2023 District of Columbia Code › Title 31 - Insurance and Securities › Chapter 56 - Securities › Subchapter III - Registration of Securities › § 31–5603.02. Registration by notification

§ 31–5603.02. Registration by notification.
(a) The following securities may be registered by notification, whether or not the securities are also eligible for registration by coordination under § 31-5603.03:
(1) A security whose issuer, and any predecessor (by merger, consolidation or acquisition of assets), has been in continuous operation for at least 5 years if:
(A) There has been no default within the past 3 calendar years in the payment of principal, interest, or dividends on any security of the issuer with a fixed maturity or a fixed interest or dividend provision; and
(B) The issuer and any predecessor during the past 3 calendar years have had average net earnings, determined in accordance with generally accepted accounting principles, which:
(i) Are applicable to all securities without a fixed maturity or a fixed interest or dividend provision outstanding on the date that the registration statement is filed and equal at least 5% of the amount of these outstanding securities, as measured by the maximum cash offering price or the market price on a day selected by the registrant, within 30 days before the date of filing the registration statement, whichever is higher, or book value, on a day selected by the registrant within 90 days of the date of filing the registration statement, to the extent that there is not a readily determinable market price or a cash offering price; or
(ii) If the issuer and any predecessor has not had a security of the type specified in sub-subparagraph (i) of this subparagraph outstanding for 3 full calendar years, equal at least 5% of the amount, as measured in sub-subparagraph (i) of this subparagraph, of all securities which will be outstanding if all the securities being offered or proposed to be offered, whether or not they are proposed to be registered or offered in the District, are issued; and
(2) A security, other than a certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease, registered for nonissuer distribution if:
(A) A security of the same class has ever been registered under this chapter; or
(B) The security being registered was originally issued pursuant to an exemption under this chapter.
(b) In addition to the information specified in § 31-5603.06(c) and the consent to service of process required under § 31-5607.06, a registration statement under this section shall contain the following information and be accompanied by the following documents,:
(1) A statement demonstrating eligibility for registration by notification;
(2) With respect to the issuer and any significant subsidiary:
(A) The name, address, and form of organization;
(B) The state or jurisdiction of its organization and the date of its organization; and
(C) The general character and location of its business;
(3) With respect to a person on whose behalf a part of the offering is to be made in a non-issuer distribution:
(A) The person’s name and address;
(B) The amount of the issuer’s securities held by the person as of the date of the filing of the registration statement; and
(C) A statement of the person’s reasons for making the offering;
(4) A description of the security being registered;
(5) The information and documents specified in § 31-5603.04(b)(2), (4), (7), (8), (9), (10), and (12);
(6) A balance sheet of the issuer as of a date within 4 months before the filing of the registration statement;
(7) A summary of earnings:
(A) For each of the 2 calendar years preceding the date of the balance sheet and for any period between the close of the last calendar year and the date of the balance sheet; or
(B) For the period of existence of the issuer and any predecessor, if less than 2 years; and
(8) Two copies of the prospectus required by subsection (c) of this section.
(c)(1) As a condition of registration under this section, a prospectus containing any designated part of the information specified in subsection (b) of this section shall be sent or given to each person to whom an offer is made before or concurrently with the first to occur of:
(A) The first written offer to the person, other than by means of a public advertisement, by or for the account of the issuer or any other person on whose behalf the offering is being made, or by any underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by the underwriter or broker-dealer as a participant in the distribution;
(B) The confirmation of a sale made by or for the account of the person;
(C) Payment under the sale; or
(D) Delivery of the security under the sale.
(2) Paragraph (1)(A) of this subsection may be satisfied by the use of a preliminary prospectus, so designated and bearing the legend which the Commissioner prescribes, if a final prospectus is sent or given to each recipient of the preliminary prospectus before or concurrently with whichever event in paragraph (1)(B), (C), and (D) first occurs.
(d) If a stop order is not in effect and a proceeding is not pending under § 31-5603.06, a registration statement under this section shall become effective at:
(1) Three o’clock p.m. eastern standard time or eastern daylight savings time, as applicable, of the 10th full business day after the filing of the registration statement or the last amendment; or
(2) At any earlier time which the Commissioner determines by rule or order.
(Oct. 26, 2000, D.C. Law 13-203, § 302, 47 DCR 7837; June 25, 2002, D.C. Law 14-150, § 2(e), 49 DCR 4238.)
Section References
This section is referenced in § 31-5603.06, § 31-5604.01, § 31-5604.02, and § 31-5605.01.
Effect of Amendments
D.C. Law 14-150, in subsec. (b), substituted “31-5603.06(c)” for “31-5603.05(c)”.