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61-1-14(2)(m) – Secondary Trading Transactional Exemption call the Division at (801) 530-6600

Exemption:

(2) The following transactions are exempted from Sections 61-1-7 and 61-1-15:

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(m) a nonissuer transaction effected by or through a registered broker-dealer where the broker-dealer or issuer files with the division, and the broker-dealer maintains in his records, and makes reasonably available upon request to a person expressing an interest in a proposed transaction in the security with the broker-dealer information prescribed by the division under its rules;

Division Interpretive Commentary:

This exemption is used for secondary trading because the exemption is limited to non-issuer transactions effected by or through a registered broker-dealer.  This exemption also requires that certain information be filed with the division and that the broker-dealer maintain this information and make it available upon request to persons interested in the securities.  The Division administers this exemption by rule.  See R164-14-2m

Required Information:
The following information must be filed with the division, maintained in the files of the broker-dealer, and made available, upon request, to persons interested in the securities.  This information is very similar, but not exactly the same, as the information required by Rule 15c2-11 under the Securities Exchange Act of 1934.

  • The exact name of the issuer and its predecessor(s), if any;
  • The street address of the issuer's principal executive offices;
  • The state of and date of incorporation or organization of the issuer;
  • The exact title and class of security for which the exemption is sought;
  • The par or stated value of the security for which the exemption is sought;
  • The number of public, and restricted securities outstanding as of the end of the issuer's most recent fiscal year and a statement as to the date of the last fiscal year end;
  • The name and street address of the transfer agent for the securities for which the exemption is sought;
  • A description of the nature of the issuer's business;
  • A description of the products or services offered by the issuer;
  • A description of the nature and extent of the issuer's facilities;
  • The names, titles and terms of office of the executive officers and members of the board of directors;
  • The names and street addresses of broker-dealers in Utah or associated person affiliated, directly or indirectly, with the issuer of the securities for which the exemption is sought;
  • Audited or reviewed financial statements for the issuer's most recent fiscal year which are prepared in conformity with GAAP and contain an unqualified audit opinion among other conditions;
  • Audited or reviewed financial statements of the issuer for the two fiscal years preceding the most recent fiscal year which are prepared in conformity with GAAP and contain an unqualified audit opinion among other conditions;
  • Audited or reviewed financial statements, dated within 30 days before the merger or acquisition, of the corporation, partnership, or proprietorship which was acquired by or merged with the issuer during the issuer's most recent fiscal year;
  • A statement that the person submitting the information has read all of the information submitted and that to the best of his knowledge the information is accurate and complete;
  • If a broker-dealer is submitting the information, the original signature of the licensed official of the broker-dealer beneath the above statement and the signatory's name and street address typed or printed beneath it;
  • If an issuer is submitting the information, the original signature of a current executive officer or director of the issuer beneath the above statement and the signatory's name and street address typed or printed beneath it;
  • Copies of all complaints and orders with respect to material litigation that occurred during the past five years involving the issuer, the assets, liabilities, or both of the issuer, the securities of the issuer, or any officer or director of the issuer; and
  • Other documents as the Division may request.

Filing Requirements:
Confirmation with the Division is required prior to relying on the exemption.   To receive confirmation of this exemption, file the following with the Division:

  • The Required Information listed above; and
  • $60.00 filing fee

Term of Exemption:
The exemption becomes effective on the date confirmed by the Division.  The exemption expires upon the earliest of:

  • A date three months after the issuer's next fiscal year end; or
  • A date ten working days from the date of any shareholders meeting unless all material changes resulting from the meeting have been filed with the Division; or
  • A date 30 calendar days from the date of any material change, not resulting from a shareholder vote, unless information with respect to the material change has been filed with the Division.

Amendments:
The Required Information listed above may be amended by forwarding the correct information to the Division and requesting that the file be amended accordingly.  If the amended information indicates that the issuer has changed its fiscal year, an amendment will not be permitted and the information will be treated as a new request for exemption.  No fee is required for an amendment.

Blank-check, blind-pool, dormant, or shell company:
The exemption is not available to a blank-check, blind-pool, dormant, or shell company which has not previously registered its securities with the Division.

A company which has not previously registered its securities with the Division which, within the past three fiscal years of the company, has merged with or been acquired by a blank-check, blind-pool, dormant, or shell company, which has not previously registered its securities with the Division, must file:

  • the required information listed above, as to all parties to such transaction;
  • the shareholders list reflecting the initial public offering of the blank-check, blind-pool, dormant or shell company; and
  • the shareholders list of the company, current within thirty days of the request for confirmation of the exemption.

Federal Covered Securities Status:
Some securities which qualify under this exemption may be considered to be federal covered securities under section 18 of the Securities Act of 1933 if the issuer files reports with the SEC pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.  See Federal Covered Securities