3 Alaska Admin. Code § 08.950

Current through October 17, 2024

Section 3 AAC 08.950 - Definitions

Unless the context requires otherwise, in AS 45.55 and this chapter, and in the forms, instructions, and orders of the administrator,

(1) repealed 4/19/2000;

(2) "affiliate" means a person who directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, another person;

(3) "applicant" means the person executing an application for the registration of securities, or registration as a broker-dealer, agent, investment adviser representative, or state investment adviser, or any person who will be engaged for all or part of the person's time in selling of securities, either as an executive officer, a dealer, an issuer, or as a salesman for a dealer or an issuer a person executing an application to file a notice in connection with a federal covered adviser or federal covered securities;

(4) "application" means the form prescribed by the administrator for filing in connection with the registration of securities, or as a broker-dealer, agent, investment adviser representative, or state investment adviser, or in connection with notice filings of federal covered securities or federal covered adviser, including all amendments, papers, documents and exhibits incidental thereto;

(5) "associate" means if used to indicate a relationship with a person,

(A) any corporation or legal entity, other than the issuer or majority-owned subsidiary of the issuer, of which a person is an officer, director, partner, or a direct or indirect legal or beneficial owner of five percent or more of any class of equity securities;

(B) a trust or other estate in which a person has a substantial beneficial interest or for which a person serves as a trustee or in a similar capacity; and

(C) a person's spouse and relatives, by blood or by marriage, if the person is a promoter of the issuer, its subsidiaries, its affiliates, or its parent;

(6) "certified" means certified by an independent certified public accountant in accordance with generally accepted accounting practices when used in connection with financial statements;

(7) "control" means the power to direct or influence the direction of the management or policies of a person directly or indirectly, through the ownership of voting securities, by contract or otherwise;

(8) "nonprofit corporation" means a corporation organized for any lawful purpose and no part of the net income inures to the benefit of any person;

(9) "division" means the division assigned securities functions in the Alaska Department of Commerce, Community, and Economic Development;

(10) "domestic corporation" means a corporation organized under AS 10.05;

(11) "foreign corporation" means a corporation organized under laws other than the laws of this state;

(12) "NASD" means the National Association of Securities Dealers, Inc.;

(13) "parent" means an affiliate controlling another person;

(14) "predecessor" means a person, a major portion of whose business assets or control has been acquired by another;

(15) "professional corporation" means a corporation organized under AS 10.45 to render a professional service;

(16) "promoter"

(A) means a person who

(i) alone or in conjunction with one or more persons, directly or indirectly, takes the initiative in founding or organizing the issuer or controls the issuer;

(ii) directly or indirectly receives, as consideration for services, property, or both, rendered, five percent or more of any class of the issuer's equity securities or five percent or more of the proceeds from the sale of any class of the issuer's equity securities;

(iii) is an officer or director of the issuer;

(iv) legally or beneficially owns, directly or indirectly, five percent or more of the issuer's equity securities; or

(v) is an affiliate or an associate of a person specified in (i)-(iv) of this subparagraph; and

(B) does not include

(i) a person who receives securities or proceeds solely as underwriting compensation if that person is not included in (A) of this paragraph; or

(ii) an unaffiliated institutional investor, who purchased the issuer's equity securities more than one year before the filing date of the issuer's registration statement; the administrator will, in the administrator's discretion, exclude an unaffiliated institutional investor, who purchased the issuer's equity securities on an arm's-length basis within one year before the filing date of the issuer's registration statement as a promoter, if the exclusion is consistent with the purposes of AS 45.55 and this chapter;

(17) "registrant" means an applicant for whom a registration has been declared effective;

(18) "SEC" means the Securities and Exchange Commission;

(19) "SECO" means the prevailing requirements of the SEC for brokers and dealers who are not members of the NASD;

(20) "underwriter" means any person who has agreed with the issuer or other person on whose behalf a distribution is to be made

