RULE 590-4-2-.09 - Request for Transactional Exemption Pursuant to a Fairness Determination

RULE 590-4-2-.09. Request for Transactional Exemption Pursuant to a Fairness Determination

(1) Any person seeking the Commissioner's approval, pursuant to O.C.G.A. § 10-5-11(9), of the fairness of the terms and conditions of the issuance and delivery of securities in exchange for outstanding securities, claims, or property interests, shall make application with the Commissioner as described in paragraph (2) below. The Commissioner may in his sole discretion reject any application. The Commissioner will only consider an application for a proposed exchange transaction where fifty one percent (51%) or more of the persons to whom it is proposed to issue securities or to deliver other consideration in an exchange under O.C.G.A. § 10-5-11(9)are persons who are Georgia residents, and:

(a) The applicant is a domestic business entity formed, organized or incorporated under the laws of Georgia; or

(b) The applicant is a business entity whose headquarters or principal place of business is located in Georgia.

(2) The application and all accompanying documents shall be type-written and submitted to the Commissioner in triplicate. The application shall be signed and dated by the applicant or by a person authorized to act in the applicant's behalf. The application shall request that the Commissioner conduct a hearing pursuant to O.C.G.A. § 10-5-11(9) and shall contain the following information:

(a) The full legal name, state of incorporation, and principal office address of any person proposing to issue securities or deliver other consideration in the proposed exchange.

(b) A description of the proposed transaction, including but not limited to all parties to the transaction, all major lines of business engaged in by such parties, expected benefits of the transaction, a chronological description of the transaction to date, a projected timetable and description of all events necessary to consummate the transaction, all legal and financial advisors providing advice to any party to the transaction, and identification of any persons providing any valuation or fairness opinions to any party with respect to the securities or other consideration to be issued or exchanged in the proposed transaction.

(c) A description of the securities or other consideration to be issued or delivered in the proposed exchange.

(d) A description of the bona fide securities, claims or property interests for which the securities or other consideration referred to in paragraph (2)(c) are to be exchanged, including the full legal name, state of incorporation, and principal office address of the issuer of any such bona fide securities.

(e) A brief statement of the terms and conditions under which the securities or other consideration referred to in paragraph (2)(c) will be issued and exchanged or delivered and exchanged for the bona fide securities, claims or property interests.

(f) A list of the full legal names, addresses, and percentage interest owned of all persons to whom the securities will be issued or other consideration delivered in the exchange. If some or all of such persons are to receive the securities or other consideration by virtue of their ownership of shares of stock in a corporation, the applicant may comply with this requirement by submitting a list which shows the shareholders of the corporation and the number of shares and percentage of total shares held by each shareholder as of a date not more than 30 days prior to the filing of the application.

(g) A statement setting forth the distinct number of and percentage total of all persons named on the list to be provided pursuant to paragraph (2)(f) who are residents of Georgia.

(h) A statement setting forth proposed findings of fact which the applicant requests that the Commissioner find and incorporate in the Commissioner's written decision with respect to the application.

(i) A statement as to whether the applicant intends to rely on the exemption from federal securities registration provided for in Section 3(a)(10) of the Securities Act of 1933, 15 U.S.C. § 77 c(a)(10).

(j) Any additional information which the applicant desires the Commissioner to consider. The Commissioner may require the applicant to submit other information in addition to the information required by this Rule. The Commissioner may also waive or modify the requirements of this Rule by allowing the applicant to submit less information than this Rule would otherwise require.

(3) The application shall be accompanied by the following documents:

(a) All written agreements, and accompanying appendices, exhibits and/or attachments, governing the proposed transaction.

(b) All press releases or other media announcements regarding the proposed transaction disseminated by any party to the proposed transaction.

(c) A draft copy of the notice of the requested hearing to be held by the Commissioner in connection with the application that the applicant plans to mail to all persons to whom the applicant proposes to issue securities or to deliver other consideration in the proposed transaction.

(d) An audited balance sheet, prepared in accordance with generally accepted accounting principles applicable in the United States ("US GAAP"), as of the close of the most recent fiscal year of any person whose securities will be issued or exchanged in the proposed transaction.

(e) An audited income statement, prepared in accordance with US GAAP, for the most recent fiscal year of any person whose securities will be issued or exchanged in the proposed transaction.

(f) All valuation or fairness opinions identified in paragraph (2)(c), including all materials supporting any parties' valuation of the securities or other consideration to be issued or exchanged in the proposed transaction.

(g) Any other documents which the applicant desires the Commissioner to consider. The Commissioner may require the applicant to submit other documents in addition to the documents required by this Rule. The Commissioner may also waive or modify the requirements of this Rule by allowing the applicant to submit fewer documents other than those which this Rule would otherwise require.

(h) A non-refundable filing fee of five hundred dollars ($500.00).

(i) A written undertaking to pay, upon receipt of an invoice from the Commissioner, the fees and costs required by paragraph (4)(d) of this Rule.

(j) A completed and notarized Form U-2, Uniform Consent to Service of Process.

(4) The procedure following application shall be as follows:

(a) The Commissioner may inform the applicant of any deficiencies in the application or of any additional information or documents required and may require the applicant to amend or resubmit the application prior to setting a date for the hearing.

(b) The Commissioner, in his sole discretion, may retain an independent valuation consultant to review all of the materials submitted in paragraph (2)(f) of this Rule.

(c) Upon the filing of an application complying with the provisions of this Rule, correction of any deficiencies and/or amendment of the application as necessary, and receipt of all materials requested by the Commissioner, the Commissioner will, within a reasonable period of time, inform the applicant of the date, hour and place of the hearing.

(d) Upon the Commissioner's issuance of a Notice of Hearing pursuant to Rule 590-4-6-.07, the applicant shall remit to the Commissioner a non-refundable fairness proceeding fee of seven thousand five hundred dollars ($7,500.00) and shall reimburse the Commissioner for all costs incurred by the Commissioner in connection with the fairness proceeding, including any costs in connection with the retention of any independent valuation consultant.

(e) The applicant shall mail by United States Mail, Postage Prepaid, notice of such hearing to all persons to whom it is proposed to issue securities or to deliver such other consideration in such exchange, not less than 14 days prior to such hearing. The applicant shall provide to the Commissioner, on or before the date of the hearing, a certification that the notice of hearing has been so mailed.

(f) An evidentiary hearing shall be held by the Commissioner pursuant to Chapter 590-4-6 of the Commissioner's Rules, and the Georgia Administrative Procedure Act, O.C.G.A. § 50-13-1, et seq.

(g) The applicant shall have the burden of proving the applicability of its claim for exemption under O.C.G.A. § 10-5-11(9).

(Original Rule entitled "Termination of Salesmen and Limited Salesmen" adopted. F. Dec. 9, 1980; eff. Dec. 29, 1980. Repealed: New Rule of same title adopted. F. Apr. 13, 1983; eff. May 3, 1983. Repealed: New Rule entitled "Termination of Dealers, Limited Dealers, Salespersons and Limited Salespersons" adopted. F. Dec. 21, 2004; eff. Jan. 10, 2005. Repealed: F. Nov. 18, 2011; eff. Dec. 8, 2011. Adopted: New rule entitled "Request for Transactional Exemption Pursuant to a Fairness Determination." F. Jul. 22, 2014; eff. Aug. 11, 2014.)

O.C.G.A. § 10-5-11(9).

The following state regulations pages link to this page.