NY Arts & Cult Aff L § 23.03 (2021)
2021 New York Laws ACA - Arts and Cultural Affairs Title F - Theatrical Syndication Financing Article 23 - Regulation of Theatrical Syndication Financing 23.03 - Definitions.

§ 23.03. Definitions.   1.  The  following  terms,  whenever  used  or referred to in this article, shall have the following  meanings,  unless the context clearly requires otherwise:  (a)  A  "theatrical  production" shall mean those live-staged dramatic productions, dramatic-musical productions and concerts,  as  defined  in this subdivision, which hereafter are shown to the public for profit and which  are financed wholly or in part by the offering or sale in or from this state, directly, or through agents or distributors,  of  investment agreements,   evidences  of  interest,  limited  partnerships,  producer shares, equity or debt securities, pre-organization subscriptions or any other syndication participation, when any persons are offered, solicited to purchase or sell, directly or indirectly, such syndication  interests for  moneys  or services within or from the state of New York; provided, however, that for purposes of paragraphs (h) and (i) of this subdivision a  "theatrical  production"  shall   mean   any   live-staged   dramatic production, dramatic-musical production or concert which is presented to the public in a place of entertainment as defined in this subdivision.  (b)  "Fraud",  "deceit", and "defraud", as such terms are used in this article, are not limited to common-law deceit.  (c) "Syndication" shall  mean  all  forms,  methods  and  devices  for pooling  of investment funds for the chief purpose of participating in a theatrical production company, as defined herein.  (d) A "principal" shall mean and include every person or firm directly or indirectly controlling  the  business  affairs  or  operations  of  a theatrical  production  company  or  of a ticket distributor, as defined herein.  (e) A "person" shall mean an individual, firm,  company,  partnership, corporation, trust or association.  (f)  A  "concert"  shall  mean any live performance whether musical or spoken, dramatic or nondramatic, by one or  more  performers,  which  is presented  to the public in a place of entertainment, as defined in this subdivision.  (g) A "sporting event" shall have the same meaning  as  set  forth  in subdivision three of section 23.23 of this article.  (h)  The  term  "event" shall mean a theatrical production or sporting event, as those terms are defined in  this  subdivision,  or  any  other public exhibition, game, show, contest or performance which is presented to   the  public  in  a  place  of  entertainment  as  defined  in  this subdivision.  (i) A "place of entertainment" shall mean a theatre,  dinner  theatre, hall,  coliseum,  convention center, arena, auditorium, stadium, concert hall, garden, outdoor space or other place of amusement  operated  as  a for  profit  entity  and  located  in  this  state  in  which theatrical productions, sporting events or other events are presented.  (j) A "theatrical production company" shall mean any entity formed  to (i) develop, produce, invest in or otherwise exploit, or any combination thereof,  one  or more specified or nonspecified theatrical productions, and (ii) conduct all activities related thereto.  (k) The term "advance ticket" shall mean a ticket  of  admission  sold more  than  twelve  hours  in  advance of the time of performance of the event for which the ticket is purchased.  (l) The term "ticket distributor" shall have the same meaning  as  set forth in subdivision one of section 23.23 of this article.  (m)  The  term  "accredited  investor" shall mean (i) a natural person whose individual net worth (or joint net worth with his or  her  spouse) will  exceed  one  million  dollars  at  the time of purchase, or (ii) a natural person who has an individual income  (exclusive  of  any  income attributable  to a spouse) of more than two hundred thousand dollars for  the past two years or joint income with a  spouse  of  more  than  three hundred  thousand  dollars  in  each of those years and has a reasonable expectation of reaching the same income level in the  current  year,  or (iii)  an  entity  in  which each equity owner is an accredited investor under subparagraph (i) or (ii) of this  paragraph,  or  (iv)  either  an organization  described  in  section  501 (C)(3) of the Internal Revenue Code of 1986, as amended, a  corporation,  a  Massachusetts  or  similar business  trust,  or  a  partnership,  in  each  case not formed for the specific purpose of acquiring the securities  being  offered,  and  with total  assets  in  excess  of five million dollars, or (v) a trust, with total assets in excess of five  million  dollars,  not  formed  for  the specific  purpose  of  acquiring  the  securities, whose purchase of the securities is directed by a person who has such knowledge and experience in business and financial matters that he or she is capable, as  defined by  the Securities Act of 1933, as amended, of evaluating the merits and risks of the prospective investment, or a bank, as  defined  in  section 3(a)(2)  of  the  Securities  Act of 1933, as amended, (A) acting in its fiduciary capacity as trustee, or (B) subscribing for  the  purchase  of securities being offered on its own behalf.   2.  Accurate  books and records of account shall be maintained by each theatrical production company. Every producer of a theatrical production shall at least once for each twelve month fiscal period  beginning  with the  initial  expenditure  of  investors' funds (other than those of any principal), within four months after the end of such period or the  last public  performance  of  the  original  production  in  New  York state, whichever is sooner, furnish to all investors and to the  department  of law a written balance sheet and statement of profit and loss which shall be  prepared  by an independent public accountant and contain an express opinion by such accountant  that  such  statements  fairly  present  the financial   position   and  results  of  operations  of  the  theatrical production company, hereinafter referred to  as  "certified  statement". Notwithstanding  the aforesaid, in no event shall a producer be required by this subdivision to submit certified statements to investors for  any period  less  than twelve months following the period covered by a prior certified statement. Irrespective of  the  aforesaid,  and  in  addition thereto,  every  such  producer shall also furnish each investor and the department of law with an accurate and