(A) purchase securities for distribution;

(B) distribute securities for or on behalf of the issuer or other person; or

(C) manage or supervise a distribution of securities for or on behalf of the issuer or other person;

(21) "controlling person" means an officer, a director, a partner, a trustee, or an individual occupying similar status or performing similar functions, or a person owning at least 10 percent of the outstanding shares of securities of a person;

(22) "custody of client funds or securities" means for a state investment adviser, the state investment adviser directly or indirectly holds client funds or securities, has authority to obtain possession of client funds or securities, or has the ability to appropriate the client funds or securities, except a state investment adviser is not considered as having constructive custody of a client's funds or securities, if such possession is for the sole purpose of immediately forwarding those funds or securities to a third party at the request of the client;

(23) "discretionary authority over client funds or securities" means, for a state investment adviser, the state investment adviser has a power of attorney or other evidence, including investment advisory contracts, granting discretionary authority by any client to the state investment adviser, or means the state investment adviser exercises discretionary power in violation of AS 45.55.023(a)(2);

(24) "equity securities" means shares of common stock or similar securities and convertible securities, warrants, options, or rights that may be converted into or exercised to purchase shares of common stock or similar securities;

(25) "independent director" means a member of the issuer's board of directors who

(A) is not an officer of the issuer, its subsidiaries, or their affiliates, and has not been an officer, or employee of the issuer, its subsidiaries, or their affiliates or associates within the last two years;

(B) is not a promoter; and

(C) does not have a material business or professional relationship with the issuer or any of its affiliates or associates; for purposes of determining whether a business or professional relationship is material, the gross revenue derived by the independent director from the issuer, its affiliates, and associates is considered material per se if it exceeds five percent of the independent director's

(i) annual gross revenue, derived from all sources, during either of the last two years; or

(ii) net worth, on a fair market value basis;

(26) "NASAA" means the North American Securities Administrators Association, Inc.;

(27) "NASDR" means the National Association of Securities Dealers Regulation, Inc.;

(28) "net earnings" means the issuer's after-tax earnings that are derived from its normal operations, exclusive of extraordinary and nonrecurring items, determined according to generally accepted accounting principles, consistently applied;

(29) "person" has the meaning given in AS 45.55.990(9);

(30) "promotional or development stage company" means an issuer who is not listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ National Market System, or whose annual net earnings for each of the last two consecutive fiscal years or whose average, annual net earnings for the last five fiscal years before the public offering have been less than five percent of the aggregate public offering;

(31) "promotional shares" means equity securities that are to be issued or were issued

(A) by an issuer, which is a promotional or development stage company, to promoters for cash or other consideration, including services rendered, patents, copyrights, and other intangibles; or

(B) within three years before the filing of the registration statement by an issuer, which is not a promotional or development stage company, to promoters for cash or other consideration, including services rendered, patents, copyrights, and other intangibles;

(32) "unaffiliated institutional investor" means an unaffiliated

(A) bank or savings and loan company;

(B) investment company registered under 15 U.S.C. 80 a (Investment Company Act of 1940);

(C) business development company as defined in 15 U.S.C. 80 a (Section 2(a)(48) of the Investment Company Act of 1940);

(D) small business investment company licensed by the United States Small Business Administration under 15 U.S.C. 681 (Section 301 of the Small Business Investment Act of 1958);

(E) employee benefit plan, within the meaning of 29 U.S.C. 1002 (Title I of the Employee Retirement Income Security Act of 1974), and state and local government employees retirement and pension plans;

(F) insurance company;

(G) trust company;

(H) private business development company, as defined in 15 U.S.C. 80b-2 (Section 202(a)22 of the Investment Advisors Act of 1940), or a comparable business entity, that is engaged as a substantial part of its business in the purchase and sale of securities, and that will own less than twenty percent of the issuer's securities upon completion of the public offering; or

