Missouri Code of State Regulations › Title 15 - ELECTED OFFICIALS › Division 30 - Secretary of State › Chapter 54 - Exemptions and Federal Covered Securities › Section 15 CSR 30-54.220 - Transaction Exemption for Securities Listed on Certain Quotation Systems

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule prescribes the circumstances under
				  which transactions in securities listed on the National Association of
				  Securities Dealers, Inc., Automated Quotation System are exempt from the
				  requirements of sections
				  409.3-301
				  and
				  409.5-504
				  of the Missouri Securities Act of 2003.
(1) The commissioner, pursuant to the
				provisions of section
				409.2-203
				of the Missouri Securities Act of 2003 (the Act), exempts the following
				transactions from the requirements of sections
				409.3-301
				and
				409.5-504
				of the Act:
(A) The offer or sale of a
				security designated or approved for designation upon notice of issuance
				(including initial public offerings) on the National Market of the National
				Association of Securities Dealers, Inc., Automated Quotation System (NASDAQ)
				and any other security of the same issuer that is of senior or substantially
				equal rank, any security called for by subscription rights or warrants or any
				warrant or right to purchase or subscribe to any of the foregoing
				securities;
(B) The administrator
				shall have the authority, after notice and hearing and upon written Findings of
				Fact and Conclusions of Law subject to judicial review:
1. To terminate this exemption if the
				administrator finds that the designation standards have been so changed or
				insufficiently applied that the protection of investors contemplated by the
				original designation standards is no longer afforded;
2. To deny the exemption from registration
				of, or revoke, a specific issue of securities; and
3. To deny the exemption by rulemaking to a
				category of securities when necessitated by the public interest and for the
				protection of investors; and
(C) For purposes of the exemption granted in
				this section of the Act, the commissioner shall apply the following standards
				for designation of additional quotation systems:
1. The association providing the automated
				quotation system (association) shall require at least the following standards
				to be met for designation of securities of an issuer on the quotation system:
Alt. No. 1
Alt. No. 2
Net Tangible Assets 1/
$4,000,000
$12,000,000
Public Float
$ 500,000
$ 1,000,000
Pretax Income
$ 750,000
Net Income
$ 400,000
Shareholders 2/
800/400
800/400
Market Value of Float
$3,000,000
$15,000,000
Minimum Bid
$ 5/Share
Operating History
3 Years
The rules of each association shall require at least two (2)
				  authorized market makers for each issuer;
2. The association shall require at least the
				following minimum corporate governance standards for its domestic issuers:
A. Distribution of annual and interim
				reports.
(I) Each issuer shall distribute to
				shareholders copies of an annual report containing audited financial statements
				of the company and its subsidiaries. The report shall be distributed to
				shareholders a reasonable period of time prior to the company's annual meeting
				of shareholders and shall be filed with the association at the time it is
				distributed to shareholders.
(II)
				Each issuer which is subject to U.S. Securities and Exchange Commission (SEC)
				Rule 13A-13 shall make available to shareholders copies of quarterly reports,
				including statements of operating results, either prior to or as soon as
				practicable following the company's filing its Form 10-Q with the SEC. If the
				form of the quarterly report differs from the Form 10-Q, both the quarterly
				report and the Form 10-Q shall be filed with the association. The statement of
				operations contained in quarterly reports shall disclose, at a minimum, any
				substantial items of an unusual or nonrecurrent nature and net income and the
				amount of estimated federal taxes.
(III) Each issuer which is not subject to SEC
				Rule 13A-13 and which is required to file with the SEC or another federal or
				state regulatory authority interim reports relating primarily to operations and
				financial position, shall make available to shareholders reports which reflect
				the information contained in those interim reports. These reports shall be made
				available to shareholders either before or as soon as practicable following
				filing with the appropriate regulatory authority. If the form of the interim
				report made available to shareholders differs from that filed with the
				regulatory authority, both the report to shareholders and the report to the
				regulatory authority shall be filed with the association;
B. Independent directors. Each issuer shall
				maintain a minimum of two (2) independent directors on its board of directors.
				For purposes of subsection (1)(C), independent director shall mean a person
				other than an officer or employee of the company or its subsidiaries or any
				other individual having a relationship which, in the opinion of the board of
				directors, would interfere with the exercise of independent judgment in
				carrying out the responsibilities of a director;
C. Audit committee. Each issuer shall
				establish and maintain an audit committee, a majority of the members of which
				shall be independent directors;
D.
				Shareholder meetings. Each issuer shall hold an annual meeting of shareholders
				and shall provide notice of the meeting to the association;
E. Quorum. Each issuer shall provide for a
				quorum as specified in its bylaws for any meeting of the holders of common
				stock; provided, however, that in no case shall the quorum be less than
				thirty-three and one-third percent (33 1/3%) of the outstanding shares of the
				company's common voting stock;
F.
