Ga. Comp. R. & Regs. R. 515-4-1-.15 - Negotiation or Competitive Bidding for Security Issues
(1) This rule shall apply to all issuances of
securities for which the Commission orders it to apply pursuant to the laws of
Georgia except where:
(a) Such securities are
issued and sold prior to January 1, 1976, or are issued pursuant to
authorization granted prior to the effective date of this rule.
(b) The gross proceeds to the issuer of the
securities will be less than $2,000,000.
(c) Such securities consist of evidences of
debt of a maturity of ten years or less, from date of issue to a commercial
bank, insurance company or similar institution not for resale to the public
provided no commission, fee, or remuneration is to be paid in connection
therewith to any third person (except an associated service company charging
only its cost of services) for negotiating the transaction.
(d) Such securities are to be issued prorata
to existing holders of securities of the applicant pursuant to any preemptive
right or privilege, or in connection with any liquidation or reorganization, or
recapitulation of surplus.
(e) Such
security is issued in exchange for outstanding securities where no commission
or other remuneration is paid or given directly or indirectly for soliciting
such exchange.
(f) The Commission,
on application filed pursuant to this rule, finds that compliance with the
competitive bidding requirements of this rule would not be appropriate or
consistent with the public interest. Such findings will not be made where the
issuer has engaged in negotiating for the sale or underwriting of the
securities without having been authorized in writing by the Commission prior to
such negotiation. Nothing in this section shall be deemed to preclude the
Commission from entering any order which would otherwise be
appropriate.
(g) Such securities
and loans are issued or guaranteed by the United States government or an agency
of the United States government or by a State or local government or
agency.
(h) The exceptions
contained in this rule shall not be construed as a waiver of the requirements
of Section 93-414 of the 1933 Code of Georgia for Commission approval of
security issues.
(2)
Except as provided in this rule, the Commission will not approve, pursuant to
Section 93-414 of the 1933 Code of Georgia, the issuance of stocks, bonds,
notes or other evidence of debt by any company or corporation over which the
authority of the Commission is extended by law unless such securities be issued
pursuant to competitive bidding. Where the Commission grants an application for
authorization and approval to issue and sell securities through competitive
bidding, the applicant shall publicly invite sealed, written proposals for the
purchase or underwriting of such securities at least one week (or such other
period as the Commission may by order fix), prior to entering into any contract
or agreement for the issuance or sale of such securities.
(a) The public invitation shall describe the
type and amount of securities to be bid for, and shall state the date, time and
place for opening of bids. Such invitation or the statement of terms and
conditions relating to bids, shall reserve the right to reject any or all bids
and, among other things, describe the arrangements made for independent counsel
for bidders. No bids shall be invited, or accepted, from any person who, prior
to the submission of bids, has performed any service for compensation in
connection with the issuance and sale of the proposed securities, or who has
received or will receive any fee or compensation in connection with the
issuance and sale of the proposed securities (except as successful bidder), nor
shall any bid be invited or accepted under which officers or directors would
benefit from or share in the proceeds from the securities. Such proposals as
may be received in response to the public invitation shall not be opened at any
time or place other than as specified in the invitation. The duly authorized
representative of any person making any such proposal shall be entitled to be
present at the opening of such proposals and to examine each proposal
submitted. The invitation or the statement of terms and conditions relating to
bids shall refer to the limitation herein prescribed.
(3) After receiving and opening all bids
submitted as provided in paragraph (2) of this rule, the applicant shall within
the period specified in the public invitation for proposals (unless all bids
are rejected), accept that bid which shall be most favorable on the basis of
the specifications set forth in the Commission's order. No bid shall be
accepted from a person who directly or indirectly controls or is controlled by,
or is under the same common control with the applicant without approval by
further order of the Commission.
(4) Promptly after the opening of the
proposals the applicant shall report to the Commission by telephone or
telegraph the information called for in paragraph (4)(b) hereof and shall file
with the Commission a verified statement in writing, together with five
conformed copies thereof, setting forth:
(a)
The action taken to comply with the Commission's order of authorization and
paragraphs (2) and (3) of this rule, including a statement that the method of
complying with the competitive bidding requirements as described in the
application has been carried out.
(b) A summary of the terms of the proposals
received, including the name of each bidder or representative of a bidding
group, the interest or dividends rate specified (where applicable), the price
to be paid the issuer per share or per $100 principal amount, the cost of money
to the issuer (except in the case of common stock), the name of the successful
bidder, and the successful bidder's initial public offering price with the
resulting yield to the public (except in the case of common stock), accompanied
by a true and correct copy of the proposal accepted.
(5) If the application to issue securities is
deemed to fall within any of the exceptions contained in paragraph (1) of this
rule, and such exception is relied upon as waiving the requirement for
competitive bidding, the application shall specifically refer to such exception
and show that it is applicable.
(6)
If the application to issue securities does not fall within clauses (a), (b),
(c), (d), or (e) of paragraph (1) of this rule the application shall either:
(a) Set forth the proposed method of
complying with the competitive bidding requirements of paragraphs (2), (3), and
(4) of this rule, including summarization of the principal terms of the
proposed invitation as part of the application; or
(b) Apply for exemption from the competitive
bidding requirements of paragraphs (2), (3), and (4) of this rule upon findings
as referred to in paragraph (1)(f). Such an application may be made only where
the issuer has not, prior to the filing of the application, engaged in any
negotiation for the sale or underwriting of the securities and does not so
engage prior to Commission action on the application for exemption, and the
application so shows, provided that engaging in negotiation may be permitted
where the Commission has given its written authorization in advance. Such
application for exemption may be filed as part of an application for securities
approval, or as a separate application filed at any time prior to the filing of
such an application for securities approval. Such application for exemption
shall show the specific grounds relied on as warranting the finding referred to
in paragraph (1)(f) of this rule. If an application for such exemption is
denied by the Commission after the application for securities approval has been
filed, the requirements of clause (a) of this paragraph shall be complied with
by amendment to the application.
(7) There shall also be set forth in the
application or amendment thereto:
(a) The
name and address of any person receiving or entitled to receive a fee for
services (other than attorneys, accountants, and similar technical services) in
connection with the negotiation for or consummation of the issuance or sale of
securities, or for services in securing underwriters, sellers, or purchasers of
securities, other than fees included in any competitive bid; the amount of each
such fee; and facts showing the necessity of the services and that the fee does
not exceed the customary fee for such services in arms-length transactions and
is reasonable in the light of the cost of rendering the service and any other
relevant factors.
(b) All facts
showing or tending to show that the issuer or applicant directly or indirectly
controls, or is controlled by, or is under the same common control as, any
person named pursuant to the requirements of (7)(a), or showing or tending to
show the opposite.
(8)
The evidence submitted shall include copies of any contract, underwriting, or
other arrangement entered into for the sale or marketing of the securities.
Where a contract or underwriting is not in final form so as to permit filing, a
preliminary draft or a summary containing such identification of the parties
thereto and such principal terms thereof as may be practicable, may be filed,
pending filing of a conformed copy in the form executed.
(9) An application for approval under this
rule will ordinarily require a minimum of thirty days after it is filed to
allow for public notice, investigation, opportunity for hearing, consideration
by the Commission and issuance of its order.
(10) The effective date of this rule is
January 1, 1976.
Notes
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