La. Admin. Code tit. 10 § XIII-511

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

Section XIII-511 - Impoundment of Proceeds

A. General

1. Where, in the opinion of the commissioner, the protection of public investors so requires, the commissioner may require as a condition of registration that all or a portion of the proceeds from the sale of the securities registered shall be impounded with an impoundment agent satisfactory to the commissioner. In cases where the offering of securities is not firmly underwritten, the commissioner shall require (unless reason for exception can be demonstrated) that the proceeds be impounded. The conditions of impoundment shall be determined by the commissioner in each case.

2. The commissioner shall determine conditions of impoundment which he deems applicable to all impoundment agreements, and shall prescribe forms embodying such general conditions. The commissioner may prescribe additional conditions applicable to each particular case, which shall be typed upon the form in space provided or upon separate sheets which shall be attached to and made a part of the prescribed form. All impoundment agreements shall be prepared on forms so prescribed by the commissioner. Upon notification by the commissioner of the additional terms and conditions of impoundment, the issuer shall submit a proposed impoundment agreement for approval as to form. Upon notification by the commissioner that the impoundment agreement is approved as to form, the issuer, the impoundment agent and any agent or underwriter shall execute an original and such copies of the impoundment agreement as may be necessary and shall file the same with the commissioner. An original of said impoundment agreement will remain on file with the commissioner and copies noting acceptance for filing will be returned to the issuer. No order of registration shall issue until an executed original of the impoundment agreement is filed with the commissioner.

3. The conditions of the proceeds impoundment shall be incorporated by reference in the order of registration, and impounded proceeds shall be subject to the continuing jurisdiction of the commissioner until he directs termination of the impoundment.

B. Definitions. When used in this rule of these regulations or in any proceeds impoundment agreement entered into pursuant to these regulations, unless the context otherwise requires.

Conditions of Impoundment- those conditions specified in the impoundment agreement which must be performed before any issuer or impoundment agent may apply to the commissioner for termination of the impoundment agreement and the release of impounded proceeds.

Impoundment- the receipt by the impoundment agent of all proceeds from the sale of securities subject to the impoundment agreement, whether sold by the issuer, by an agent for the issuer or by any underwriter.

Impoundment Agent- an independent corporate fiduciary which will impound all proceeds from sale of securities subject to the impoundment agreement according to the conditions and for the term of the impoundment agreement.

Impoundment Agreement- an agreement, accepted by the commissioner for filing, and executed by the impoundment agent, the issuer, and any underwriter or agent engaged in the sale of securities subject to the impoundment agreement, specifying the conditions and terms of impoundment.

Proceeds- include all valuable consideration given by any person in connection with the purchase of any securities subject to the impoundment agreement.

Release of Impounded Proceeds- release of the impounded proceeds by the impoundment agent at the direction of the commissioner to any person entitled thereto according to the terms of the impoundment agreement.

Securities Subject to the Impoundment Agreement- all securities sold pursuant to an order of registration which requires the impoundment of proceeds.

Subscribers- include all persons who subscribe for securities subject to the impoundment agreement and deliver payment therefor.

Termination of Impoundment- a written authorization by the commissioner directing the impoundment agreement agent to terminate the impoundment and to release the impounded proceeds.

Terms of Impoundment- the number of days, specified in the impoundment agreement, beginning from date of order of registration, within which the issuer of any agent or underwriter must sell the securities subject to the impoundment agreement in order to meet the minimum of impoundment relating to the amount of proceeds.

C. Termination of Impoundment and Release of Impounded Proceeds

1. The commissioner shall authorize the impounding agent to terminate the impoundment and release the impounded proceeds to the issuer when the full amount specified in the impoundment agreement has been impounded, and any other conditions to such release have been satisfied, unless there have been changes in the plan of operation or in other circumstances that would render the amount of impounded proceeds inadequate to finance the proposed plan of operation, or unless such other material changes have occurred as would render the representations contained in the prospectus by which securities were offered for sale to be fraudulent, false or materially misleading.

2. An application to the commissioner for authorization to terminate the impoundment and release the impounded proceeds shall contain:

a. a statement of the issuer any agent or underwriter engaged in the sale of securities subject to the impoundment agreement, setting forth the number of securities sold, and stating that all proceeds from sale of the securities subject to the impoundment agreement have been delivered to the impoundment agent in accordance with the terms and conditions of the impoundment agreement, and that there have been no material adverse changes in the financial condition of the issuer or in other circumstances that would render the amount of impounded proceeds inadequate to finance the proposed plan of operations and that there have been no other material changes which would render the representations contained in the prospectus or offering circular to be fraudulent, false or materially misleading;

b. a statement of the impoundment agent signed by an appropriate officer setting forth the aggregate amount of the impounded proceeds;

c. such other information as the commissioner may require in a particular case.

La. Admin. Code tit. 10, § XIII-511

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

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