Sec. 710 IAC 4-2-6 - Solicitations of interest prior to the filing of a registration statement or notice of claim of exemption from registration under section 4 of this rule

ยง 710 IAC 4-2-6. Solicitations of interest prior to the filing of a registration statement or notice of claim of exemption from registration under section 4 of this rule

Authority: IC 23-19-6-5

Affected: IC 23-19

Sec. 6.

(a) An offer, but not a sale, of a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving an offering circular, or information to be provided under section 4(d)(3)(B) of this rule, for the security is exempt from registration under IC 23-19-3-1 if all of the following conditions are satisfied:

(1) The issuer:

(A) is or will be a business entity organized under the laws of:

(i) one (1) of the states or possessions of the United States; or

(ii) one (1) of the provinces or territories of Canada;

(B) is engaged in or proposes to engage in a business other than petroleum exploration, production, mining, or other extractive industries; and

(C) is not a blind pool or other offering for which the specific business or properties cannot now be described.

(2) The offeror intends to register the security in this state or file a claim of exemption from registration under section 3 of this rule and conduct its offering under either 17 CFR 230.251 or 17 CFR 230.504.

(3) Ten (10) business days prior to the initial solicitation of interest under this section, the offeror files with the commissioner a solicitation of interest form, to be adopted by order of the commissioner, along with any other materials to be used to conduct solicitations of interest, including, but not limited to, the following:

(A) The script of any broadcast to be made.

(B) A copy of any notice to be published.

(4) Five (5) business days prior to usage, the offeror files with the commissioner any amendments to the materials described in subdivision (3) or additional materials to be used to conduct solicitations of interest, except for materials provided to a particular offeree pursuant to a request by that offeree.

(5) No solicitation of interest form, script, advertisement, or other material that the offeror has been notified by the commissioner not to distribute is used to solicit indications of interest.

(6) Except for scripted broadcasts and published notices, the offeror does not communicate with any offeree about the contemplated offering unless the offeree is provided with the most current solicitation of interest form:

(A) at or before the time of the communication; or

(B) within five (5) calendar days from the communication.

(7) During the solicitation of interest period, the offeror does not solicit or accept money or a commitment to purchase securities.

(8) No sale is made until seven (7) calendar days after delivery to the purchaser of a final offering circular or final documents to be provided under section 4(d)(3)(B) of this rule, or the delivery of a preliminary offering circular or preliminary documents to be provided under section 4(d)(3)(B) of this rule.

(9) The offeror does not know, and, in the exercise of reasonable care, could not know that the issuer or any of the issuer's officers, directors, ten percent (10%) shareholders, or promoters is subject to one (1) of the disqualifying provisions of section 2 of this rule.

(b) A failure to comply with any condition of subsection (a) will not result in the loss of the exemption from the requirements of IC 23-19-3-1 for any offer to a particular individual or entity if the offeror shows the following:

(1) The failure to comply did not pertain to a condition directly intended to protect that particular individual or entity.

(2) The failure to comply was insignificant with respect to the offering as a whole.

(3) A good faith and reasonable attempt was made to comply with all applicable conditions of subsection (a).

(c) Where an exemption is established only through reliance upon subsection (b), the failure to comply shall be actionable as a violation of IC 23-19 by the commissioner under IC 23-19-6-4 and constitute grounds for denial or revocation of the exemption as to a specific security or transaction.

(d) Failure to comply with this subsection will not result in the loss of the exemption from IC 23-19-3-1, but shall be a violation of IC 23-19, be actionable by the commissioner under IC 23-19-6-4, and constitute grounds for denying or revoking the exemption as to a specific security or transaction. The offeror shall comply with the following requirements:

(1) Any published notice or script for broadcast must contain at least the following:

(A) The identity of the chief executive officer, or person performing similar function, of the issuer.

(B) A brief and general description of its business and products.

(C) The following legends:

(i) NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED.

(ii) NO SALES OF THE SECURITIES WILL BE MADE OR COMMITMENT TO PURCHASE ACCEPTED UNTIL DELIVERY OF OFFERING DOCUMENTS THAT INCLUDE COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING.

(iii) AN INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND.

(iv) THIS OFFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS. NO SALE MAY BE MADE UNTIL THE OFFERING IS REGISTERED OR EXEMPTED BY THE SECURITIES AND EXCHANGE COMMISSION AND THE INDIANA SECURITIES DIVISION.

(2) All communications with prospective investors made in reliance on this rule must cease after a registration statement or notice under section 4 of this rule is filed in this state, and no sale may be made until at least twenty (20) calendar days after the last communication made in reliance on this rule.

(3) A preliminary offering circular or preliminary information supplied under section 4(d)(3)(B) of this rule may only be used in connection with an offering for which indications of interest have been solicited under this rule if the offering is conducted by a registered broker-dealer.

(e) The commissioner may waive any condition of this section, in writing, upon application by the offeror and cause having been shown. The following shall not be deemed to be a waiver of any condition of this section or deemed to be a confirmation by the commissioner of the availability of this section:

(1) Compliance with this section.

(2) Attempted compliance with this section.

(3) The absence of any objection or order by the commissioner with respect to any offer of securities undertaken under this section.

(f) Issuers on whose behalf indications of interest are solicited under this section may not make offers or sales in reliance on IC 23-19-2-2(14) until six (6) months after the last communication with a prospective investor made under this section.

(Securities Division; 710 IAC 4-2-6; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA Readopted filed 5/12/2016, 1:47 p.m.: 20160608-IR-710160136RFA)

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