La. Admin. Code tit. 10 § XIII-505

Current through Register Vol. 50, No. 11, November 20, 2024

Section XIII-505 - Commissions and Expenses

1. Selling Expenses of Offering of Securities. Selling expenses in connection with an offering of securities (whether such offering is sold entirely or partially within Louisiana) shall include underwriting discounts or commissions, the value of options or warrants to acquire securities granted or proposed to be granted in connection with the offering to an underwriter, or its partners, officers, directors or shareholders, or otherwise as such underwriter may lawfully direct; finder's fees paid or to be paid in connection with the offering; the value of the difference between the fair value at the time of issuance and the price paid for securities of the issuer, issued within two years prior to the offering or proposed to be issued to an underwriter, or any of its partners, officers, directors or shareholders, to the extent such sales or issuances may be deemed by the commissioner to have been in lieu of commissions, or material in the selection of an underwriter by the issuer, or otherwise directly or indirectly connected with the offering; and all other expenses directly or indirectly incurred in connection with the offering, excluding, however:

a. attorneys' fees for services in connection with the offer, sale and issuance of the securities and their qualification for offer and sale under applicable laws and regulations, except such attorneys' fees of the underwriter as are paid by the issuer or selling stockholders;

b. charges of transfer agents, registrars, indenture trustees, escrow holders, depositaries, auditors, accountants, engineers, appraisers and other experts;

c. cost of prospecti, circulars and other documents required to comply with such laws and regulations;

d. other expenses incurred in connection with such qualification and compliance with such laws and regulations;

e. cost of authorizing and preparing the securities and documents relating thereto, including issue taxes and stamps.

2. Selling expenses shall, at all times, be reasonable and, unless good cause for an exception is shown, shall not exceed the following percentages for the specified types of companies or securities based upon percentages of the aggregate offering price.

	Firm Undertaking	Best Efforts Undertaking
Finance, mortgage and related companies	15%	10%
Bonds, notes, debentures and secured issuers	15%	10%
Common stock	15%	10%
Preferred stocks and other stock senior to common stock	15%	10%
Investment companies	10%	10%
Oil or gas interests	12 1/2%	12 1/2%

3. Securities of an issuer whose securities are sold under a Louisiana broker-dealer permit granted said issuer. In those cases, no commissions shall inure to the benefit of any officers or directors selling the securities of the issuer. All agents registered under said broker-dealer permit, who are not officers or directors will be allowed to receive a maximum commission as set out under the above column headed "Best Efforts Undertaking." For a company in the exploratory or development stage and whose securities are not registered under Federal Securities Act of 1933, one-half of the commissions which inure to the agents of an issuer broker-dealer, must be escrowed for a period of time as stipulated by the Commissioner of Securities of the State of Louisiana.

4. Options or warrants to underwriters, or their partners, officers directors or shareholders or otherwise as lawfully directed by such underwriters shall be valued at market value, if any exists. In cases where no market value exists, an option or warrant to acquire common stock shall be valued at 20 percent of the public offering price of such numbers of shares under option or warrant, unless it is shown to the satisfaction of the commissioner that a contrary valuation exists.

B. Other Expenses. Provision may be made for additional allowance by the issuer from the public offering price of securities actually sold to pay the sales expenses incurred in making the public offering. Such sales expenses shall, however, be limited to the following categories:

1. advertising directly associated with the sale of the public offering being registered;

2. attorneys' fees for services in connection with the issue and sale of the securities and their qualification for sale under applicable laws and regulations;

3. the cost of prospecti, circulars and other documents required to comply with such laws and regulations;

4. other expenses directly incurred in connection with such qualifications and compliance with such laws and regulations (filing fees and investigation fees prior to registration);

5. cost of authorizing and preparing the securities and documents relating thereto, including issue taxes and stamps;

6. charges of transfer agents, registrars, indenture trustees, escrow holders, depositaries, auditors, and of engineers, appraisers and other experts;

7. a listing of all "other expenses" must be presented to the office of the Commissioner of Securities of the state of Louisiana within a reasonable period of time not to exceed one month from the date the permit for a public offering was issued.

La. Admin. Code tit. 10, § XIII-505

Adopted by the Commissioner of Securities, November 9, 1971.

AUTHORITY NOTE: Promulgated in accordance with R.S. 51:707 and R.S. 51:708.