(I) qualified purchaser as defined under 15 U.S.C. 80 a - 2(a)(51) (sec. 209(b) of the National Securities Markets Improvement Act of 1996);

(33) "accredited investor" has the meaning given in 17 C.F.R. 230.501(a), as revised as of October 1, 2013 and adopted by reference;

(34) "adjusted net earnings" means the issuer's net earnings, after charges for interest and dividends, and adjusted on a pro forma basis to reflect

(A) the elimination of any required charges for debt, debt securities, or preferred stock that are to be redeemed or retired from the proceeds derived from the public offering of preferred stock;

(B) the effect of any acquisitions or capital expenditures that materially affect the issuer's net earnings, and that

(i) were made by the issuer after its last fiscal year; or

(ii) are proposed or required to be made by the issuer during its current fiscal year;

(C) the effect of charges or dividends on debt, debt securities, or preferred stock issued after the issuer's last fiscal year;

(D) the effect of any charges or dividends on debt, debt securities, or preferred stock that were issued during the issuer's last fiscal year, but that were outstanding for only a portion of that fiscal year, as if charges or dividends on the debt, debt securities, or preferred stock had been outstanding for the entire fiscal year; and

(E) the effect of any other material changes to an issuer's future net earnings;

(35) "aggregate public offering" means the dollar amount of the whole public offering;

(36) "aggregate revenues" means the aggregate amount of revenues a promotional or development stage company has received within the last three consecutive fiscal years immediately preceding the public offering plus revenues received during the period covered by any interim period for financial information included in the prospectus, excluding revenues from interest and extraordinary items;

(37) "average promotional price" means the average per share price paid for promotional shares and other shares issued before the public offering that are of the same class of shares being offered in the public offering; "average promotional price" is determined by reference to the audited financial statements of the issuer included in the prospectus;

(38) "cash analysis" means a calculation of the issuer's net cash provided by operating activities, as reflected on the statement of cash flows and presented in conformity with generally accepted accounting principles; if debt securities are to be redeemed or retired from the proceeds from the public offering, a pro forma adjustment for the elimination of the related interest charges, net of applicable income taxes, must be made;

(39) "CRD" means the Central Registration Depository within the NASDR;

(40) "depositor" means a promoter who is required to deposit promotional shares into escrow in accordance with 3 AAC 08.180 - 3 AAC 08.186;

(41) "escrow agent" means

(A) a financial institution

(i) whose principal place of business and domicile is in the United States; and

(ii) that is not affiliated with the issuer, promoters of the issuer, or associates of the issuer, except that the issuer, promoters of the issuer, or associates of the issuer may be customers of the financial institution; or

(B) an attorney or certified public accountant, if the attorney or certified public accountant is not affiliated with the issuer, its promoters, or associates, is licensed to do business in the state in which the attorney or certified public accountant practices, and can demonstrate that the attorney or certified public accountant is adequately insured or can provide a fidelity bond;

(42) "face-amount certificate company" has the meaning given in 15 U.S.C. 80 a - 4(l) (sec. 4(l) of the Investment Company Act of 1940);

(43) "FDIC" means Federal Deposit Insurance Corporation;

(44) "firmly underwritten offering" means an offering that is purchased by the broker-dealer, who assumes the risk of distribution;

(45) "impoundment agent" means a financial institution that is domiciled and whose principal place of business is located in the United States and whose deposits are insured by the FDIC;

(46) "investment adviser representative," as defined in AS 45.55.990, does not include this state, an executive department of this state, or an employee of this state, if engaged in the normal course of official duties;

(47) "investment company" has the meaning given in 15 U.S.C. 80a-3 (sec. 3 of the Investment Company Act of 1940);

(48) "lock-in agreement" means an agreement between an issuer and persons who hold promotional shares in which the issuer and those persons agree, as a condition of registration and for the period specified in the lock-in agreement, not to sell, pledge, hypothecate, assign, grant any option for the sale of, or otherwise transfer or dispose of, whether or not for consideration, directly or indirectly, promotional shares and all certificates representing stock dividends, stock splits, recapitalizations, or similar transactions, that are granted to or received by the security holder;

