Section 830-X-4-.10 - Preferred Stock Or Debt Securities (Alabama Administrative Code)

§ 830-X-4-.10. Preferred Stock Or Debt Securities

(1) Issuers in a promotional or development phase will not normally qualify to issue preferred stock or debt securities.

(2) An issuer of preferred stock should have earnings after provision for federal income taxes determined in accordance with generally accepted accounting principles for the last fiscal year, excluding extraordinary items, sufficient to pay the dividends on the securities to be offered to the public and there shall be no indication that during the current fiscal year earnings, excluding extraordinary items, will not be less than the required amount to pay dividends on the securities to be offered to the public.

(3) An issuer of debt securities should have earnings before provision for federal income taxes determined in accordance with generally accepted accounting principles for the last fiscal year, excluding extraordinary items, sufficient to pay the interest on the securities to be offered to the public and there shall be no indication that during the current fiscal year earnings, excluding extraordinary items, will not be less than the required amount to pay interest on the securities to be offered to the public.

(4) All debt securities must be issued under a trust indenture with a bank acting as trustee. The trust indenture must comply with the provisions of the Trust Indenture Act of 1939, whether or not the indenture is required to be qualified under the Act. The indenture must contain a provision for a sinking fund sufficient to retire approximately 75% of the debt prior to maturity unless the debt is to mature serially or the debt has a short-term maturity (5 years or less).

Author:

(Filed September 30, 1982. Readopted: Filed November 9, 1983.)

Statutory Authority: Code of Ala. 1975, § 8-6-23.

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