				Solicitation of proxies. Each issuer shall solicit proxies and provide proxy
				statements for all meetings of shareholders and shall provide copies of the
				proxy solicitation to the association;
G. Conflicts of interest. Each issuer shall
				conduct an appropriate review of all related party transactions on an ongoing
				basis and shall use the company's audit committee or a comparable body for the
				review of potential conflict of interest situations where appropriate;
				and
H. Shareholder approval policy.
				Each issuer shall require shareholder approval of the issuance of securities in
				connection with the following:
(I) Options,
				plans or other special remuneration plans for directors, officers or key
				employees;
(II) Actions resulting
				in a change in control of the issuer; and
(III) The acquisition, direct or indirect, of
				a business, a company, tangible or intangible assets or property or securities
				representing any such interests-
(a) From a
				director, officer or substantial security holder of the company (including its
				subsidiaries and affiliates) or from any company or party in which one of these
				persons has a direct or indirect interest; and
(b) Where the present or potential issuance
				of common stock or securities convertible into common stock could result in an
				increase in outstanding common shares of twenty-five percent (25%) or
				more;
3. Voting rights.
A. The rules of each association shall
				provide as follows: No rule, stated policy, practice or interpretation of this
				association shall permit the designation on the NASDAQ System's National Market
				(authorization), or the continuance of authorization, of any common stock or
				other equity security of a domestic issuer if, on or after July 7, 1988, the
				issuer of the security issues any class of security or takes other corporate
				action with the effect of nullifying, restricting or dis-parately reducing the
				per share voting rights of holders of an outstanding class(es) of common stock
				of the issuer registered pursuant to Section 12 of the Securities Exchange Act
				of 1934.
B. For purposes of
				subparagraph (1)(C)3.A., the following shall be presumed to have the effect of
				nullifying, restricting or disparately reducing the per share voting rights of
				an outstanding class(es) of common stock:
(I)
				Corporate action to impose any restriction on the voting power of shares of the
				common stock of the issuer held by a beneficial owner or record holder based on
				the number of shares held by the beneficial or record holder;
(II) Corporate action to impose any
				restriction on the voting power of shares of the common stock of the issuers
				held by a beneficial or record holder based on the length of time the shares
				have been held by that beneficial or record holder;
(III) Any issuance of securities through an
				exchange offer by the issuer for shares of an outstanding class of common stock
				of the issuer, in which the securities issued having voting rights greater than
				or less than the per share voting rights of any outstanding class of the common
				stock of the issuer; and
(IV) Any
				issuance of securities pursuant to a stock dividend, or any other type of
				distribution of stock, in which the securities issued have voting rights
				greater than the per share voting rights of any outstanding class of the common
				stock of the issuer.
C.
				For purposes of subparagraph (1)(C)3.A., the following, standing alone, shall
				be presumed not to have the effect of nullifying, restricting or disparately
				reducing the per share voting rights of holders of an outstanding class(es) of
				common stock:
(I) The issuance of securities
				pursuant to an initial registered public offering;
(II) The issuance of any class of securities,
				through a registered public offering, with voting rights not greater than the
				per share voting rights of any outstanding class of the common stock of the
				issuer;
(III) The issuance of any
				class of securities to effect a
bona fide
merger or
				acquisition, with voting rights not greater than the per share voting rights of
				any outstanding class of the common stock of the issuer; and
(IV) Corporate action taken pursuant to state
				law requiring a state's domestic corporation to condition the voting rights of
				a beneficial or record holder of a specified threshold percentage of the
				corporation's voting stock on the approval of the corporation's independent
				shareholders.
D.
				Definitions. The following terms shall mean, for purposes of this subsection,
				and the rules of each association shall include these definitions for the
				purposes of the prohibition in subparagraph (1)(C)3.A. of this rule:
(I) The term common stock shall include any
				security of an issuer designated as common stock and any security of an issuer,
				however designated which, by statute or by its terms, is common stock (for
				example, a security which entitles the holders of the security to vote
				generally on matters submitted to the issuer's security holders for a
				vote);
(II) The term domestic
				issuer shall mean an issuer that is not a foreign private issuer as defined in
				Rule 3b-4 under the Securities Exchange Act of 1934 (
				17
				CFR 240.3b-4 );
(III) The term equity security shall include
				any equity security defined as such pursuant to Rule 3a11-1 under the
				Securities Exchange Act of 1934 ( 17 CFR 240.3a11-1 ); and
(IV) The term security shall include any
				security defined as such pursuant to Section 3(a)(10) of the Securities
				Exchange Act of 1934, but shall exclude any class of security having a
				preference or priority over the issuer's common stock as to dividends, interest
				payments, redemption or payments in liquidation, if the voting rights of the
				securities only become effective as a result of specified events, not relating
				to an acquisition of the common stock or the issuer, which reasonably can be
				expected to jeopardize the issuer's financial ability to meet its payment
				obligations to the holders of that class of securities;
4. Maintenance criteria. After
				designation or authorization for quotation on a quotation system, a security
				must meet the following criteria to continue to be designated or authorized for
				quotation on the quotation system:
A. The
				issuer of the security has net tangible assets of at least-
(I) Two (2) million dollars if the issuer has
				sustained losses from continuing operations or net losses, or both, in two (2)
				of its three (3) most recent fiscal years; or
(II) Four (4) million dollars if the issuer
				has sustained losses from continuing operations or net losses, or both, in
				three (3) of its four (4) most recent fiscal years;
B. There are at least two hundred thousand
				(200,000) publicly held shares;
C.
				There are at least four hundred (400) shareholders or at least three hundred
				(300) shareholders of round lots; and
D. The aggregate market value of publicly
				held shares is at least one (1) million dollars;
5. The associations promptly shall notify the
				commissioner of the revocation of designation of an issue of securities by
				their marketplace; and
6. The
				marketplace receiving an exemption will use its best efforts to make available
				on a timely basis information from existing data bases regarding offerings of
				securities subject to the exemption.