61-1-14(2)(b) – Manual Listing Transactional Exemption
(2) The following transactions are exempted from Sections 61-1-7 and 61-1-15:
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(b) a nonissuer transaction in an outstanding security, if as provided by rule of the division:
(i) information about the issuer of the security as required by the division is currently listed in a securities manual recognized by the division, and the listing is based upon such information as required by rule of the division; or
(ii) the security has a fixed maturity or a fixed interest or dividend provision and there is no default during the current fiscal year or within the three preceding fiscal years, or during the existence of the issuer and any predecessors if less than three years, in the payment of principal, interest, or dividends on the security;
Division Interpretive Commentary
This exemption is used for secondary trading because the exemption is limited to non-issuer transactions. The Division administers this exemption by rule. See R164-14-2b
Standard and Poor's Corporation Records
Mergent's Industrial Manual
Mergent's Bank and Finance Manual
Mergent's Transportation Manual
Mergent's OTC Industrial Manual
Mergent's Public Utility Manual
Mergent's OTC Unlisted Manual
Mergent's International Manual
To qualify for the exemption, the manual listing must contain the following information about the issuer:
- Issuer's name, current street, mailing address, and telephone number;
- Names and titles of the executive officers and members of the board of directors of the issuer;
- Description of the issuer's business;
- Number of shares of each class of stock outstanding at the balance sheet date; and
- Issuer's annual audited financial statements dated within 18 months, or if the issuer has been organized for less than one year, audited financial statements for the period from inception.
Confirmation with the Division is required prior to relying on the exemption unless all of the following conditions are met at the time of the transaction:
- The security is sold at a price reasonably related to the current market price of such security;
- The security does not constitute the whole or part of an unsold allotment to, or subscription or participation by, a broker-dealer as an underwriter of the security;
- The security has been outstanding in the hands of the public for at least 90 days;
- The issuer of the security is a going concern, actually engaged in business, and is not in the development stage, in bankruptcy or receivership;
- The issuer of the security has been in continuous operation for at least five years; and
- The required information listed above is contained in a recognized securities manual.
To receive confirmation of this exemption, file the following with the Division:
- All information filed with the selected recognized securities manual;
- A copy of the listing with the recognized securities manual which is based upon the required information listed above; and
- $60.00 filing fee payable to the Utah Division of Securities.
Confirmation may only be requested by a broker-dealer licensed with the Division or by the issuer of the securities for which the exemption is sought.
Term of Exception
The exemption becomes effective on either:
- The date confirmed by the Division, if confirmation is required; or
- The date a listing, based upon the required information listed above, is published in a recognized securities manual, if confirmation is not required.
The exemption expires upon the earliest of:
- A date 18 months from the date of the annual audited financial statements;
- The date of a new annual issue or edition of the securities manual which does not contain a listing based upon the required information listed above;
- A date 45 calendar days from a change in the Chairman of the Board of Directors or a change in any two other members of the Board of Directors unless the securities manual has published this information within the 45 days; or
- A date 90 calendar days after a significant change in the issuer unless the securities manual has published, at a minimum, an audited balance sheet and income statement reflecting the significant change within the 90 days.
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:
- with the recognized securities manual, the required information listed above, as to all parties to such transaction;
- with the Division, the shareholders list reflecting the initial public offering of the blank-check, blind-pool, dormant or shell company; and
- with the Division, 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.