Iowa Administrative Code › Agency 191 - Insurance Division › Securities › Chapter 50 - Regulation of Securities Offerings and Those Who Engage in the Securities Business › Rule 191-50.66 - Nasaa Guidelines and Statements of Policy

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Overview of national
				models.
In cooperation with the securities administrators of other
				states and with a view to effectuating a policy to achieve maximum uniformity
				of regulations regarding the registration of securities, registration and
				business practices of securities industry and investment advisory registrants,
				and enforcement of antifraud laws, and in the interest of streamlining the
				rules contained in Chapter 50, the administrator incorporates by reference the
				following guidelines and statements of policy promulgated by NASAA. This rule
				does not include any later amendments or editions of the incorporated matter.
The NASAA Web site allows access to statements of policy,
				  comment letters, model rules, NASAA proposals published for comment, and state
				  rule proposals and may be found at
www.nasaa.org
, under "regulatory & legal
				  activity".
(2)
Registration of oil and gas programs.
All oil and gas programs
				filing for registration by coordination or qualification shall substantially
				comply, as determined by the administrator, with the NASAA Guidelines for
				Registration of Oil and Gas Programs, which were initially adopted by the NASAA
				membership on September 22, 1976, as amended on October 12, 1977; October 31,
				1979; April 23, 1983; July 1, 1984; September 3, 1987; September 14, 1989;
				October 24, 1991; May 7, 2007; and May 6, 2012; and published in CCH NASAA
				Reports at paragraph 2621.
(3)
Uniform disclosure guidelines
-
legend.
All
				registrations of securities filing for registration by coordination or
				qualification shall substantially comply, as determined by the administrator,
				with the NASAA Guidelines for Cover Legends as adopted by the NASAA membership
				on October 2,2004, and published in CCH NASAA Reports at paragraph
				1351.
(4)
Omnibus
				guidelines.
All registrations of limited or general partnerships,
				joint ventures, unincorporated associations, or similar organizations, other
				than a corporation formed and operated for the primary purpose of investment in
				and the operation of or gain from and interest in the assets to be acquired by
				such entity for which statements of policy have not been adopted by the NASAA
				membership, filing for registration by coordination or qualification shall
				substantially comply, as determined by the administrator, with the NASAA
				Omnibus Guidelines as adopted by the NASAA membership on March 29, 1992, as
				amended on May 7, 2007; and published in CCH NASAA Reports at paragraph
				2321.
(5)
Registration of
				commodity pool programs.
All registrations of securities filing for
				registration by coordination or qualification shall substantially comply, as
				determined by the administrator, with the NASAA Guidelines for Registration of
				Commodity Pool Programs as adopted by the NASAA membership on September 21,
				1983, effective January 1, 1984, amended August 30, 1990, amended May 7, 2007,
				amended May 6, 2012, and published in CCH NASAA Reports at paragraph
				1201.
(6)
Registration of
				equipment programs.
All registrations of securities filing for
				registration by coordination or qualification shall substantially comply, as
				determined by the administrator, with the NASAA Guidelines for Equipment
				Programs as adopted by the NASAA membership on November 20, 1986, effective
				January 1, 1987, amended April 22, 1988, October 24, 1991, May 7, 2007, and May
				6, 2012, and published in CCH NASAA Reports at paragraph 1601.
(7)
Registration of real estate
				programs.
All registrations of securities filing for registration by
				coordination or qualification shall substantially comply, as determined by the
				administrator, with the NASAA Guidelines for Real Estate Programs as adopted by
				the NASAA membership on September 29, 1993, last revised, May 7, 2007, and
				published in CCH NASAA Reports at paragraph 3601.
(8)
Registration of mortgage
				programs.
All registrations of securities filing for registration by
				coordination or qualification shall substantially comply, as determined by the
				administrator, with the NASAA Guidelines for Mortgage Programs as adopted by
				the NASAA membership on September 10, 1996, amended May 2007, and published in
				CCH NASAA Reports, paragraph 701.
(9)
Real estate investment
				trusts.
The registration of a real estate investment trust may be
				disallowed if it does not substantially comply, as determined by the
				administrator, with the NASAA Statement of Policy Regarding Real Estate
				Investment Trusts as revised and adopted by the NASAA membership on September
				29,1993, as revised on May 7, 2007, and published in CCH NASAA Reports at
				paragraph 3401.