(49) "'minimum-maximum' offering" means an offering in which the risk of distribution stays with the issuer, the broker-dealer agrees to use best efforts to sell the securities, and a minimum and maximum amount of proceeds is set to determine when the offering closes;

(50) "national securities exchange" means an exchange that has been registered as a national securities exchange as required by 15 U.S.C. 78 e - 78f (secs. 5-6 of the Securities Act of 1934);

(51) "NCUSIF" means the National Credit Union Share Insurance Fund;

(52) "nonprofit corporation" means a corporation

(A) that is organized for any lawful purpose; and

(B) from which no part of the net income inures to the benefit of any person;

(53) "open-end management company" means a management company as defined in 15 U.S.C. 80 a - 4(3) (sec. 4(3) of the Investment Company Act of 1940) and classified according to the definition in 15 U.S.C. 80 a - 5(a)(1) (sec. 5(a)(1) of the Investment Company Act of 1940);

(54) "professional geologist" means a geologist certified under AS 08.02.011, or under the applicable occupational licensing statutes and regulations of another state;

(55) "public offering price" means the per share price at which a promotional or development stage company proposes to offer equity securities to the public;

(56) "qualified mining engineer" means an engineer registered under AS 08.48 and 12 AAC 36, or under the applicable occupational licensing statutes and regulations of another state, who has specialized knowledge and skills in the field of mining;

(57) "registered engineer" means an engineer registered under AS 08.48 and 12 AAC 36, or under the applicable occupational licensing statutes and regulations of another state;

(58) "registered land surveyor" means a land surveyor registered under AS 08.48 and 12 AAC 36, or under the applicable occupational licensing statutes and regulations of another state;

(59) "state" has the meaning given in AS 45.55.990;

(60) "state investment adviser," as defined in AS 45.55.990, does not include this state, an executive department of this state, or an employee of this state, if engaged in the normal course of official duties;

(61) "unit investment trust" has the meaning given at 15 U.S.C. 80 a - 4(2) (sec. 4(2) of the Investment Company Act of 1940);

(62) "issuer," as defined in AS 45.55.990,

(A) includes a viatical settlement provider or other person that purchases or otherwise acquires a viatical settlement contract for the purpose of selling a viatical settlement interest in the contract; and

(B) for purposes of (A) of this paragraph, does not include a broker-dealer, agent, viator, or insured;

(63) "life insurance policy" includes a certificate of life insurance under a group insurance policy;

(64) "owner of a life insurance policy" means the person that is the original owner or subsequent assignee or transferee, and that has had a bona fide insurable interest in a life insurance policy, if that policy insures the life of an individual who has the right to assign, transfer, sell, devise, or bequeath the benefits of the life insurance policy and who enters or seeks to enter into a viatical settlement contract; "owner of a life insurance policy" does not include

(A) a viatical settlement purchaser;

(B) a viatical settlement provider;

(C) a person acquiring the policy or interest in a policy from a viatical settlement provider; or

(D) an independent third party trustee or escrow agent;

(65) "viatical settlement contract"

(A) means a written agreement between a viator or insured and a viatical settlement provider for the sale, assignment, transfer, devise, or bequest to the viatical settlement provider by the viator or insured of all or a portion of the death benefit or ownership of a life insurance policy, for consideration that is less than the expected death benefit of the life insurance policy;

(B) includes a contract for a loan or other financial transaction secured primarily by an individual or group life insurance policy; and

(C) does not include

(i) a loan by a life insurance company under the terms of a life insurance contract;

(ii) a loan secured by the cash value of a policy;

(iii) the assignment of a life insurance policy as collateral for a loan to a bank, saving bank, savings and loan association, credit union, or other licensed lending institution;

(iv) the exercise by the viator of an accelerated benefits provision under the terms of the life insurance contract; or

