Tenn. Comp. R. & Regs. 0780-01-14-.21 - EXEMPTION FROM TCA Section 56-3-702 OF SALES OF SECURITIES TO BE ACQUIRED

(1) Whenever any person is entitled, as an incident to his ownership of an issued security and without the payment of consideration, to receive another security "when issued" or "when distributed," the security to be acquired shall be exempted from the operation of T.C.A. § 56-3-702 provided that:

(a) the sale is made subject to the same conditions as those attaching to the right of acquisition, and

(b) such person exercises reasonable diligence to deliver such security to the purchaser promptly after this right of acquisition matures, and

(c) such person reports the sale on the appropriate form for reporting transactions by persons subject to T.C.A. § 56-3-702.

(2) This section shall not be construed as exempting transactions involving both a sale of security "when issued" or "when distributed" and a sale of the security by virtue of which the seller expects to receive the "when issued" or "when distributed" security, if the two transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him pursuant to his right of acquisition.

Notes

Tenn. Comp. R. & Regs. 0780-01-14-.21

Original rule certified June 10, 1974.

Authority: T.C.A. § 56-3-708 to implement T.C.A. § 56-3-702.