(10)
Corporate securities definitions.
For securities registration
				purposes, the administrator adopts the various definitions set out in the NASAA
				Statement of Policy Regarding Corporate Securities Definitions as adopted by
				the NASAA membership on April 27, 1997, and as amended September 28, 1999, and
				March 31, 2008, and published in CCH NASAA Reports at paragraph 3812.
(11)
Impoundment of
				proceeds.
When an impoundment of proceeds is necessary, it shall
				substantially comply, as determined by the administrator, with the NASAA
				Statement of Policy Regarding the Impoundment of Proceeds as adopted by the
				NASAA membership on April 27, 1997, and as amended September 28, 1999, and
				March 31, 2008, and published in CCH NASAA Reports at paragraph 2151.
(12)
Loans and other material
				affiliated transactions.
When there have been or will be loans or
				other material affiliated transactions, the transactions shall substantially
				comply, as determined by the administrator, with the NASAA Statement of Policy
				Regarding Loans and Other Material Affiliated Transactions as amended by the
				NASAA membership on April 27, 1997, and March 31, 2008, and published in CCH
				NASAA Reports at paragraph 374.
(13)
Options and warrants.
The issuance of options and warrants may be allowed by the administrator if the
				issuance is in substantial compliance, as determined by the administrator, with
				the NASAA Statement of Policy Regarding Options and Warrants as adopted by the
				NASAA membership on November 17, 1997, and as amended September 28, 1999, and
				as amended March 31, 2008, and published in CCH NASAA Reports at paragraph
				2801.
(14)
Preferred
				stock.
A public offering of preferred stock may be allowed by the
				administrator if the administrator determines that the offering substantially
				complies with the NASAA Statement of Policy Regarding Preferred Stock as
				adopted by the NASAA membership on April 27, 1997, and as amended March 31,
				2008, and September 11, 2016 (
http://nasaa.cdn.s3.amazonaws.com/wp-content/uploads/2011/07/SOP-Regarding-Preferred-Stock-Amended0916.pdf
).
(15)
Promotional shares.
The
				registration of a security may include promotional shares if it substantially
				complies, as determined by the administrator, with the NASAA Statement of
				Policy Regarding Promotional Shares as adopted by the NASAA membership on April
				27, 1997, and as amended September 28, 1999, and March 31, 2008, and published
				in CCH NASAA Reports at paragraph 3201.
(16)
Risk disclosure.
All
				registrations of securities filing for registration by coordination or
				qualification shall substantially comply, as determined by the administrator,
				with the NASAA Guidelines for Risk Disclosure as adopted by the NASAA
				membership on September 8,2001, and published in CCH NASAA Reports at paragraph
				1362.
(17)
Unsound
				financial condition.
An issuer may be deemed to be in an unsound
				financial condition if it substantially meets, as determined by the
				administrator, the conditions provided within the NASAA Statement of Policy
				Regarding Unsound Financial Condition as adopted by the NASAA membership on
				April 27,1997, and as amended September 28,1999, and March 31,2008, and
				published in CCH NASAA Reports at paragraph 3821.
(18)
Use of proceeds.
The
				registration of a security may be disallowed if the administrator determines
				that the registration does not substantially comply with the NASAA Statement of
				Policy Regarding Specificity in Use of Proceeds as amended by the NASAA
				membership on April 27, 1997, September 28, 1999, March 31, 2008, and September
				11, 2016 (
http://nasaa.cdn.s3.amazonaws.com/wp-content/uploads/2011/07/SPECIFICITY
				IN USE OF PROCEEDS-Amended0916.pdf
).
(19)
Registration of asset-backed
				securities.
All registrations of securities filing for registration by
				coordination or qualification shall substantially comply, as determined by the
				administrator, with the NASAA Guidelines for Registration of Asset-Backed
				Securities as adopted by the NASAA membership on October 25, 1995, amended May
				7, 2007, and May 6, 2012, and published in CCH NASAA Reports at paragraph
				501.
(20)
Promoters' equity
				investment.
The registration of a security may be disallowed by the
				administrator if the administrator determines that the registration does not
				substantially comply with the NASAA Statement of Policy Regarding Promoters'
				Equity Investment as amended by the NASAA membership on April 27, 1997, March
				31, 2008, and September 11, 2016 (
http://nasaa.cdn.s3.amazonaws.com/wp-content/uploads/2011/07/PROMOTERS
				EQUITY INVESTMENT-revised0916.pdf
).
