N.Y. Comp. Codes R. & Regs. tit. 13 § 16.2

Current through Register Vol. 46, No. 45, November 2, 2024

Section 16.2 - Contents of prospectus

(a)Cover.

(1) There shall be set forth on the outside front cover page of every prospectus the following statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least two points leaded:

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

There shall be no other reference to filing with the Attorney General or the Department of Law anywhere in the prospectus.

(2) There shall be set forth on the outside front cover page of every prospectus the following:

(i) the amount of money sought to be raised;

(ii) the price per unit;

(iii) the name of the issuer;

(iv) the name and address of the principal distributor; and

(v) the date of the prospectus.

(3) Unless the issue is also filed with the Securities and Exchange Commission of the United States under a full registration, it shall be indicated after the date of the prospectus that the prospectus may not be used for a period of more than four months thereafter. Such statement shall not eliminate the need to amend the prospectus during that four-month period upon the occurrence of material events affecting the issuer or issue.

(4) The aforesaid shall not constitute a limitation on the contents of the front cover where additional material is essential for full and fair disclosure.

(b)Body.

(1) Where applicable, when the offering involves specific real estate or interests therein, to be acquired with all or part of the proceeds of the offering, there shall be contained on the inside front cover in easily readable print a box entitled "Introductory Information on Property to be Purchased," which shall be in the following form:

(i) location of property;

(ii) basic type of construction and use;

(iii) nature of interest to be acquired (fee, leasehold, etc.).

Where applicable the following statement shall follow in capital letters in bold print:

THIS PROSPECTUS CONTAINS PAST OPERATING FIGURES ON THE PROPERTY, THE BACKGROUND AND EXPERIENCE OF THE PROMOTERS, AND THEIR PROFITS. YOU SHOULD READ THIS PROSPECTUS CAREFULLY TO MAKE UP YOUR OWN MIND ON THE SUITABILITY FOR YOU OF THIS INVESTMENT. NO PROJECTIONS OR PREDICTIONS ARE CONTAINED IN THIS PROSPECTUS BECAUSE OF THE IMPOSSIBILITY OF PREDICTING FUTURE INCOME.

(2) If there is no undertaking contained in the prospectus by the offerors or others to return all moneys invested in the offering in the event of the failure or discontinuance of the promotion, the following language shall be employed in the prospectus in italics, where applicable:

If insufficient funds are raised to complete this offering, or if the offering is not completed for any other reason, you may receive back only part of your investment, or possibly lose your full investment.

(3) Where applicable, the following facts (in addition to those expressly required in paragraph [b] of subdivision 1 of the New York Real Estate Act) and possible changes therein, shall be set forth with respect to proposed or contemplated particular or general real estate investments and businesses integrally connected therewith:

(i) the surrounding neighborhood, growth and changing phases;

(ii) the occupancy rate presently and for at least the past two years;

(iii) the rent roll and material particulars on recent increases and decreases, and other relevant matters related thereto;

(iv) the average rent or other income factor (include average rental per apartment room, or per square foot in commercial buildings); and its comparison to the rest of the neighborhood or nearest competition for comparable properties;

(v) for existing properties, a fair reflection of the operations thereof, with historical operating figures for at least two years or the life of the property where it has been in existence for a shorter period, including profit and loss statements prepared by an independent public accountant, audited and prepared in accordance with standard accounting procedures. The operating figures provided as aforesaid shall cover a period ending not less than six months prior to the date of the prospectus. However, unaudited operating figures shall be provided for any subsequent period not covered by such figures, up to three months prior to the date of the prospectus;

(vi) in the case of issuers which have been engaged in business operations prior to the date of the offering, a fair reflection of the operations thereof, with historical figures of the issuer for at least three years or for the existence of the issuer where it has been in existence for a shorter period, including profit and loss statements of the issuer prepared by an independent public accountant, audited and prepared in accordance with standard accounting procedures. The operating figures provided as aforesaid shall cover a period ending not more than six months prior to the date of the prospectus. However, unaudited operating figures shall be provided for any subsequent period not covered by such figures up to three months prior to the date of the prospectus;

(vii) rights and limitations pertaining to participation by investors in increased future earnings;

(viii) percentage termination of leases over next 10 years or other period where more material;

(ix) business conditions in any particular business involved in the offering and peculiarities thereof, such as rapidity of obsolescence;

(x) the tax effects of depreciation policies to be followed;

(xi) the effect of success or failure of contemplated or essential present or future refinancing;

(xii) powers to refinance mortgages and other indebtedness;

(xiii) the assignability of the management (or net lease) agreement and liability therefor;

(xiv) the cancelability of the management (or net lease) agreement and liability therefor;

(xv) a detailed statement as to all material competition;

(xvi) general employment situation in the area involved;

(xvii) the names and addresses of the sellers and their true relationship to the promotion or offering;

(xviii) a summary of all material clauses in any relevant agreement, such as limited partnership or trust agreement, which are not otherwise covered in the prospectus (this shall include all rights and options of principals, promoters, offerors and management to purchase or otherwise liquidate the interests of investors or increase their equity or control);

(xix) where "management" is expected to assign actual management to an independent contractor, details including identification and qualified background of actual management;

(xx) whether principals (general partners, trustees, etc.) are or will be bonded;

(xxi) the existence or non-existence of a current trading market for the particular securities being offered;

(xxii) any existing lawsuits or other proceedings which could materially affect the offering or the venture or operation thereof;

(xxiii) assessed valuation (relevant factors such as: last change, next date for change);

(xxiv) whether interests assigned to principal promoters, such as general partners have been given a valuation arbitrarily set;

(xxv) all other information material to the offering.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.2

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018