1. (a) Corporate licensees. A corporate licensee shall not guarantee a security issued by an affiliated company pursuant to a public offering, nor hypothecate its assets to secure the payment or performance of the obligations evidenced by a security issued by an affiliated company pursuant to a public offering, without first obtaining the prior approval of the Arkansas Racing Commission.

2. (b) Public offerings of affiliated companies. Prior approval of the Arkansas Racing Commission is required for any public offering of any securities of an affiliated company:

   1. (1) Which is not a publicly traded corporation if the securities will be offered by such an affiliated company or by a controlling person thereof; or

   2. (2) Which is a publicly traded corporation if the securities will be offered by such affiliated company and if such securities or the proceeds from the sale thereof are intended to be used:

      1. (A) To pay for construction of gaming facilities in Arkansas to be owned or operated by the affiliated company or a subsidiary of the affiliated company;
      2. (B) To acquire any direct or indirect interest in gaming facilities in Arkansas;
      3. (C) To finance the operation by the affiliated company or a subsidiary of such affiliated company of gaming facilities in Arkansas; or
      4. (D) To retire or extend obligations incurred for one (1) or more such purposes.

3. (c) Continuous or delayed public offerings.

   1. (1) An affiliated company which is a publicly traded corporation may apply for approval of a continuous or delayed public offering of its securities if such an affiliated company:

      1. (A) Has a class of securities listed on either the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Automatic Quotation System, or has stockholders’ equity in an amount of ten million dollars ($10,000,000) or more as reported in its most recent report on Form 10-K or Form 10-Q filed with the Securities and Exchange Commission immediately preceding the application; and
      2. (B) Has filed all reports required to be filed by Section 13 or Section 15(d) of the Federal Securities Exchange Act, or in the case of a foreign issuer or foreign private issuer, pursuant to Regulations 13d-16 and 15a-16 of the Federal Securities Exchange Act, during the preceding twelve (12) months, or for such a shorter period that such affiliated company has been required to file such reports.

   2. (2)

      1. (A) The Arkansas Racing Commission may grant approval of a continuous or delayed offering for a period of up to three (3) years.
      2. (B) An approval granted pursuant to this subpart does not constitute an approval of other related transactions for which separate Arkansas Racing Commission approval is otherwise required by this part adopted by the Arkansas Racing Commission.

   3. (3)

      1. (A) If an application is approved, the affiliated company shall notify the Arkansas Racing Commission of its intent to make the public offering and identify the type and amount of securities it proposes to sell and the date on which it is anticipated the sale will occur.
      2. (B) If such notification is not written, it must be followed, as soon as practicable, with a written confirmation which need not precede such sale.

4. (d) Public offerings by entities not presently licensees or affiliated companies.

   1. (1) Any entity that is not a licensee or an affiliated company or otherwise subject to the provisions of the act or the rules which plans to make a public offering of securities intending to use such securities, or the proceeds from the sale thereof, to construct gaming facilities in Arkansas to be operated by the entity, or a subsidiary of the entity, or any other corporation or other form of business organization under common control with the entity, to acquire any direct or indirect interest in gaming facilities in Arkansas, to finance the operation by the entity, or a subsidiary of the entity, or any other corporation or other form of business organization under common control with the entity, of gaming facilities in Arkansas, or to retire or extend obligations incurred for one (1) or more such purposes, may apply to the Arkansas Racing Commission for prior approval of such an offering.
   2. (2) The Arkansas Racing Commission may act on any such application.
   3. (3) Any entity which submits an application pursuant to this subpart shall pay all costs connected with the processing of the application including but not limited to investigative costs.
   4. (4) An approval sought under this subpart will not include a finding regarding the suitability of the individuals involved.
   5. (5) The Arkansas Racing Commission may find an entity unsuitable based solely on the fact that it did not submit an application pursuant to subdivision (d)(1) of this section, unless the Arkansas Racing Commission has ruled pursuant to subdivision (d)(6) of this section that it is not necessary to submit an application pursuant to subdivision (d)(1) of this section.

   6. (6) Upon receipt of a written request for a ruling, the Arkansas Racing Commission may issue an administrative ruling that it is not necessary for an entity to submit an application pursuant to subdivision (d)(1) of this section upon review of such factors as the Arkansas Racing Commission deems appropriate, including but not limited to the following:

      1. (A) The standards enumerated in this part;
      2. (B) Whether the entity has any applications pending before the Arkansas Racing Commission and if so, the nature of such applications;
      3. (C) The operational and ownership structure and history of the entity;
      4. (D) A description of the regulatory authorities that the entity is subject to the jurisdiction of and the entity’s regulatory history; and
      5. (E) Such other facts as the Arkansas Racing Commission may deem relevant and material.

