Section R164-11-7b - Fund ImpoundA. Preliminary Notes (1)R164-11-7 b applies only to public offerings which are registered by qualification pursuant to Section 10 of the Utah Uniform Securities Act (the "Act") and the rules thereunder.(2) This R164-11-7b and R164-10-2 both require certain documents to be filed and provide that failure to comply with these requirements is cause for denial, suspension or revocation of the effectiveness of a registration statement.(3) This rule R164-11-7 b is a statement of what has been the position of the Utah Securities Division (the "Division") in the past under Rule A67-03-12 and applies to all registration statements which become effective on or after May 10, 1983.B. Term of Impound (1) The applicant for registration by qualification under Section 10 of the Act and the rules thereunder may choose a term of not less than one month and not more than one year from the effective date of the registration statement.(2) The term of the impound shall be expressed by the number of months and shall not be expressed by the number of days.C. Amount to be Impounded (1) The amount to be impounded shall be the greater of:(a) Twenty-five percent of the aggregate offering price of the securities to be registered plus offering expenses; OR(b) The minimum amount required to sustain the business proposed by the registrant for one full year from the release of the impound; OR(c) The minimum amount proposed to be sold by the applicant pursuant to the registration statement.D. Where Funds are to be Impounded Funds may be impounded at any federal or state bank or savings institution.
E. Conditions of Impound (1) The applicant shall file a completed FORM 11-7b with the Division as part of the registration statement.(2) The conditions of impound are stated on FORM 11-7b and are herein incorporated as requirements of this R164-11-7 b.F. Release of Impounded Funds (1) The impounded funds shall be released only by an ORDER OF THE DIVISION.(2) The impounded funds shall be released to the registrant where: (a) All registration requirements which, pursuant to the rules of the Division needed to be met by such date, have been met;(b) The registrant requests the release in writing; and(c) The Division receives written confirmation from the financial institution impounding the funds of the amount which has been deposited into the impound.G. Certain Registrants Where the registrant in a registration by qualification is a security holder who is not conducting a public offering for or on behalf of the issuer of the securities which are to be sold in the offering, no fund impound is required by this R164-11-7b; provided, however, that where an offering has a "minimum" required to be sold in order to consummate the transaction, a fund impound is required.
Utah Admin. Code R164-11-7b