2023 District of Columbia Code › Title 31 - Insurance and Securities › Chapter 56 - Securities › Subchapter III - Registration of Securities › § 31–5603.04. Registration by qualification

§ 31–5603.04. Registration by qualification.
(a) A security may be registered by qualification.
(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) With respect to the issuer and any significant subsidiary:
(A) The name, address, and form of its organization;
(B) The state or foreign jurisdiction and date of its organization;
(C) The general character and location of its business;
(D) A description of its physical properties and equipment;
(E) A statement of the general competitive conditions in the industry or business in which it is or will be engaged; and
(F) Certified copies of its articles of incorporation;
(2) With respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions:
(A) The name, address, and principal occupation for the past 5 years;
(B) The amount of securities of the issuer held by the person as of a specified date within 30 days of the filing of the registration statement;
(C) The amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and
(D) A description of any material interest in any material transaction that the person has effected, or proposed to effect, with the issuer or any significant subsidiary of the issuer within the past 3 years;
(3) With respect to persons covered under paragraph (2) of this subsection, the remuneration paid during the past 12 months and estimated to be paid during the next 12 months, directly or indirectly, by the issuer, including all its predecessors, parents, subsidiaries, and affiliates, to all these persons in the aggregate;
(4) With respect to a person owning of record, or beneficially if known, 10% or more of the outstanding shares of any class of equity security of the issuer, the information specified in paragraph (2) of this subsection other than the person’s occupation;
(5) With respect to every promoter if the issuer was organized within the past 3 years, the information specified in paragraph (2) of this subsection, any amount paid, or intended to be paid, to the promoter within the 3-year period or intended to be paid to the promoter and a description of the services or other consideration provided in return for the payment;
(6) 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 securities of the issuer held by the person as of the date of the filing of the registration statement;
(C) A description of any material interest in any material transaction that the person has effected, or proposed to effect, with the issuer or any significant subsidiary of the subsidiary within the past 3 years; and
(D) A statement of the person’s reasons for making the offering;
(7)(A) The capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered; and
(B) A statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else, for which the issuer or any subsidiary has issued any of its securities within the past 2 years or is obligated to issue any of its securities;
(8)(A) The amount and kind of securities to be offered; the proposed offering price or method by which it shall be computed, and any variation from the offering price at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; and the basis upon which the offering is to be made if otherwise than for cash;
(B) The estimated aggregate underwriting and selling discounts or commissions and finders’ fees, separately stating the amount of cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering, or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts;
(C) The estimated amounts of other selling expenses, including legal, engineering, and accounting charges, the name and address of every underwriter and every recipient of a finder’s fee, and a copy of any underwriting or selling group agreement under which the distribution is to be made or the proposed form of the agreement whose terms have not yet been determined; and
(D) A description of the plan of distribution of securities which are to be offered otherwise than through an underwriter;
(9)(A) The estimated cash proceeds to be received by the issuer from the offering, the purposes for which the proceeds are to be used by the issuer, and the amount to be used for each purpose;
(B) The order or priority in which the proceeds will be used for the purposes stated, the amounts of any funds to be raised from other sources to achieve the purposes stated, and the sources of such funds; and
(C) If any part of the proceeds is to be used to acquire property, including goodwill, otherwise than in the ordinary course of business:
(i) The names and addresses of the vendors;
(ii) The purchase price;
(iii) The names of persons who have received commissions in connection with the acquisition; and
(iv) The amount of the commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;
(10) A description of stock options or other security options outstanding, or to be created in connection with the offering, and the amount of such options held, or to be held, by a person required to be named in paragraphs (2), (4), (5), (6), or (8) of this subsection and by a person who holds, or will hold, 10% or more, in the aggregate, of any such options;
(11)(A) The dates of, parties to, and general effect, concisely stated of, every management or other material contract made, or to be made, otherwise than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the past 2 years, together with a copy of the contract; and
(B) A description of any pending litigation or proceeding to which the issuer is a party and which materially affects its business or assets, including any litigation or proceeding known to be contemplated by governmental authorities;
(12) Two copies of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended, as of the effective date, to be used in connection with the offering;
(13) A specimen, copy, or description of the security being registered; a certified copy of the issuer’s articles of incorporation and a certified copy of its bylaws, or their substantial equivalents, as currently in effect; and a copy of any indenture or other instrument covering the security to be registered;
(14) A signed or conformed copy of an opinion of counsel as to the legality of the security being registered, with an English translation if it is in a foreign language, which opinion shall state whether the security when sold will be legally issued, fully paid, and non-assessable, and, if a debt security, a binding obligation of the issuer;
(15) The written consent of an accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than a public and official document or statement, which is used in connection with the registration statement;
(16) A certified statement of financial condition of the issuer as of a date within 4 months prior to the filing of the registration statement; a balance sheet, profit and loss statement, and analysis of surplus for each of the 3 calendar years preceding the date of the statement of financial condition and for any period between the close of the last calendar year and the date of the statement of financial condition, or for the period of the issuer’s and any predecessors existence if less than 3 years, and if any part of the proceeds of the offering is to be applied to the purchase of any business, the same financial statements which would be required if that business were the registrant; and
(17) Any additional information the Commissioner may require by rule or order.
(c) A registration statement under this section shall become effective no later than 60 calendar days after the date of the registration statement or the last statement other than a price amendment is filed if:
(1) No stop order is in effect and no proceeding is pending under § 31-5603.06;
(2) The Commissioner has not ordered under subsection (d) of this section that effectiveness be delayed; and
(3) The registrant has not requested that effectiveness be delayed.
(d) The Commissioner may delay effectiveness for a single period not to exceed 90 days if the Commissioner determines that the registration statement is not complete in all material respects and promptly notifies the registrant of the determination. The Commissioner may delay effectiveness for a single period not to exceed 30 days if the Commissioner determines that delay is necessary, whether or not the Commissioner previously delayed effectiveness under this subsection.
(Oct. 26, 2000, D.C. Law 13-203, § 304, 47 DCR 7837; June 25, 2002, D.C. Law 14-150, § 2(g), 49 DCR 4238.)
Section References
This section is referenced in § 31-5603.02, § 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)”.