No. 38926 (Amendment): Section R164-15-2. Notice Filings for Rule 506 Offerings

(Amendment)

DAR File No.: 38926
Filed: 10/29/2014 04:57:01 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule sets forth the procedures that must be followed in giving notice to the Utah Division of Securities (Division) that an issuer of securities is relying on the exemption from registration found in Rule 506 of Regulation D of the federal Securities Act of 1933.

Summary of the rule or change:

The North American Securities Administrators Association (NASAA) is inaugurating a new electronic filing system to receive, transmit, and store Rule 506 notice filings. The proposed system is called the Electronic Filing Depository (EFD) and will process both the aforementioned filings, as well as the fee payments accompanying them. This amendment: 1) authorizes the EFD to receive filings on behalf of the Division; 2) establishes EFD as the sole authorized channel for making Rule 506 notice filings; and 3) requires the Division to give 30-days notice prior to ceasing to accept Rule 506 notice filings by other means. The Utah Securities Commission has reviewed and approved this amendment.

State statutory or constitutional authorization for this rule:

• Section 61-1-15.5

Anticipated cost or savings to:

the state budget:

No additional costs or savings to the state budget are expected.

local governments:

Local governments do not regulate these type of securities offerings.

small businesses:

Although the filing fees charged by the Utah Division of Securities will remain unchanged, NASAA will charge a system access fee of $150 per filing to maintain and operate the EFD system.

persons other than small businesses, businesses, or local governmental entities:

Although the filing fees charged by the Utah Division of Securities will remain unchanged, NASAA will charge a system access fee of $150 per filing to maintain and operate the EFD system.

Compliance costs for affected persons:

Although the filing fees charged by the Utah Division of Securities will remain unchanged, NASAA will charge a system access fee of $150 per filing to maintain and operate the EFD system. However, this cost will in most cases be wholly or partially offset by other savings as noted in the Director's comments below.

Comments by the department head on the fiscal impact the rule may have on businesses:

The Rule 506 exemption is the most widely utilized private offering exemption in U.S. federal securities laws. Most companies raising money by means of this provision will do so simultaneously in numerous state and territorial jurisdictions within the United States. Under current procedures, each jurisdiction requires the issuing company to submit by mail a multi-page filing document and a fee payment. These mailings are typically handled by overnight delivery services. The new EFD system will provide a one-stop filing solution--allowing companies to avoid overnight mailing costs to up to 50 separate jurisdictions.

Francine Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Securities
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Benjamin Johnson at the above address, by phone at 801-530-6134, by FAX at 801-530-6980, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2014

This rule may become effective on:

12/22/2014

Authorized by:

Keith Woodwell, Director

RULE TEXT

R164. Commerce, Securities.

R164-15. Federal Covered Securities.

R164-15-2. Notice Filings for Rule 506 Offerings.

(A) Authority and purpose.

(1) The Division enacts this rule under authority granted by Sections 61-1-15.5 and 61-1-24.

(2) The rule requires a notice filing within 15 days after the first sale in this state of securities described in Subsection 61-1-15.5(2) and sets forth the filing procedure.

(3) This rule is hereby amended to recognize the following:

(3)(a) The amendment of Regulation D by the Securities and Exchange Commission (SEC) to authorize the filing of Form D in electronic format with the SEC through the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) in accordance with EDGAR rules set forth in Regulation S-T (17 CFR Part 232) as described in Securities and Exchange Commission Securities Act Release No. 8891; and

(3)(b) The establishment of the Electronic Filing Depository (EFD), operated by the North American Securities Administrators Association, Inc. (NASAA) to receive and store all Form D notice filings and amendments (17 CFR 239.500) and to collect filing fees on behalf of the Division.

[(3) This rule has been amended in recognition of the amendment of Regulation D by the Securities and Exchange Commission (SEC) to authorize the filing of Form D in electronic format with the SEC through the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) in accordance with EDGAR rules set forth in Regulation S-T (17 CFR Part 232) as described in Securities and Exchange Commission Securities Act Release No. 8891.

(4) This rule authorizes an issuer to file Temporary Form D while that form remains in effect or a copy of the notice of sales on Form D filed electronically with the SEC until an electronic filing system acceptable to the Division is implemented that permits the electronic filing of Form D with the Division or its designee.