(21)
Unequal voting rights.
The registration of a security may be disallowed by the administrator if the
				administrator determines that the registration does not substantially comply
				with the NASAA Statement of Policy Regarding Unequal Voting Rights as adopted
				by the NASAA membership on October 24, 1991, and as amended March 31, 2008, and
				September 11, 2016 (
http://nasaa.cdn.s3.amazonaws.com/wp-content/uploads/2011/07/SOP
				Unequal Voting Rights-Amended0916.pdf
).
(22)
Use of electronic offering
				documents and electronic signatures.
a.
Definitions.
For purposes
				of this subrule, the following definitions apply.
"Offering documents"
means documents that
				  include, but are not limited to, the registration statement, prospectus,
				  applicable agreements, charter, bylaws, opinion of counsel and other opinions,
				  specimen, indenture, consent to service of process and associated resolution,
				  sales materials, subscription agreement, and applicable exhibits.
"Sales materials"
means materials that
				  include only those materials to be used in connection with the solicitation of
				  purchasers of the securities approved as sales literature or other related
				  materials by the SEC, FINRA, and the states, as applicable.
"Security breach"
means the unauthorized
				  accessing, acquisition, or disclosure of any data that compromises the security
				  or confidentiality of confidential personal information maintained by the
				  person or business; provided, however, that for this purpose a "security
				  breach" shall relate only to a system, technology, or process that is used in
				  connection with or is introduced into a securities offering in order to
				  implement the use of electronic offering documents or electronic
				  signatures.
b.
Use
				of electronic offering documents and subscription agreements.
(1) An issuer of securities or agent acting
				on behalf of the issuer may deliver offering documents over the Internet or by
				other electronic means, or in machine-readable format, provided all of the
				following requirements are met:
1. Each
				offering document:
* Is prepared, updated, and delivered in a manner consistent
				  and in compliance with state and federal securities laws;
* Satisfies the formatting requirements applicable to printed
				  documents, such as font size and typeface, and is identical in content to the
				  printed version (other than electronic instructions or procedures as may be
				  displayed and nonsubstantive updates to daily net asset value which can be
				  updated more efficiently in the electronic version);
* Is delivered as a single, integrated document or file; when
				  delivering multiple offering documents, the documents must be delivered
				  together as a single package or list;
* Where the offering documents include a hyperlink to
				  external documents or content, provides notice to investors or prospective
				  investors that the document or content being accessed by the hyperlink is
				  provided by an external source; and
* Is delivered in an electronic format that intrinsically
				  enables the recipient to store, retrieve, and print the documents;
2. The issuer or agent acting on
				behalf of the issuer:
* Obtains informed consent from the investor or prospective
				  investor to receive offering documents electronically;
* Ensures that the investor or prospective investor receives
				  timely, adequate, and direct notice when an electronic offering document has
				  been delivered;
* Employs safeguards to ensure that delivery of offering
				  documents occurred at or before the time required by law in relation to the
				  time of sale; and
* Maintains evidence of delivery by keeping records of its
				  electronic delivery of offering documents and makes those records available on
				  demand by the securities administrator.
(2) Subscription agreements may be provided
				electronically by an issuer or agent acting on behalf of the issuer for the
				prospective investor to review and complete, provided the subscription process
				is administered in a manner that is similar to the administration of
				subscription agreements in paper form, as follows:
1. Before completion of any subscription
				agreement, the issuer or agent acting on behalf of the issuer shall review with
				the prospective investor all appropriate documentation related to the
				prospective investment including documents and instructions on how to complete
				the subscription agreement;
2.
				Mechanisms shall be established to ensure a prospective investor reviews all
				required disclosures and scrolls through the document in its entirety prior to
				initialing or signing; and
3.
				Unless otherwise allowed by the securities administrator, a single subscription
				agreement shall be used to subscribe a prospective investor in no more than one
				offering.
(3) Security
				breach.
1. In the event of discovery of a
				security breach at any time in any jurisdiction, the issuer or its agents, as
				appropriate, shall take prompt action to do all of the following:
* Identify and locate the breach.
* Secure the affected information.
