Section 202.030. Commercial paper

(a) The exemption contained in section 202(c) of the act (70 P. S. § 1-202(c)) is available for any security which is a Federally-covered security by reason of being an exempt security under section 3(a)(3) of the Securities Act of 1933 (15 U.S.C.A. § 77c(3)) as interpreted by Release 33-4412 (26 FR 9158 (1961)) issued by the United States Securities and Exchange Commission which provides that:

(1) The commercial paper shall be prime quality of a type not ordinarily purchased by the general public.

(2) The commercial paper is of a type eligible for discounting by banks which are members of the Federal Reserve System.

(3) The commercial paper is not payable on demand and does not contain a provision for an automatic ‘‘rollover.’’

(4) The commercial paper is issued to facilitate current operational business requirements.

(5) The proceeds of the commercial paper are not used to:

(i) Discharge existing indebtedness unless the indebtedness is itself exempt under section 3(a)(3) of the Securities Act of 1933.

(ii) Purchase or construct a plant facility.

(iii) Purchase durable machinery or equipment.

(iv) Fund commercial real estate development or financing.

(v) Purchase real estate mortgages or other securities.

(vi) Finance mobile homes or home improvements.

(vii) Purchase or establish a business enterprise.

(b) For purposes of this section, ‘‘prime quality’’ means that the commercial paper has been rated in one of the top three rating categories by a Nationally recognized statistical rating organization.

(c) When commercial paper is being issued by a holding company for a bank, as that term is defined in section 102(d) of the act (70 P. S. § 1-102(d)), the commercial paper shall bear a prominent legend in bold face type of at least 12 points in size indicating that the commercial paper:

(1) Has not been issued by the bank for which the issuer is the holding company.

(2) Is not a deposit of the bank covered by Federal deposit insurance.

(d) No public media advertisement or mass mailing may be made in connection with soliciting offers or sales of commercial paper; provided, that nothing in this section limits mailings to institutional investors or broker-dealers, as those terms are defined in the act and this subpart.

The provisions of this § 202.030 amended July 11, 2003, effective July 12, 2003, 33 Pa.B. 3365; transferred and renumbered from 64 Pa. Code § 202.030, December 14, 2012, effective December 15, 2012, 42 Pa.B. 7533. Immediately preceding text appears at serial pages (317562) to (317563).

Notation

Authority

The provisions of this § 202.030 amended under sections 202(a), (c), (e) and (i) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P. S. § § 1-202(a), (c), (e) and (i) and 1-609(a)).