(v) the assignment, transfer, sale, devise, or bequest of a life insurance policy, for less than the expected death benefit, by the viator to a friend or family member if the friend or family member does not enter into more than one agreement in a calendar year;

(66) "viatical settlement financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a life insurance policy from a viatical settlement provider, credit enhancer, reinsurer, or person that is a party to a viatical settlement contract and that has a direct ownership in a life insurance policy that is the subject of a viatical settlement contract but whose sole activity related to the transaction is providing funds to effect the viatical settlement contract and that has an agreement in writing with a viatical settlement provider to act as a participant in a viatical settlement financing transaction;

(67) "viatical settlement financing transaction" means a transaction in which a viatical settlement provider or a viatical settlement financing entity obtains financing for viatical settlement contracts, viaticated policies, or interests in those contracts or policies; "viatical settlement financing transaction" includes secured or unsecured financing, a securitization transaction or securities offering either registered or exempt from registration under federal and state securities law, or a direct purchase of interests in that policy, if that financing transaction complies with federal and state securities law;

(68) "viatical settlement interest" means the entire interest or any fractional interest in a life insurance policy or in the death benefit under a life insurance policy that is the subject of a viatical settlement contract; "viatical settlement interest" does not include the initial purchase from the viator by a viatical settlement provider;

(69) "viatical settlement provider" means a person, other than a viator or insured, that enters into a viatical settlement contract, including a person that

(A) obtains financing for the purchase, acquisition, transfer or other assignment of a viatical settlement contract, viaticated policy, or interest in viatical settlement contracts or viaticated policies; or

(B) sells, assigns, transfers, pledges, hypothecates, or disposes of a viatical settlement contract, viaticated policy, or interest in viatical settlement contracts or viaticated policies;

(70) "viatical settlement purchase agreement" means a contract or agreement, entered into by a viatical settlement purchaser for the purpose of deriving an economic benefit and to which the owner of a life insurance policy is not a party, to purchase that life insurance policy or an interest in that life insurance policy for an amount that is less than the death benefit payable under the policy;

(71) "viatical settlement purchaser" means a person that, for the purpose of deriving an economic benefit, gives money or other consideration for a life insurance policy or an interest in the death benefits of a life insurance policy that is the subject of a viatical settlement contract; "viatical settlement purchaser" does not include an issuer, a viatical settlement financing entity, or a special purpose entity that is created solely to act as a financing source for the viatical settlement provider;

(72) "viaticated policy" means a life insurance policy that has been acquired by a viatical settlement provider under a viatical settlement contract;

(73) "viator" means the owner of a life insurance policy insuring the life of an individual who enters or who seeks to enter a viatical settlement contract; "viator" does not include a viatical settlement provider or a person that acquires a viaticated policy or a fractional interest in a viaticated policy from a viatical settlement provider or a subsequent viatical settlement purchaser.

(74) "FINRA" means the Financial Industry Regulatory Authority, formerly NASD.

(75) "institutional buyer" has the meaning given in 17 C.F.R. 230.144A, as revised as of October 1, 2013, and adopted by reference.

(76) "EFD system" means the Electronic Filing Depository system provided by the North American Securities Administrators Association.

3 AAC 08.950

Eff. 2/20/72, Register 41; am 10/1/99, Register 151; am 4/19/2000, Register 154; am 4/20/2000, Register 154; am 12/7/2006, Register 180; am 3/4/2015, Register 213, April 2015; am 1/17/2016, Register 217, April 2016; am 11/26/2016, Register 220, January 2017

As of Register 171 (October 2004), the regulations attorney made technical revisions under AS 44.62.125(b)(6) to reflect the name change of the Department of Community and Economic Development to the Department of Commerce, Community, and Economic Development made by ch. 47, SLA 2004 and the corresponding title change of the commissioner of community and economic development.

Authority:AS 45.55.950

AS 45.55.990