Section 710IAC4-6-6. Offerings of securities with high price to earnings multiples

   (a) Additional information shall be required to be submitted with the applications for registration of equity securities where the proposed offering price exceeds a prescribed multiple of recent earnings of the issuer.

  (b) In the case of application for registration of shares of common stock, where the maximum or proposed offering price exceeds a multiple of twenty-five (25) times the net earnings per share or another multiple as the commissioner may prescribe from time to time, the information prescribed in subsections (c) and (d) shall be submitted with the application as justification for the offering price.

  (c) Where there is no existing public market for the shares, comparative information shall be submitted justifying the fairness of the proposed offering price in relation to the current market prices of the shares of companies comparable to the issuer in terms of:

(1) size;

(2) industry;

(3) products; and

(4) other relevant factors.

Submission of an underwriter's memorandum on the issuer containing the foregoing information, prepared in connection with the proposed offering, shall satisfy the requirements of this subsection.

  (d) Where there is an existing public market for the shares, information shall be submitted justifying the adequacy of the public market, including:

(1) the number of shares owned by public shareholders;

(2) the number of shares traded during each of the preceding six (6) months;

(3) the number of transactions during each of the months;

(4) the number of shareholders at the beginning and end of the period;

(5) the names and locations of dealers regularly making a market in the shares and the newspapers; and

(6) financial publications where the shares are regularly quoted.

If there has been a significant increase in the price/earnings multiple of the issuer over the period, additional information shall be submitted accounting for the increase.

  (e) The information prescribed above shall not be required in the case of shares of common stock listed on any national securities exchange recognized by state law, nor in the case of shares of common stock of a newly organized issuer with no history of earnings.

  (f) No registration of equity securities shall provide directly or indirectly, for increases in the price of the securities offered based on the amount of securities sold in the offering. (Securities Division; 710 IAC 4-6-6; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA; readopted filed May 12, 2016, 1:47 p.m.: 20160608-IR-710160136RFA)