   7. (7)

      1. (A) Any entity for which the Arkansas Racing Commission has approved an application submitted pursuant to subdivision (d)(1) of this section shall cause the following statement to be included in the prospectus, offering circular, or other offering document, or if such a document is not required by law, the offeror shall maintain adequate records that the statement was furnished to potential investors, for the public offering which was approved by the Arkansas Racing Commission.
      2. (B) Because proceeds of this offering are to be used in connection with gaming facilities in Arkansas, the entity making the offering voluntarily sought and received approval of the Arkansas Racing Commission to make the offering.
      3. (C) That approval relates solely to the terms of the offering.
      4. (D) It does not constitute a finding that the entity has been or will be found qualified to be involved with gaming activities in Arkansas for which a separate Arkansas Racing Commission approval will be required.
      5. (E) It also does not involve a finding by the Arkansas Racing Commission as to the accuracy or adequacy of this part.

5. (e) Certain public offerings and stockholder approvals. The Arkansas Racing Commission may find a publicly traded corporation unsuitable to be a holding company of a corporate licensee if:

   1. (1) At a time when the applicant was not subject to the jurisdiction of the Arkansas Racing Commission it made a public offering of securities intending to use such securities, or the proceeds from the sale thereof, to construct gaming facilities in Arkansas to be operated by the applicant, or a subsidiary of the applicant, or any other corporation or other form of business organization under common control with the applicant, to acquire any direct or indirect interest in gaming facilities in Arkansas, to finance the operation by the applicant, or a subsidiary of the applicant, or any other corporation or other form of business organization under common control with the applicant, of gaming facilities in Arkansas, or to retire or extend obligation incurred for one (1) or more such purposes; or
   2. (2) At a time when the applicant was not subject to the jurisdiction of the Arkansas Racing Commission it obtained the approval or consent of its stockholders to have a material involvement with gaming in the State of Arkansas, and in connection with such offering, approval, or consent, it did not make a full disclosure of all material facts to the offerees or its stockholders relating to such material involvement including, without limitation, a description of the nature and scope of the state and applicable local laws of Arkansas regarding gaming control.
6. (f) Approval of securities issuable on exercise of options or warrants or conversion of other securities. If the Arkansas Racing Commission approves a public offering of securities which involves securities issuable on exercise of purchase rights, such approval is deemed continuing for the entire period of exercisability or convertibility and further approval is not required for the actual issuance of such securities.

7. (g) Application for approval of public offering.

   1. (1) A person applying for approval of a public offering pursuant to this part shall make a full disclosure of all material facts relating thereto to the Arkansas Racing Commission.

   2. (2) To the extent applicable, the application must include the following information:

      1. (A) A description of the securities to be offered;
      2. (B) The terms upon which the securities are to be offered;
      3. (C) The gross and net proceeds of the offering, including a detailed list of expenses;
      4. (D) The use of proceeds;
      5. (E) The name and address of the lead underwriter and the participating underwriters, if any;
      6. (F) The forms of the underwriting agreement, the agreement among underwriters, if any, and the selected dealer’s agreements, if any;
      7. (G) A statement of intended compliance with all applicable federal, state, local, and foreign securities laws;
      8. (H) The names and addresses of the applicant’s general counsel, local counsel, special securities counsel, independent auditors, and any special consultants on the offering;
      9. (I) If any securities to be issued are not to be offered to the general public, the names and addresses of the other offerees and the form of the offering thereto; and
      10. (J)

8. (i) True copies or descriptions of all papers filed with the Securities and Exchange Commission and all material communications between the applicant and the Securities and Exchange Commission or, if the offering is not subject to the registration requirements of Section 5 of the Federal Securities Act other than by reason of an exemption contained in Regulation A adopted pursuant to Section 3 of said Act, copies or descriptions of all papers filed with, and all material communications between the applicant and such other governmental entity charged with securities regulation, if any.

   1. (ii) A copy of each registration statement and each amendment thereto must be filed with the Arkansas Racing Commission by the end of the next business day after their filing with the Securities and Exchange Commission.

      1. (iii) All other papers required to be included pursuant to this subsection must be filed with the Arkansas Racing Commission as soon as practicable.

9. (h) Coordination.

   1. (1) The Arkansas Racing Commission will ordinarily permit an application for approval of a public offering pursuant to this subpart to be completed over a period of time as documents and information become available in accordance with the normal and customary practice in the securities industry.
   2. (2) An application may be filed without all the information required by this part if all such information required by the Arkansas Racing Commission is supplied prior to the sale of the securities.

Codification Notes: The Securities Act of 1933 is codified at 15 U.S.C. § 77a et seq. The Securities and Exchange Act of 1934 is codified at 15 U.S.C. § 78a et seq.