S.C. Code Regs. § § 13-202

Current through Register Vol. 48, No. 11, November 22, 2024

Section 13-202 - Securities of Nonprofit Organizations

The exemption from the registration requirements of Section 35-1-301 provided by Section 35-1-201(7) for nonprofit organizations shall not be considered to be available for debt securities issued and offered by such organizations unless the full disclosure provisions of Section 35-1-501(2) are met and the investing public is afforded the protection provided by the following as a minimum:

(1) The organization shall be incorporated as a nonprofit, nonstock corporation.

(2) Any organization assisting the issuer in any manner in the sale of the securities shall be required to be registered as a broker-dealer in this State.

(3) The trustee and/or paying agent shall be independent of the issuer, the broker-dealer or any affiliate of either, and shall possess the authority to administer a trust under state and/or federal laws.

(4) The debt securities shall meet all form and minimum provisions for debt securities established pursuant to rule or order of the Securities Commissioner.

(5) A Prospectus, Offering Brochure, Offering Circular or similar instrument, dated and filed with the Securities Commissioner, shall be delivered to each prospective purchaser and a copy of such instrument (signed by two officers of the issuer) shall be held in the files of the trustee and/or paying agent.

(6) Said Prospectus or similar instrument shall at a minimum contain the following information:

(a) Financial statement consisting of a statement of assets and liabilities, income and expense statement, and comparative figures showing the budget, number of pledging units, if available, and income and expenses for the past three years. If any of this information is not available, a statement to that effect should be made with an explanation of why it is not available. Obligations, if any, on existing indebtedness should be clearly stated;

(b) A pay-back or maturity schedule and sinking fund requirements, if any. If refinancing will be needed when the bonds mature, this should be clearly stated;

(c) The name, address and telephone number of the trustee and/or paying agent;

(d) Any past history of financial transactions between the issuer and broker-dealer or financing organization and any known or contemplated future transactions;

(e) The name, address and telephone number of the broker-dealer handling the issue and the name and address of the local representative of the broker-dealer;

(f) The total expenses of the issue (including remuneration to the broker-dealer);

(g) A statement on whether the offering is being made on a best efforts or firm underwriting basis, and if the former, a clear statement of the responsibilities of the financing organization and the church membership;

(h) An itemized statement of the use to which the proceeds will be put. If additional funds will be needed to complete the stated purposes, this should be disclosed together with a statement showing how such funds will be obtained;

(i) If any statements are made concerning the risk or lack of risk in purchasing the securities, they should be made in the light of the financial condition of the issuer, and not in generalities. Likewise, any comparison of yields will be considered misleading unless other comparative aspects of these investments are included;

(j) A description of the terms of the debt security offered. For details reference may be made to an indenture and/or deed of trust if such exists;

(k) If guarantee of payment is made by an affiliated organization, information describing the ability of that organization to guarantee should be furnished, including financials. The word "guarantee" should be used only if there is a second obligation by another entity;

(l) Brief information concerning the city, town or other area in which the issuer is located with special reference to the immediate neighborhood;

(m) Clear disclosure of any affiliation of the issuer or broker-dealer, or of any officers of either, with any building contractor or supplier who has an interest in or may receive any of the proceeds of the issue; and

(n) If the securities have not been registered under the South Carolina Uniform Securities Act of 2005, the Securities Act of 1933 or the securities law of the state in which the issuer is located, this should be clearly indicated, and the exemptions relied upon cited.

(7) Before reliance is placed upon the exemption provided by Section 35-1-201(7), written clearance by the Securities Commissioner must be obtained. A request for such should be accompanied by the following:

(a) A copy of the latest preliminary or definitive Prospectus, Offering Brochure or other offering document. If preliminary, a copy of the definitive instrument should be filed when available;

(b) A draft or specimen of the security;

(c) A copy of the preliminary or definitive indenture and/or trust agreement, if any;

(d) A copy of the Agreement between the issuer and broker-dealer;

(e) An Opinion of Counsel as to the legality of the issue and obligation of the issuer;

(f) Copies of all advertising materials and related literature to be used in the offer or sale of the security; and

(g) A filing fee in the amount of one hundred fifty ($150.00) dollars.

S.C. Code Regs. § 13-202

Added by State Register Volume 30, Issue No. 6, eff June 23, 2006.