§ 830-X-4-.12. Escrow Of Securities
(1) In circumstances where there is a substantial disparity between the proposed public offering price of securities and the consideration paid by promoters or insiders for such securities or if securities have been issued or are intended to be issued for any patent right, copyright, trademark, process, formula, goodwill, promotion fees or expenses, going concern value of other intangible assets, the Commission may require as a condition to the registration of securities an escrow of all or part of the securities issued to promoters or insiders.
(2) The escrow agreement shall be in a form suitable to the Commission and shall provide that the owners of such securities shall not be entitled to sell or transfer the securities or withdraw the securities from escrow until:
(a) The company has each year for two consecutive fiscal years net earnings after payment of federal income taxes equal to 5 percent (5%) of the initial public offering price times the average number of shares of the company's common stock outstanding in each respective year, or
(b) All shareholders shall have been paid a dividend or dividends aggregating not less than 6% of the initial offering price shown to the satisfaction of the Commission to have been actually earned on the investment.
(3) In the event of a voluntary or involuntary dissolution, the owners of such escrowed securities shall not participate in the assets until the owners of all other securities have been paid in full.
Author:(Filed September 30, 1982. Readopted: Filed November 9, 1983.)
Statutory Authority: Code of Ala. 1975, § 8-6-23.
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