(a)

1. (1)

   1. (A) The terms “sale, assignment, transfer, pledge, or other disposition” extend to dispositions of any type of ownership referred to in this part.
   2. (B) Included within the meaning of the term “disposition” as used in this part are, without limitation, the following:

(i) The granting of a proxy in respect of a security (other than a proxy granted to a person who is licensed or found suitable to own securities of the same corporation or securities of an affiliate of that corporation), in which case the person to whom the proxy is granted is to be regarded as the transferee; and

1. (ii) Any transfer or disposition, whether or not for value, of any interest in the profits or proceeds (including without limitation interest payments, dividends, and other distributions by the issuer of a security) realized from the holding or disposition of a security.
2. (2) Issuer dispositions. Application for approval of any sale, assignment, transfer, pledge, or other disposition of a security to be made by the issuer thereof shall be made pursuant to this part.
3. (3) Procedures for obtaining approvals for transfers of outstanding securities. The provisions of this part shall govern all transfers for which approval is required.

(b) Persons who may be determined to be unsuitable.

1. (1) The following persons may be determined to be unsuitable within the meaning of this section:

   1. (A) Any person who, having been notified by the corporation or by the Arkansas Racing Commission of the requirement that such person be licensed, fails, refuses, or neglects to apply for such licensing within thirty (30) days after being requested to do so by the commission;
   2. (B) Any record holder of a security issued by a corporate licensee or a holding company who shall have failed, refused, or neglected, upon request of the commission, to furnish to the commission within thirty (30) days after such request, full, complete, and accurate information as to the beneficial ownership of such security; and
   3. (C) Any record owner of a security which is beneficially owned, in whole or in part, by a person determined to be unsuitable by the commission.

2. (2) Escrow of securities. The commission may, from time to time and at any time, require that securities issued by a corporate licensee be placed in escrow on specified terms and conditions.

   1. (c) Proscribed corporate activities in respect of persons found “unsuitable”. Beginning upon the date when the commission serves notice of a determination of unsuitability upon the corporation, it shall be grounds for disciplinary action for such corporation:
3. (1) To pay any person found to be unsuitable any dividend or interest upon any security held, as defined in this part, by such person;
4. (2) To recognize the exercise by any such unsuitable owner, directly or through any trustee or nominee, of any voting right conferred by such security;
5. (3) To pay to any such unsuitable owner any remuneration in any form for services rendered or otherwise; or

6. (4) To make any other payment or distribution, of any kind whatsoever, in respect of any such security, by way of or pursuant to payment of principal, redemption, conversion, exchange, or liquidation or any other transaction.

   1. (d) Statement required.
7. (1) Every security issued by a corporation, other than a publicly traded corporation, which holds a state gaming license must bear a statement, on both sides of the certificate, evidencing the security, of the restrictions imposed by this section.
8. (2) The statement required shall be substantially as follows: The sale, assignment, transfer, pledge or other disposition of this security is ineffective unless approved in advance by the Arkansas Racing Commission. If at any time such commission finds that an owner of this security is unsuitable to continue to have an involvement in gaming in such state, such owner must dispose of such security as provided by the laws of the State of Arkansas and the rules of the Arkansas Racing Commission thereunder. Such laws and rules restrict the right under certain circumstances: (a) to pay or receive any dividend or interest upon any such security; (b) to exercise, directly or through any trustee or nominee, any voting right conferred by such security; or (c) to receive any remuneration in any form from the corporation, for services rendered or otherwise.