Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 7 - STATE SECURITIES BOARD › Chapter 125 - MINIMUM DISCLOSURES IN CHURCH AND NONPROFIT INSTITUTION BOND ISSUES › Section 125.6 - Financial Information

Current through Reg. 49, No. 28; July 12, 2024
(a) Complete
				financial (preferably audited), prepared in accordance with generally accepted
				accounting principles. Complete financials are to include: a statement of
				assets and liabilities (a balance sheet); comparative figures showing the
				budget, the number of families giving on a regular basis and their average
				annual contribution, if applicable and available, and income (revenue) and
				expense statements for the past three years; interim statements of church
				financials for the interim period between the last annual statements and 90
				days just preceding the month of the offering.
(b) If any of the above information is not
				available, a statement to that effect must be made, along with an explanation
				of why it is not available.
(c) Any
				information necessary to explain extraordinary or nonrecurring fluctuations in
				the above-mentioned statements must be supplied.
(d) Obligations, if any, on existing
				indebtedness must be clearly stated and explained.
(e) An itemized statement showing the major
				uses of the proceeds of the offering by dollar amount is to be included. In
				stating the use of the proceeds, when construction costs are not based upon
				firm contracts, a statement should be made that the costs are estimates only
				and subject to change. If additional funds are needed to accomplish the stated
				purposes of the offering, this is to be disclosed, together with a statement
				showing how such funds will be obtained.
(f) A pay-out or maturity schedule must be
				included and sinking fund requirements must be indicated. If projected growth
				in income is used as the basis for increases in later sinking fund payments,
				great care must be exercised to insure that the estimates used are realistic
				and all assumptions fully disclosed.
(g) If refinancing is needed when the bonds
				mature, this needs to be clearly brought out. Unless special circumstances are
				show, "balloon payments" normally would not be considered fair, just, and
				equitable.
(h) Anything that is
				known that will take place in the future, and which could have an adverse
				effect on the issuer's ability to pay back the bonds or the interest on the
				bonds, must be disclosed and explained.
(i) Schedules or charts showing the amount of
				return to be received when interest coupons are reinvested must be omitted
				unless there are specific provisions for reinvesting interest
				received.
(j) The person or persons
				preparing any appraisals must be identified and their qualifications for
				serving as such should be indicated along with the method of
				appraisal.
(k) Where part or all of
				the proceeds of an issue are to be used to retire outstanding indebtedness
				against certain property so that the property will serve as collateral for a
				first mortgage indebtedness, proceeds from the issue must be escrowed to insure
				that the indebtedness will be retired.
(l) If a legal opinion concerning the
				validity of the issue has not been rendered by an attorney, this fact shall be
				stated.
(m) In stating the use of
				the proceeds of the issue when construction costs are not based upon firm
				contracts, a statement should be made that the costs are estimates only which
				are subject to change.