three years, or which they have a right to acquire, there should be included a comparison of the public contribution under the proposed public offering and the effective cash contribution of such persons. In such cases, and in other instances where the extent of the dilution makes it appropriate, the following shall be given: (1) the net tangible book value per share before and after the distribution; (2) the amount of the increase in such net tangible book value per share attributable to the cash payment made by purchasers of the shares being offered; and (3) the amount of the immediate

dilution from the public offering price which will be absorbed by such purchasers.

Item 7. Financial Statements Furnish appropriate financial statements of the issuer as required below. Such statements shall be prepared in accordance with generally accepted accounting principles and practices. The statements required for the issuer's latest fiscal year shall be certified by an independent public accountant or certified public accountant in accordance with Regulation S-X if the issuer has filed or is required to file with the Commission certified financial statements for such fiscal year; the statements filed for the period or periods preceding such latest year need not be certified.

(a) A blance 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 two fiscal years and for any subsequent period up to the date of the balance sheet furnished pursuant to (a) above.

SCHEDULE B: CONTENTS OF OFFERING CIRCULAR FOR BUSINESS DEVELOPMENT COMPANIES

General Instructions.

Same as General Instructions to Schedule A.

Item 1. Same as Item 1 of Schedule A.

Item 2. General Description of Issuer (a) Concisely discuss the organization and operation or proposed operation of the issuer. Include the following:

(i) Basic identifying information, including:

(A) The date and form of organization of the issuer and the name of the state under the laws of which it is organized; and

(B) A brief description of the nature of a business development company.

NOTE: A business development company having a wholly-owned small business investment company subsidiary should disclose how the subsidiary is regulated, e.g., as an investment company registered under the Investment Company Act of 1940, and what percentage of the parent company's assets are, or are expected to be, invested in the subsidiary. The business development company should also describe the small business investment company's operations, including any material difference in investment policies between the business development company and its small business investment company subsidiary.

(ii) A concise description of the investment objectives and policies of the issuer, including:

(A) If those objectives may be changed without a vote of the holders of the majori

ty of the voting securities, a brief statement to that effect; and

(B) A brief discussion of how the issuer proposes to achieve such objectives, including:

(1) The types of securities (for example, bonds, convertible debentures, preferred stocks, common stock) in which it may invest, indicating the proportion of the assets which may be invested in each such type of security;

(2) The issuer proposes to have a policy of concentrating in a particular industry or group of industries, identification of such industry or industries. (Concentration, for purposes of this item, is deemed to be 25% or more of the value of the issuer's total assets invested or proposed to be invested in a particular industry or group of industries). (3) In companies for the purpose of exercising control or management;

(4) The policy with respect to any assets that are not required to be invested in eligible portfolio companies or other companies qualifying under section 55 of the Investment Company Act of 1940;

(5) The policy with respect to rendering significant managerial assistance to eligible portfolio companies or other companies qualifying under section 55 of the Investment Company Act of 1940;

(6) The policy with respect to investing as part of a group.

(C) Identification of any other policies of the issuer that may not be changed without the vote of the majority of the outstanding voting securities, including the policy not to withdraw its election as a business development company without approval by the majority of the outstanding voting securities.

(D) A concise description of those significant investment policies or techniques (such as investing for control or management) that are not described pursuant to subparagraphs (B) or (C) above that the issuer employs or has the current intention of employing in the forseeable future.

(b) Discuss briefly the principal risk factors associated with investment in the issuer, including factors peculiar to the issuer as well as those generally attendant to investment in a business development company with investment policies and objectives similar to the issuer.

Item 3. Same as Item 3 of Schedule A. Item 4. Same as Item 4 of Schedule A. Item 5. Same as Item 5 of Schedule A. Item 6. Same as Item 6 of Schedule A. Item 7. Same as Item 7 of Schedule A. (Secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and (c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a37))

[49 FR 35345, Sept. 7, 1984]

REGULATION F-EXEMPTION FOR As

SESSMENTS ON ASSESSABLE STOCK
AND FOR Assessable STOCK OFFERED
OR SOLD TO REALIZE AMOUNT OF As-
SESSMENT THEREON

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

SOURCE: Sections 230.651 to 230.656 appear at 24 FR 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 pro

ceeding 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 of 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. At the time of filing the notification, the applicant shall pay to the Commission a fee of $100, no part of which shall be refunded. The Commission may, in its discretion authorize the commencement of the offering prior to the expiration of such 10-day period upon a written request for such authorization. [37 FR 1471, Jan. 29, 1972]

§ 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:

(a) Every notice or advertisement 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.

§ 230.655 Prohibition of certain statements.

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, the Commission will, after notice of an opportunity for such hearing, either vacate the order or issue an order permanently suspending the exemption.

(c) The Commission may at any time after notice of and opportunity for hearing, issue an order permanently suspending the exemption for any reason upon which it could have issued 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 issuer by personal service, registered or certified mail or confirmed telegraphic notice at the address of the issuer given in the notification.

[24 FR 6386, Aug. 8, 1959, as amended at 29 FR 16982, Dec. 11, 1964]

20-055 0-88--16

PART 231-INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT OF 1933 AND GENERAL RULES AND REGULATIONS THEREUNDER

INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT OF 1933 AND GENERAL RULES AND REGULATIONS THEREUNDER

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Statement by Federal Trade Commission relating to the availability of an exemption from registration where a secondary distribution involves sales outside the State of incorporation.

Letter of General Counsel discussing factors to be considered in determining the availability of the exemption from registration provided by the second clause of section 4(1).

Letter of General Counsel discussing the availability of an exemption from registration for securities issued in exchange for other securities where terms of the issuance and exchange are subject to approval by a State public utility commission.

Letter of General Counsel discussing availability of an exemption from registration for collateral trust notes.

Letter of General Counsel discussing distribution by statistical service of bulletins and circulars describing securities for which registration statements have been filed.

Letter of General Counsel discussing the availability of an exemption from registration for the issuance of securities under deposit agreements where solicitations under the agreements were begun prior to the effective date of the registration requirements of the Securities Act.

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