South Carolina Code of Regulations › Chapter 13 - ATTORNEY GENERAL › Article 2 - SECURITIES › Subarticle 3 - REGISTRATION OF SECURITIES AND NOTICE FILING OF FEDERAL COVERED SECURITIES › Section 13-304 - Underwriting Expenses, Underwriter Warrants, Selling Expenses, and Selling Security Holders

Current through Register Vol. 48, No. 6, June 28, 2024
A. An offer or
				sale of securities may be disallowed by the Securities Commissioner if the
				underwriting expenses to be incurred exceed seventeen (17%) percent of the
				gross proceeds from the public offering.
B. Underwriting expenses may include but are
				not limited to:
(1) Commissions to
				underwriters or broker-dealers;
(2)
				Non-accountable fees or expenses to be paid to the underwriter or
				broker-dealer;
(3) Underwriter
				warrants, which shall be valued using the following formula:
{[(165% x Aggregate Offering Price) - (Exercise Price x the
				  number of shares offered to public)] / 2} x [(the number of shares underlying
				  warrants) / (the number of shares offered to public)]
The value may be reduced by twenty percent (20%) if the
				  exercise period of the warrants is extended from one (1) year after the public
				  offering to two (2) years after the public offering and by forty percent (40%)
				  if the exercise period of the warrants is extended from one (1) year after the
				  public offering to three (3) years after the public offering. Warrants may be
				  granted to underwriters only under the following conditions and subject to the
				  following restrictions:
(a) The
				underwriter is a managing underwriter;
(b) The public offering is either a firmly
				underwritten offering or a "minimum-maximum" offering. Options or warrants may
				be issued in a "minimum-maximum" public offering only if:
(i) The options or warrants are issued on a
				pro rata basis; and
(ii) The
				"minimum" amount of securities has been sold;
(c) The exercise price of the warrants must
				be at least equal to the public offering price;
(d) The number of shares covered by
				underwriter options or warrants may not exceed ten percent (10%) of the shares
				of common stock actually sold in the public offering;
(e) The life of the options or warrants may
				not exceed a period of five (5) years from the completion date of the public
				offering;
(f) The options or
				warrants are not exercisable for the first year after the completion date of
				the public offering;
(g) Options or
				warrants may not be transferred, except:
(i)
				To partners of the underwriter, if the underwriter is a partnership;
(ii) To officers and employees of the
				underwriter, who are also shareholders of the underwriter, if the underwriter
				is a corporation;
(iii) By will,
				pursuant to the laws of descent and distribution; or
(iv) By the operation of law. (H) THE WARRANT
				AGREEMENT MAY NOT ALLOW FOR A REDUCTION IN THE EXERCISE PRICE OF THE OPTIONS OR
				WARRANTS RESULTING FROM THE SUBSEQUENT ISSUANCE OF SHARES BY THE ISSUER EXCEPT
				WHERE SUCH ISSUANCES ARE PURSUANT TO A:
(h) The warrant agreement may not allow for a
				reduction in the exercise price of the options or warrants resulting from the
				subsequent issuance of shares by the issuer except where such issuances are
				pursuant to a:
(i) Stock dividend or stock
				split; or
(ii) merger,
				consolidation, reclassification, reorganization, recapitalization, or sale of
				assets.
(4)
				Rights of first refusal, which shall be valued at one percent (1%) of the
				public offering or the amount payable to the underwriter if the issuer
				terminates the right of first refusal;
(5) Solicitation fees payable to the
				underwriter, which shall be valued at the lesser of actual cost or one percent
				(1%) of the public offering if the fees are payable within one (1) year of the
				offering;
(6) Financial consulting
				or financial advisory agreements with an underwriter or any other similar type
				of agreement or fees, however designated, which shall be valued at actual
				cost;
(7) Underwriter due diligence
				expenses;
(8) Payments made either
				six (6) months prior to or required to be made six (6) months following the
				public offering to investor relations firms designated by the underwriter;
				and
(9) Other underwriting expenses
				incurred in connection with the public offering of securities as determined by
				the Securities Commissioner.