Section 203.141. Sales to existing securityholders

(a) The exemption contained in section 203(n) of the act (70 P. S. § 1-203(n)) shall only be available for the offer and sale of equity securities when the following exist:

(1) The offer is made to existing securityholders of a class of a series of the issuer’s issued and outstanding equity securities, although the offer need not be made to all the classes or series.

(2) The offer is made pro rata to all such security holders who are, of record, residents of this Commonwealth.

(3) No commission or other remuneration, other than a standby commission, is paid or given, directly or indirectly, for soliciting a securityholder in this Commonwealth.

(b) The exemption contained in section 203(n) of the act (70 P. S. § 1-203(n)) shall only be available for the offer and sale of debt securities when the following exists:

(1) The offer is made to existing securityholders of a class of a series of the issuer’s issued and outstanding equity securities, although the offer need not be made to all the classes or series.

(2) No commission or other remuneration, other than a standby commission, is paid or given, directly or indirectly, for soliciting a securityholder in this Commonwealth.

(c) For purposes of subsection (a)(2), an offer will be deemed to have been made pro rata when the following exists:

(1) The initial offer is made pro rata; and

(2) After the expiration of a reasonable period of time following the initial offer, an indentified securityholder acquires securities in an amount exceeding a pro rata share on terms and conditions fully disclosed to the affected securityholders.

(d) For purposes of this section, the term ‘‘securityholder’’ is limited to persons who at the time of offers and sales under the exemption contained in section 203(n) of the act (70 P. S. § 1-203(n)) are holders of equity securities, including by way of illustration, holders of: common stock, preferred stock, securities convertible into common or preferred stock; nontransferable warrants to purchase any of the foregoing, and transferable warrants exercisable within not more than 90 days of their issuance, to purchase any of the foregoing; provided, that the term ‘‘securityholder’’ shall not include persons who are holders of equity securities issued in violation of or without compliance with the act and the rules and regulations adopted thereunder.

(e) For purposes of this section, the term ‘‘class’’ includes equity securities of an issuer which are of substantially similar character, the holders of which enjoy substantially similar rights and privileges.

(f) For purposes of this section, the term ‘‘standby commission’’ means the commission payable to a broker-dealer registered under the act for its firm commitment to purchase securities offered to existing securityholders which are not purchased by the securityholders.

(g) For purposes of this section, the term ‘‘pro rata’’ means the offering will be made in this Commonwealth proportionately on the basis of the number of shares owned by the existing securityholder or the securityholder’s percentage ownership interest in the issuer. By way of illustration, an offering will be deemed to have been made on a pro rata basis where the issuer offers its existing securityholder an opportunity to purchase one new share of stock for each five shares owned as of a record date or when the issuer offers an existing security- holder owning 3% of the issuer’s stock as of a record date, the opportunity to purchase 3% of the issuer’s current offering.

The provisions of this § 203.141 adopted May 31, 1974, effective June 1, 1974, 4 Pa.B. 1085; amended January 28, 1994, effective January 29, 1994, 24 Pa.B. 653; corrected May 29, 1998, effective May 7, 1994, 28 Pa.B. 2509; amended December 30, 1999, effective January 1, 2000, 30 Pa.B. 18; transferred and renumbered from 64 Pa. Code § 203.141, December 14, 2012, effective December 15, 2012, 42 Pa.B. 7533. Immediately preceding text appears at serial pages (324411) to (324413).

Notation

Authority

The provisions of this § 203.141 amended under sections 202(g) and (i), 203(d), (i.1), (j) and (n)—(t), 204(a), 205(b), 207(g), (j.1) and (n), 209(b), 211(a) and (b), 504(d), 513, 603(a), 606(d) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P. S. § § 1-202(g) and (i), 1-203(d), (i.1), (j) and (n)—(t), 1-204(a), 1-205(b), 1-207(g), (j.1) and (n), 1-209(b), 1-211(a) and (b), 1-504(d), 1-513, 1-603(a), 1-606(d) and 1-609(a)).