44-1871

44-1871. Securities that may be registered by
description

A. Securities, except real property investment contracts, may be registered by
description in the manner provided in sections 44-1872 through 44-1875 if either of the
following applies:

1. If such securities are commodity investment contracts or commodity option
contracts and the financial condition of the party filing the registration statement
meets the requirements specified by any rule of the commission.

2. If securities are of an issuer that both:

(a) Has been in continuous operation for not less than three years.

(b) Has shown, for a period of not less than three years during the five years
prior to the date of registration, average annual net income adjusted by adding back
interest expenses net of applicable income tax benefits arising therefrom of securities
to be retired out of the proceeds of sale, as follows:

(i) In the case of interest-bearing securities, not less than one and one-half
times the annual interest charges on the securities and on all other outstanding
interest-bearing securities of equal rank.

(ii) In the case of securities having a specified dividend rate, not less than one
and one-half times the annual dividend requirements on the securities and on all
outstanding securities of equal rank.

(iii) In the case of securities wherein no dividend rate is specified, not less
than five per cent calculated by dividing the adjusted average annual net income by the
product of the number of all outstanding securities of equal rank at the completion of
the offering and the maximum price at which any of the securities are to be offered for
sale.

B. An issuer who owns more than fifty per cent of the outstanding voting stock of a
corporation is permitted to include the earnings of the corporation applicable to the
payment of dividends on the stock so owned in the earnings of the issuer of the
securities being registered by description.