South Carolina Code of Regulations › Chapter 13 - ATTORNEY GENERAL › Article 2 - SECURITIES › Subarticle 2 - EXEMPTIONS FROM SECURITIES › Section 13-202 - Securities of Nonprofit Organizations

Current through Register Vol. 48, No. 6, June 28, 2024
The exemption from the registration requirements of Section
				  35-1-301
				  provided by Section
				  35-1-201(7)
				  for nonprofit organizations shall not be considered to be available for debt
				  securities issued and offered by such organizations unless the full disclosure
				  provisions of Section
				  35-1-501(2)
				  are met and the investing public is afforded the protection provided by the
				  following as a minimum:
(1) The
				organization shall be incorporated as a nonprofit, nonstock
				corporation.
(2) Any organization
				assisting the issuer in any manner in the sale of the securities shall be
				required to be registered as a broker-dealer in this State.
(3) The trustee and/or paying agent shall be
				independent of the issuer, the broker-dealer or any affiliate of either, and
				shall possess the authority to administer a trust under state and/or federal
				laws.
(4) The debt securities shall
				meet all form and minimum provisions for debt securities established pursuant
				to rule or order of the Securities Commissioner.
(5) A Prospectus, Offering Brochure, Offering
				Circular or similar instrument, dated and filed with the Securities
				Commissioner, shall be delivered to each prospective purchaser and a copy of
				such instrument (signed by two officers of the issuer) shall be held in the
				files of the trustee and/or paying agent.
(6) Said Prospectus or similar instrument
				shall at a minimum contain the following information:
(a) Financial statement consisting of a
				statement of assets and liabilities, income and expense statement, and
				comparative figures showing the budget, number of pledging units, if available,
				and income and expenses for the past three years. If any of this information is
				not available, a statement to that effect should be made with an explanation of
				why it is not available. Obligations, if any, on existing indebtedness should
				be clearly stated;
(b) A pay-back
				or maturity schedule and sinking fund requirements, if any. If refinancing will
				be needed when the bonds mature, this should be clearly stated;
(c) The name, address and telephone number of
				the trustee and/or paying agent;
(d) Any past history of financial
				transactions between the issuer and broker-dealer or financing organization and
				any known or contemplated future transactions;
(e) The name, address and telephone number of
				the broker-dealer handling the issue and the name and address of the local
				representative of the broker-dealer;
(f) The total expenses of the issue
				(including remuneration to the broker-dealer);
(g) A statement on whether the offering is
				being made on a best efforts or firm underwriting basis, and if the former, a
				clear statement of the responsibilities of the financing organization and the
				church membership;
(h) An itemized
				statement of the use to which the proceeds will be put. If additional funds
				will be needed to complete the stated purposes, this should be disclosed
				together with a statement showing how such funds will be obtained;
(i) If any statements are made concerning the
				risk or lack of risk in purchasing the securities, they should be made in the
				light of the financial condition of the issuer, and not in generalities.
				Likewise, any comparison of yields will be considered misleading unless other
				comparative aspects of these investments are included;
(j) A description of the terms of the debt
				security offered. For details reference may be made to an indenture and/or deed
				of trust if such exists;
(k) If
				guarantee of payment is made by an affiliated organization, information
				describing the ability of that organization to guarantee should be furnished,
				including financials. The word "guarantee" should be used only if there is a
				second obligation by another entity;
(l) Brief information concerning the city,
				town or other area in which the issuer is located with special reference to the
				immediate neighborhood;
(m) Clear
				disclosure of any affiliation of the issuer or broker-dealer, or of any
				officers of either, with any building contractor or supplier who has an
				interest in or may receive any of the proceeds of the issue; and
(n) If the securities have not been
				registered under the South Carolina Uniform Securities Act of 2005, the
				Securities Act of 1933 or the securities law of the state in which the issuer
				is located, this should be clearly indicated, and the exemptions relied upon
				cited.