§485-9 Registration by notification. (a) Securities entitled to registration by notification. The following classes of securities shall be entitled to registration by notification in the manner provided in this section:
(1) Securities issued by a corporation, partnership, association, company, syndicate, or trust owning a property, business, or industry which has been in continuous operation not less than three years and which has shown during a period of not less than two years or more than ten years next prior to the close of its last fiscal year preceding the offering of such securities, average annual net earnings, after deducting all prior charges not including the charges upon securities to be retired out of the proceeds of sale, as follows:
(A) In the case of interest-bearing securities, not less than one and one-half times the annual interest charge thereon and upon all other outstanding interest-bearing obligation of equal rank;
(B) In the case of preferred stock, not less than one and one-half times the annual requirements on the preferred stock and on all other outstanding stock of equal rank;
(C) In the case of common stock not less than five per cent upon all outstanding common stock of equal rank, together with the amount of common stock then offered for sale reckoned upon the price at which the stock is then offered for sale or sold.
The ownership by a corporation, partnership, association, company, syndicate, or trust of more than fifty per cent of the outstanding voting stock of a corporation shall be construed as the proportionate ownership of the property, business, or industry of the corporation, and permits the inclusion of the earnings of the corporation applicable to the payment of dividends upon the stock so owned in the earnings of the corporation, partnership, association, company, syndicate, or trust issuing the securities sought to be registered by notification.
(2) Bonds or notes secured by first mortgage upon real estate leased to a corporation for a term of years at a net rental sufficient to pay the interest and to retire the principal of all bonds or notes secured by the mortgage during the term of the lease, where the lease is irrevocable and is pledged under the mortgage securing the bonds or notes.
(3) Bonds or notes secured by first mortgage on real estate in any state or territory of the United States or in the District of Columbia or in the Dominion of Canada where such real estate consists of agricultural lands used and valuable for agricultural purposes (not including oil, gas, or mining property) and where the aggregate face value of the bonds or notes, not including interest notes or coupons, secured on such property does not exceed seventy per cent of the then fair market value of the lands plus sixty per cent of the insured value of any improvements thereon.
(4) Bonds or notes secured by first mortgage on real estate in any state or territory of the United States or in the District of Columbia or in the Dominion of Canada where such real estate consists of improved city, town, or village property and where the aggregate face value of such bonds or notes, not including interest notes or coupons, secured on such property does not exceed seventy per cent of the then fair market value of the property, including any improvements appurtenant thereto, and when the property is used principally to produce through rental a net annual income, after deducting operating expenses and taxes, or has a fair rental value after deducting operating expenses and taxes, at least equal to the annual interest plus not less than three per cent of the principal of the mortgage indebtedness.
(5) Bonds or notes secured by a mortgage constituting a first lien on a leasehold or real estate in any state or territory of the United States or in the District of Columbia where the real estate consists of improved city, town, and village property and where the aggregate face value of the bonds or notes, not including interest notes or coupons secured by the first mortgage does not exceed seventy per cent of the then fair market value of the leasehold and when the property is so used as to produce through rental a net annual income after deducting operating expenses and taxes, or has a fair rental value after deducting operating expenses and taxes, at least equal to the annual interest plus not less than three per cent of the principal of the mortgage indebtedness; provided all advertisements, circulars, and letters advertising the sale of the bonds or notes, and all receipts of payments therefor, and the bonds and notes shall bear in bold type not less than eighteen points upon the face thereof a legend stating that the bonds or notes are secured by mortgage on a leasehold, and all other written or printed offerings shall contain a statement to the same effect.
(6) Bonds or notes secured by a first mortgage upon real estate in any state or territory of the United States or in the District of Columbia:
(A) Where the mortgage is a first mortgage upon city, town, or village real estate, or leaseholds, upon which real estate or leaseholds a building or buildings is or are about in good faith forthwith to be erected according to the expressed terms of the mortgage;
(B) And where reasonable adequate provision has been made for financing the full completion of the building clear of any lien superior to the mortgage;
(C) And where the aggregate face value of the bonds or notes, not including interest notes or coupons, secured by the first mortgage does not exceed seventy per cent of the fair market value of the mortgaged property, including the building or buildings to be erected thereon;
(D) And where the mortgaged property is to be used principally to produce through rental a net annual income, after deducting operating expenses and taxes, or will have a fair rental value, after deducting operating expenses and taxes, at least equal to the annual interest plus not less than three per cent of the principal of such mortgage indebtedness;
Provided that all advertisements, circulars, and letters advertising the sale of the bonds or notes and all receipts of payments therefor shall bear in bold type not less than eighteen points upon the face thereof a legend stating that the bonds or notes are construction bonds or notes and all other written or printed offerings of the bonds or notes shall bear a statement to the like effect;
And provided further that where the bonds or notes are secured wholly or partly by first mortgage on leaseholds, the value of the leaseholds is required to meet the ratio of property value to face value obligations above in this subsection provided, and all advertisements, circulars, and letters advertising the sale of the bonds or notes, and all receipts of payments therefor, and the bonds and notes shall bear in bold type not less than eighteen points upon the face thereof a legend stating that the bonds or notes are secured wholly or partly by mortgage on a leasehold as the case may be, and all other written or printed offerings of the bonds or notes shall contain a statement to the same effect.
