Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1938-08-13

| ment Is appropriately limited 70 indicate that
offers to purchase are solicited only from,
and sales viii be made only TO, residents Of
! the particular state involved, and may be
delivered In interstate commerce to the
Another exemption many Of you have heard
! Of Is the one provided for by rule 200. This
is the exemption many times referred to as
/ the $4,000 exemption" The rule, which eS-
! tnblishes this exemption. provides that any
! offering OF securities Is exempted from regis
! tration If the aggreeate offering price to the
public does not exceed the sum Of $4,000;
I 1t also provides that the amount OF the offer
ing shall be reduced by the amount Of any
other offerings whether public or priyatel,
within one year prior TO the offering exempt
ed. Of securities Of the same issuer or Of any
person controlling, controlled by, or under
common control with such issuer, unless. or
| except to the extent that, such offerings have
been withdrawn"
The $4,000 rule is designed to enable
mining corporation or any other issuer to
secure q small amount OF capital without the
necessity Of filing a registration statement.
But, as stated. the rule requires that the ag-
gregate offering price to the public Of the
securities for which the exemption is claimed
shall not exceed the sum Of 100000 And the
general counsel for the commission has ex-
pressed the opinion that this rule implicitly
requires that the entire present program OF
financing the company involved shall not ex-
coed the $50 600 limit permitted and an issuer
may not obtain exemption under this rule
II the amount presently to be offered forms
in substance a part OF a substantially larger
issue to be marketed in the near future To
illustrate q scheme that contemplates the
organization Of a corporation with a capital
say OF 100000, and the disposal OF the entire
500, 900 at the rate Of $4,000 per year would
be IN violation Of the provisions OF this rule.
From the $4,000, too as has been said,
must be deducted the amount OF any securities
offered to the public within the year unless
the offering has been withdrawn, and there
must be deducted also any securities trans
ferred in all private transactions during the
year prior to the date OF the offering. In
the mining industry private offerings or sales
would include stock EXCHANGED for machinery
equipment, promotion. wages, leases, property
the year must be considered and the stock
involved be deducted from the $4,000. The
trolled by or under common control with an
other issuer or other issuers, the aggregate
offering Of all cannot exceed $4,000.
third exemption applicable to the sale of
mining securities is provided by rule 202. II
the provisions OF the rules are complied with
and the offering does not exceed total price
to the public Of 100000 the exemption is
available. Under the rule. the security may be
less than its par value, or. II no-par stock
is involved, IL must be sold for not less than
its stated valuei the amount Of 100000 must
be reduced by the amount OF any other offer
ings Of securities OF the same issuer which, |
within one year OF the Offering for which the |
exemption is being claimed, were exempted |
any other exemption rule, unless or except
to the extent that, such other offerings have /
been withdrawn; also the net proceeds after /
deducting all sales expenses, shall be not less |
than rs percent Of the aggregate amount paid
by the public for the security; certain types
Of promotion stock cannot be sold during the /
period OF distribution. This promotion stock L
must be placed In escrow so that II cannot be Il
sold until the issuer shall have earned a net
profit from operations for a period OF one
year; or until the purchaser for cash has
received back rs percent Of the amount he
paid; also a prospectus containing the infor-
nation called for In the rule must be pre-
pared and filed with the securities and ex-
change commission before It is used ana q
copy Of the prospectus must be given TO each
purchaser at or before the time the stock Is
offered 10 him.
Contrary to an impression which Is rather
general, to prepare this prospectus Is not at
all difficult No complicated details are re-
quired. Answers must be given to only Is
questions. These answers will disclose, among
other things, the names and addresses OF the
corporation officers, the description Of the
properties, the number OF shares issued to
its promoters for services and the number
EXCHANGED for its property, the amount Of
its debts funded and current, and If annual
salaries of more than $4,000 are to be paid
The names Of those who are to receive such
salaries must be given.
fourth exemption applicable to mining
securities is the exemption provided by rule
40 recently adopted by the commission as 9
trial exemption and available for use until
oct. /, 1885, when the time may or may not
be extended Rule 210 exempts all offerings
up to 100000 provided the offerer complies
with the laws of each state to whose residents
the securities are offered for sale. the
offerer complies with the laws Of each state
to whose residents the securities are offered,
then by filing with the commission simple
statement indicating its intention to claim
the exemption and giving the name and ao-
dress Of the corporation, the state where IN
corporated, the names OF its officers. the
number, value, and offering price OF tne
shares to be offered, and the names OF the
states to whose residents the offering Is TO
be made, then the exemption provided by rule
90 is available II after the beginning OF the
Offering the offerer desires to enlaree his
territory, he may do so by complying with the
laws OF the state 10 be added and By notitylns
the commission Of the addition
A short time ago clarifying amendments
were added to the rules 200, 2O2 ana ]lO eA-
emptions which we have Just discussed Ihe
amendments read as follows; Ine a ss $3.50
shall be taken as the sum OF the offerlns
price thereof determined as hereinbefore pro-
vided and the aggregate amount OF al as
sessments which may legally be levied tnere-
This amendment affects the offering Of any
company whether 1t sells stock or gives ~
away, and has the intention to levy assess
ments to secure its cash capital. Under these
rules, no exemption is available TOT issuets
of assessable stock unless the totai sn s,.lS
OF assessments which may be levied Is limited
to the amount the rule exempts. The COM
mission has stated that the amendments 90
not involve any change in policy, but are IN
tended merely to clarity the scope OF the
exemptions
Sometimes we hear 1t said that there are
some who have the impression that the COM
mission looks with disfayor on mining Sc
curities Nothing could be farther from the
truth The problem OF any industry such as
mining which produces around one and one
quarter billions worth OF raw materials per
annum and which ranks with agriculture as
a basic industry are problems which we real
lie deserve careful and sympathetic study
But in that industry and its financing there
exists an element OF speculation which, with
the possible exception Of oils, is not found
in any other field and that very fact has
who use It dishonesty to further their
schemes The pocketbook OF the public rather
than property is mined. Promises mean moth
Of conscience There Is a pot Of sold at the
end Of every rainbow. The credulity and the
need Of old men and old women. the widow
and the orphan, Is eriminaiy imposed UPON
49, .-l.. "a a-.-.l