Mont. Admin. r. 6.10.305 - FOREIGN SECURITY EXEMPTION

(1) Securities offered or sold in compliance with the following conditions are exempt from the registration requirements of 30-10-202 through 30-10-207, MCA:

(a) A nonissuer transaction, by or through a registered broker-dealer, in an outstanding security (including an American depository receipt representing such a security) of an issuer domiciled in a foreign country with which the United States is at the time of the transaction maintaining diplomatic relations, if the class of security has been outstanding in the hands of the public for not less than 90 days preceding the date of the transaction.

(i) This exemption is not available for sales of securities constituting an unsold allotment to, or subscription by, the broker-dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter.

(ii) This exemption is not available unless one of the following requirements is met:

(A) the most recent edition of Mergent's Manual or Standard & Poor's Corporation Records, or the periodic supplements to such publications, as well as all commonly recognized formats of the manuals including CD-ROM and electronic dissemination over the internet, contains a description of the issuer's business or operations, the names of the issuer's officers and directors (or their corporate equivalents in the issuer's country of domicile), an externally audited balance sheet of the issuer as of a date within 18 months of the date of the transaction and audited profit and loss statements for each of the issuer's two fiscal years immediately preceding the date of such balance sheet (such statements to be prepared in accordance with U.S. or foreign GAAP); or

(B) the issuer of the security has a class of securities subject to the reporting requirements of section 13 of the Securities Exchange Act of 1934, 15 U.S.C. 78 m or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78 m or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78 o(d) and is not delinquent in such reporting; or

(C) the security is exempted from the provisions of section 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. 78 l(g) by section 12(g)(3) of that Act, 15 U.S.C. 78 l(g)(3), and the issuer is in compliance with all of the conditions of 17 CFR 240.12g3 - 2 (b)(1).

(iii) This exemption is not available unless all of the following requirements are met:

(A) the issuer, including any predecessors, has been in continuous operation for at least the preceding two years, is a going concern actually engaged in business and is not in an organizational or developmental stage, and is not in bankruptcy or receivership;

(B) the issuer has net tangible assets of at least U.S. $25,000,000 as of the date of its most recent externally audited financial statement prepared in accordance with U.S. or foreign GAAP. Such statement shall be dated as of a date within 18 months of the date of the transaction;

(C) the issuer had an average gross income of at least U.S. $5,000,000 over its most recent two consecutive years of operation according to audited profit and loss statements of the issuer prepared in accordance with U.S. or foreign GAAP for the issuer's two fiscal years immediately preceding the date of the financial statement referred to in (1)(a)(iii)(B);

(D) the issuer has a class of securities listed or traded on a stock exchange or automated quotation system organized under the laws of its country of domicile; and

(E) for the issuer's securities in the United States, there are at least two market makers who are registered broker-dealers under the Securities Exchange Act of 1934 and who has an excess net capital of a least U.S. $10,000,000.

(b) A nonissuer transaction by or through a registered broker-dealer in an outstanding security, other than a revenue obligation, which is issued or guaranteed by any foreign government with which the United States is, at the time of sale, maintaining diplomatic relations, or by a political subdivision of Canada or Mexico which has the power of taxation, if the securities, when offered for sale in this state, are acknowledged by the foreign government or political subdivision as valid obligations, and none of the securities of the foreign government or political subdivision are in default either as to principal or interest.

Notes

Mont. Admin. r. 6.10.305

NEW, 1994 MAR p. 569, Eff. 3/18/94; AMD, 2000 MAR p. 824, Eff. 3/31/2000; TRANS and AMD, from ARM 6.10.131, 2008 MAR p. 2046, Eff. 9/26/08.

30-10-107, MCA; IMP, 30-10-104, 30-10-107, MCA;