(7) Bonds or notes secured by first lien on collateral pledged as security for the bonds or notes with a bank or trust company as trustee, which bank or trust company is incorporated under the laws of and subject to examination and supervision by the United States or by a state or territory of the United States, which collateral shall consist of one or more of the following:
(A) A principal amount of first mortgage bonds or notes conforming to the requirement of any one or more of paragraphs (2), (3), (4), (5), and (6) of this section;
(B) A principal amount of obligations secured as hereinafter in this subsection provided;
(C) A principal amount of obligations of the United States;
(D) Cash; the aggregate to be not less than one hundred per cent of the aggregate principal amount of all bonds or notes secured thereby. The portion of such collateral referred to in clause (B) shall consist of obligations secured by a first lien on a principal amount of first mortgage bond or notes conforming to the requirements of any one or more of paragraphs (2), (3), (4), (5), and (6) of this section, or a principal amount of obligations of the United States or cash equal to not less than one hundred per cent of the aggregate principal amount of the obligation so secured thereby, and all such pledged securities including cash so securing the obligations shall have been deposited with a bank or trust company as trustee, which bank or trust company is incorporated under the laws of and subject to examination and supervision by the United States or by a state or territory of the United States.
(8) The commissioner of securities may receive registration by notification of other securities which are substantially of the same quality and description as one or more of the specific classes above named, although not specifically heretofore described.
(b) Procedure for registration by notification. Securities entitled to registration by notification shall be registered by the filing by the issuer or by any registered dealer interested in the sale thereof, in the office of the commissioner, of a statement with respect to the securities containing the following:
(1) Name of issuer, location and, if incorporated, place of incorporation;
(2) A brief description of the securities, including the amount of the issue;
(3) Amount of securities to be offered in the State;
(4) A statement of the amount of the issuer's income, expenses, and fixed charges during the last three years, certified to by a public accountant;
(5) A balance sheet showing the amount and general character of its assets and liabilities as of the last fiscal year immediately preceding, certified to by a public accountant;
(6) A brief statement of the facts which show that the securities fall within one of the classes in this section defined;
(7) The price at which the securities are to be offered for sale to the public;
(8) A statement that the issuer has complied with all the laws of the United States relating to the sale of securities; and
(9) Such further information as the commissioner may require.
All of the statements, exhibits, and documents of every kind required by the commissioner under this section, except properly certified public documents, shall be verified by the oath of the applicant or of the issuer in such manner and form as may be required by the commissioner.
In the case of securities falling within the class defined by subsection (a)(1) or (2), a copy of the circular to be used for the public offering shall be filed in the office of the commissioner with the statement or within two days thereafter or within such further time as the commissioner allows.
In the case of securities falling within the classes defined by subsection (a)(3), (4), (5), (6), and (7), the circular to be used for the public offering shall be filed with the statement.
The filing of such statement in the office of the commissioner and the payment of the fee hereinafter provided shall constitute the registration of the security. Upon such registration, the securities may be sold in the State by any registered dealer giving notice in the manner provided in section [485-14(m)] subject to the further order of the commissioner as hereinafter provided.
At the time of filing the statement, as prescribed in this section, the applicant shall pay to the commissioner a fee of one-twentieth of one per cent of the aggregate offering price of the securities to be offered in the State for which the applicant is seeking registration, but in no case shall the fee be more than $500. [L 1957, c 314, pt of §1; am L 1963, c 120, §2; Supp, §199-7; HRS §485-9; am L 1986, c 240, §1; am L 1996, c 181, §11]
Cross References
Modification of fee, see §92-28.