808 KAR 10:430. Required filing for oil,

gas, and mineral securities offerings relying upon the registration exemption

in KRS 292.410(1)(i).

 

      RELATES TO: KRS 292.410(1)(i)

      STATUTORY AUTHORITY: KRS 292.410(1)(i)5

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

292.410(1)(i)5 authorizes the commissioner to impose additional conditions and

requirements for a particular class of issuers if appropriate in furtherance of

the intent of KRS Chapter 292. The Commissioner of the Department of Financial

Institutions has found that securities evidencing interests in oil, gas, and

other minerals have resulted in numerous losses for investors and a significant

rise in enforcement actions. The requirement of a filing to claim an exemption

from registration will allow the Commissioner of the Department of Financial Institutions

to become aware of offerings of securities of oil, gas, and minerals and

provide investor protection by becoming involved earlier in the process. This

administrative regulation establishes the filing requirements for a

registration exemption for oil, gas, and mineral securities.

 

      Section 1. Notice of Claim of

Registration Exemption; Filing Requirements. To claim a registration exemption

pursuant to KRS 292.410(1)(i) for any security that otherwise has available the

securities registration exemption in KRS 292.410(1)(i) and evidences an oil,

gas, or mineral interest, a person shall file a Notice of Claim of Exemption

with the Office of Financial Institutions. The Notice of Claim of Exemption

shall include the following:

      (1) A letter containing:

      (a) A declaration that the KRS

292.410(1)(i) exemption will be relied upon;

      (b) A statement as to which condition in

KRS 292.410(1)(i)3 is satisfied;

      (c) A representation that persons who

receive commissions, finders fees, or other remuneration in connection with

sales of securities are in compliance with KRS 292.330;

      (d) A representation that the seller

believes that all the buyers are purchasing for investment;

      (e) A representation that each buyer will

sign an appropriate "investment intent" letter, a copy of which shall

be included with the claim of exemption, stating in part that the buyer is not

taking with a view to distribution;

      (f) A representation that the securities

to be issued will bear an appropriate restrictive legend, a copy of which shall

be submitted with the claim of exemption;

      (g) A representation that the offerees

and purchasers shall have access to information concerning the issuer and any

persons significant to the success of the undertaking; and

      (h) A representation that public

advertising or solicitation shall not be employed in effecting the proposed

transaction.

      (2) A copy of the articles of

incorporation, bylaws, limited partnership agreement, or other organizational

document which reflects the security holders’ rights;

      (3) A prospectus, offering circular or

memorandum making full disclosure of material facts, including a discussion of

all salient risk factors, unless the document was not prepared, because the

transaction satisfies the condition in KRS 292.410(1)(i)3a; and

      (4) Current financial statements of the

issuer, which shall be filed with the notice and shall be contained in any

disclosure document. (32 Ky.R. 1500; 1893; eff. 5-5-2006; TAm eff. 11-7-2012.)