710 IAC 4-6-5 Preferred stock and debentures; unfair practices

Sec. 5. (a) The offering or proposed offering of preferred stock of an issuer shall be considered unfair and inequitable to public investors if the net earnings of the issuer for its last fiscal year prior to the public offering, exclusive of nonrecurring items, are insufficient to pay the dividends on the securities proposed to be offered to the public. (b) The offering or proposed offering of debt securities, including: (1) debentures; (2) notes; and (3) bonds; of an issuer, shall be considered unfair and inequitable to public investors if the cash flow of the issuer as adjusted for nonrecurring items and the issuance of the debt securities is insufficient to cover the interest on the securities proposed to be offered to the public. (c) Issuers in the promotional, exploratory, or developmental stage will not normally qualify to issue preferred stock or debt securities.