truthful  itemized  statement  of income  and  expenditure  for  every  six  month period not covered by a previously issued certified statement or a certified statement  required to  be  issued  hereunder  for  a  period  ending  at  such  time, which additional statement shall be subscribed to by the producer as accurate, and may be submitted within three months after the  close  of  such  six month period. Following the last public performance in New York state of the  original  production,  the  producer shall accurately report to the investors and the department of law, at least once  within  four  months after  the  end  of each year thereafter, with respect to any subsequent earnings or expenditures by the theatrical production,  which  shall  be truthful  and  accurate and which shall be subscribed to by the producer as accurate. The attorney  general  may  adopt,  promulgate,  amend  and rescind   rules   and   regulations   setting   forth  other  accounting requirements than set forth above, which may be selected by  a  producer in  lieu of the accounting requirements set forth above. Upon conditions set forth by the  attorney  general,  such  rules  and  regulations  may further  provide  for the issuance of an exemption from the requirements herein (i) for  offerings  of  less  than  two  hundred  fifty  thousand dollars,  (ii)  for offerings made to less than thirty-six persons in or from this state, or (iii) for such other offerings and upon  such  other grounds as may be determined by the attorney general.    This  subdivision  shall  not  apply  to  any  production  whose first performance in New York state  preceded  June  first,  nineteen  hundred sixty-four.   3. (a) Except as otherwise provided herein, no offering of syndication interests  in  a theatrical production company, as defined herein, shall be made within or from this state without the use  of  a  prospectus  or offering  circular  making  full  and  fair disclosure of material facts pertaining to the particular venture.  The  attorney  general  may  also issue  rules  and  regulations  requiring  the submission to prospective investors in such offerings an offering circular and amendments  thereto containing  a  concise  and  accurate  description  of the nature of the offering, profits  to  promoters  and  others,  the  background  of  the producers,  a  description  of  subsidiary  rights  and  other pertinent information  as  will  afford  potential  investors  or  purchasers  and participants  an  adequate basis upon which to found their judgment, but the attorney general shall accept offering  literature  filed  with  the Securities and Exchange Commission and authorized for use by such agency as  complying  therewith as of the date of receipt of a true copy by the department of law of such literature and proof of authorization  by  the Securities  and  Exchange  Commission  by  affidavit  or  otherwise. The attorney general may also provide for the method of filing  of  offering literature  other  than  that  filed  with  the  Securities and Exchange Commission, as well as underlying documents, with the department of  law at  its  office  in  the  city of New York, prior to the offering of the syndication interest involved; however, any such regulation  also  shall provide  that  all  funds  derived  from  the  sale  of  such theatrical syndication interests shall be held in trust in a special  bank  account until  the  attorney general has issued to the issuer or other offeror a letter stating that the offering has been permitted to be filed; but  in that  event  such  regulation  promulgated by the attorney general shall also provide that the attorney general,  not  later  than  fifteen  days after such submission, shall issue such a letter or, in the alternative, a notification in writing indicating deficiencies therein.  (b) Where not more than one million dollars is the total amount of the theatrical offering, including the right to an involuntary overcall, the provisions  of  this  subdivision shall be deemed to be satisfied by the use of an investment agreement clearly setting forth in easily  readable print  all  of the terms of the offering. A copy of such document may be filed with the department of law in lieu of  a  prospectus  or  offering circular  in the manner set forth in this article and shall be deemed to be offering literature.  (c) The provisions of this subdivision shall not apply to offerings to fewer than thirty-six persons (plus an unlimited  number  of  accredited investors)  where  express waivers in writing to the filing and offering circular requirements of this subdivision are filed with the  department of law by or on behalf of all investors.   4.  A  limited  partnership that is a theatrical production company is exempt from the requirement for publishing  its  certificate  or  notice under sections ninety-one, 121-201 and 121-902 of the partnership law so long  as  the  words "limited partnership" appear in its name. A limited liability company that is a theatrical production company is exempt from the requirement for publishing its articles of organization, application for authority  or  a  notice  containing  the  substance  thereof  under sections  two hundred six and eight hundred two of the limited liability company law so long as the words "limited liability company"  appear  in its name.    5.  It shall be unlawful for any person, in connection with the offer, sale,  or  purchase  of  any  syndication  interest  in  any  theatrical production company, as defined herein, directly or indirectly:  (a) To employ any device, scheme, or artifice to defraud;  (b)  To  willfully  make any untrue statement of a material fact or to omit to state a material fact necessary in order to make such  statement made, not misleading; or  (c)  To  engage  in  any act, practice, or course of business which he knows or reasonably should have known operates or  would  operate  as  a fraud or deceit upon any person.   6. Any person, partnership, corporation, company, trust or association or  any agent or employee thereof, who (or which), having engaged in any act or practice constituting a violation of  subdivision  five  of  this section,   commits  additional  acts  under  such  circumstances  as  to constitute a felony, the crime of conspiracy,  petit  larceny,  or  more than  one of the aforesaid, shall be punishable therefor, as well as for the violation of subdivision five of this section, and may be prosecuted for each crime, separately or in the  same  information  or  indictment, notwithstanding any other provision of law.