Compilation of Rules and Regulations of the State of Georgia › Department 590 - RULES OF OFFICE OF SECRETARY OF STATE › Chapter 590-4 - COMMISSIONER OF SECURITIES › Subject 590-4-3 - REGISTRATION OF SECURITIES › Rule 590-4-3-.13 - Escrow and Impoundment of Proceeds

Current through Rules and Regulations filed through June 27, 2024
(1) In any case where securities are to be
				registered for sale pursuant to Section
				 10-5-23 of  the Act, and the issuer of such securities has not had any substantial gross
				revenues from the sale of products or services or any substantial net income
				from any source for any fiscal year ended during the past three years and has
				not succeeded, and does not intend to succeed, to any business that has had any
				substantial gross revenues from the sale of products or services, or any
				substantial net income from any source, for any fiscal year ended during the
				past three years, the following shall be required as conditions to
				registration:
(a) Except in an offering
				pursuant to an underwriting agreement under which no securities will be sold
				unless all securities to be offered are sold, pursuant to a written escrow
				agreement, the deposit into escrow of 100% of the proceeds from the sale of
				such registered securities until the amount deposited in such escrow equals or
				exceeds the amount referenced in the prospectus and approved by the
				Commissioner.
1. This escrow account shall be
				with a bank, trust company or other escrow agent approved by the
				Commissioner.
2. Until the escrow
				account contains the specified amount, the issuer shall cause 100% of the
				proceeds from the sale of such registered securities to be deposited directly
				into this account as soon as practicable after receipt. The escrow agreement
				may provide for disbursement to the issuer of up to 15% of the amount deposited
				until the specified amount is paid in.
3. The escrow agreement shall provide that if
				the escrow account does not contain the specified amount on the specified date
				no later than one year after the effective date of the registration, then all
				amounts contained in the escrow account, including all interest earned thereon,
				if any, shall be returned to the securities purchasers whose payments were
				deposited into the escrow account. The amount of repayment to each purchaser
				shall be determined by multiplying the fraction, the numerator of which is the
				amount of each such purchaser's payments that have been deposited into the
				escrow account and the denominator of which is the aggregate amount of all
				deposits of purchaser payments into the escrow account, by the aggregate amount
				contained in the escrow account immediately prior to the repayment.
4. If the offering proceeds are to be used
				for a specific purpose, including, but not limited to, the purchase of real or
				personal property, the escrow agreement shall provide that, upon termination of
				the escrow account, the escrow funds shall be paid over to the attorney who is
				to handle the purchase closing.
5.
				The escrow agreement shall provide that the funds held in escrow, when
				released, will be used for the specific purposes stated in the prospectus, or
				offering circular, filed as part of the registration statement required by the
				Act.
6. The escrow agreement shall
				provide that, upon termination of the escrow account and payout of the escrow
				funds, the escrow agent shall notify the Commissioner of the time of
				disbursement and to whom the funds were disbursed.