](B) Definitions

(1) "Division" means the Division of Securities, Utah Department of Commerce.

(2) "NASAA" means the North American Securities Administrators Association, Inc.

(3) "EFD" means the Electronic Filing Depository established and maintained by NASAA.

(C) Designation and filing requirements

(1) For all notice filings authorized by Subsection 61-1-15.5(2), the Division hereby designates EFD to receive and store all notice filings made on SEC Form D (17 CFR 239.500) and to collect related filing fees on behalf of the Division.

(2) Unless otherwise provided, upon notice in paragraph (C)(3) below, all Form D notice filings, amendments, and related filing fees shall be filed electronically with and transmitted to EFD.

(3) Notwithstanding paragraph (C)(2) of this rule, the electronic filing of Form D notice filings and amendments and the collection of related processing fees shall not be required until such time as EFD provides for receipt of such filings and fees and thirty (30) days notice is provided by the Division. Any documents or fees required to be filed with the Division that are not permitted to be filed with, or cannot be accepted by, EFD shall be filed directly with the Division.

(4) A duly authorized person of the issuer shall affix his or her electronic signature to the Form D filing by typing his or her name in the appropriate fields and submitting the filing to EDGAR. Submission of a filing in this manner shall constitute irrefutable evidence of legal signature by any individual whose name is typed on the filing both for purposes of authorizing the disclosures in the Form as well as giving effect to any consent to service provisions found therein.

(5) Subsequent to the expiration of the notice period in paragraph (C)(3), no filing, partial filing, or filing fee submitted to the Division by means other than EFD shall act to grant such a filing the status of being duly received by the Division for any purpose relating to the timeliness of the filing or the avoidance of the assessment of any late filing fee.

[(C)](D) Filing requirements prior to Paragraph (C)(3) notice

(1) An issuer offering a security that is a covered security under section 18(b)(4)(D) of the Securities Act of 1933 must file with the Division or its designee, no later than 15 days after the first sale of such federal covered security in this state, an initial notice and a filing fee as follows:

(1)(a) The issuer shall file an initial notice on SEC Form D. For Purposes of Subsection 61-1-15.5(2), the initial notice on SEC Form D shall consist of [either,

(1)(a)(i) the Temporary Form D (17 CFR 239.500T), including Part E and the Appendix, as adopted by the SEC while that form remains in effect from September 15, 2008 through March 15, 2009; or

(1)(a)(ii) ]a copy of the notice of sales on Form D filed in electronic format with the SEC through the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) in accordance with EDGAR rules set forth in Regulation S-T (17 CFR Part 232) and in effect on September 15, 2008.

(1)(b) [Regardless of whether the issuer files a notice of sales on Temporary Form D or a copy of the notice of sales on Form D filed in electronic format with the SEC, ]S[s]uch form shall be manually signed by a person duly authorized by the issuer;

[(1)(c) If the issuer files a notice on Temporary Form D, it shall also furnish a completed manually signed NASAA Form U-2 - Uniform Consent to Service of Process;

] [(1)(d)](1)(c) The issuer shall include with the initial notice a statement indicating:

[(1)(d)(i)](1)(c)(i) The date of the first sale of securities in the state of Utah; or

[(1)(d)(ii)](1)(c)(ii) That sales have yet to occur in the state of Utah; and

[(1)(e)](1)(d) The issuer shall submit a fee as specified in the Division's fee schedule.

[(2) An issuer who has filed a Form U-2 in connection with a previous notice filing need not file another.

][(3)](2) An issuer may file an amendment to a previously filed notice of sales on Form D at any time and must file such an amendment to correct a material mistake of fact or error in the previously filed notice of sales on Form D, as soon as practicable after discovery of the mistake or error.

[(4)](3) An issuer that files an amendment to a previously filed notice of sales on Form D must provide current information in response to all requirements of the notice of sales on Form D regardless of why the amendment is filed.

 

KEY: mutual funds, securities, securities regulation

Date of Enactment or Last Substantive Amendment: [January 12, 2009]2014

Notice of Continuation: July 25, 2012

Authorizing, and Implemented or Interpreted Law: 61-1-15.5; 61-1-24

 

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