* Suspend the use of the particular device or technology that
				  has been compromised until information security has been restored.
* Provide notice of the security breach to any investor whose
				  confidential personal information has been improperly accessed in connection
				  with the security breach and to the securities administrator of each state in
				  which an affected investor resides.
2. Compliance with subparagraph
				50.66(22)
"b"
(3) after the discovery of a security breach or
				any other breach of personal information shall not substitute or in any way
				affect other requirements or obligations, including notification, imposed on an
				issuer or its agents pursuant to applicable laws, regulations, or
				standards.
(4) Delivery
				requires that the offering documents be conveyed to and received by the
				investor or prospective investor, or that the storage media in which the
				offering documents are stored be physically delivered to the investor or
				prospective investor in accordance with numbered paragraph
				50.66(22)
"b"
(1)"1."
(5) Each electronic document shall be
				preceded by or presented concurrently with the following notice:
"Clarity
				of text in this document may be affected by the size of the screen on which it
				is displayed."
(6) Informed
				consent to receive offering documents electronically pursuant to the first
				bulleted paragraph of numbered paragraph 50.66(22)
"b"
(1)"2"
				may be obtained in connection with each new offering or globally, either by the
				issuer or by an agent acting on behalf of the issuer. The investor may revoke
				this consent at any time by informing the party to whom the consent was given,
				or, if such party is no longer available, the issuer. Generally, a consent is
				considered to be informed when an investor is apprised that the document to be
				provided will be available through a specific electronic medium or source, and
				that there may be costs associated with delivery. In addition, for a consent to
				be informed an investor must be apprised of the time and scope parameters of
				the consent.
(7) Investment
				opportunities shall not be conditioned on participation in the electronic
				offering documents and subscription agreements initiative.
(8) Investors or prospective investors who
				decline to participate in an electronic offering documents and subscription
				agreements initiative shall not be subjected to higher costs-other than the
				actual direct cost of printing, mailing, processing, and storing offering
				documents and subscription agreements-as a result of their lack of
				participation in the initiative, and no discount shall be given for
				participating in an electronic offering documents and subscription agreements
				initiative.
(9) Entities
				participating in an electronic initiative shall maintain, and shall require
				participating underwriters, dealer-managers, placement agents, broker-dealers,
				or other selling agents to maintain, written policies and procedures covering
				the use of electronic offering documents and subscription agreements.
(10) Entities and their contractors and
				agents having custody and possession of electronic offering documents,
				including electronic subscription agreements, shall store them in a
				nonrewriteable and nonerasable format.
(11) Subrule 50.66(22) does not change or
				waive any other requirement of law concerning registration or presale
				disclosure of securities offerings.
c.
Use of electronic
				signatures.
(1) An issuer of
				securities or agent acting on behalf of the issuer may provide for the use of
				electronic signatures if all of the following are true:
1. The process by which electronic signatures
				are obtained:
* Shall be implemented in compliance with the Electronic
				  Signatures in Global and National Commerce Act and the Uniform Electronic
				  Transactions Act, and, where applicable, shall include required federal
				  disclosures;
* Shall include an appropriate level of security and
				  assurances of accuracy;
* Shall employ an authentication process to establish signer
				  credentials;
* Shall employ security features that protect signed records
				  from alteration; and
* Shall provide that either the issuer or agent acting on
				  behalf of the issuer retain, in compliance with applicable laws and
				  regulations, electronically signed documents;
2. An investor or prospective investor shall
				expressly opt in to the electronic signature initiative, and participation may
				be terminated at any time; and
3.
				Investment opportunities shall not be conditioned on participation in the
				electronic signature initiative.
(2) Entities that participate in an
				electronic signature initiative shall maintain, and shall require underwriters,
				dealer-managers, placement agents, broker-dealers, and other selling agents to
				maintain, written policies and procedures covering the use of electronic
				signatures.
(3) Documentation of an
				investor's election to participate in an electronic signature initiative by
				following the requirements of numbered paragraph
				50.66(22)
"b"
(1)"2" may be obtained in connection with each new
				offering, or by an agent acting on behalf of the issuer. The investor may
				revoke this consent at any time by informing the party to whom the consent was
				given, or, if such party is no longer available, the issuer.
This rule is intended to implement Iowa Code sections
				  502.305(6) and
				  502306(1)..