[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR230.133]

[Page 470-472]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933--Table of Contents
 
Sec. 230.133  Definition for purposes of section 5 of the Act, of ``sale'', ``offer'', ``offer to sell'', and ``offer for sale''.

    (a) For purposes only of section 5 of the Act, no sale, offer to 
sell, or offer for sale shall be deemed to be involved so far as the 
stockholders of a corporation are concerned where, pursuant to statutory 
provisions in the state of incorporation or provisions contained in the 
certificate of incorporation, there is

[[Page 471]]

submitted to the vote of such stockholders a plan or agreement for a 
statutory merger or consolidation or reclassification of securities, or 
a proposal for the transfer of assets of such corporation to another 
person in consideration of the issuance of securities of such other 
person or securities of a corporation which owns stock possessing at 
least 80 percent of the total combined voting power of all classes of 
stock entitled to vote and at least 80 percent of the total number of 
shares of all other classes of stock of such person, under such 
circumstances that the vote of a required favorable majority (1) will 
operate to authorize the proposed transaction as far as concerns the 
corporation whose stockholders are voting (except for the taking of 
action by the directors of the corporation involved and for compliance 
with such statutory provisions as the filing of the plan or agreement 
with the appropriate State authority), and (2) will bind all 
stockholders of such corporation except to the extent that dissenting 
shareholders may be entitled, under statutory provisions or provisions 
contained in the certificate of incorporation, to receive the appraised 
or fair value of their holdings.
    (b) Any person who purchases securities of the issuer from security 
holders of a constituent corporation with a view to, or offers or sells 
such securities for such security holders in connection with, a 
distribution thereof pursuant to any contract or arrangement, made in 
connection with any transaction specified in paragraph (a) of this 
section, with the issuer or with any affiliate of the issuer, or with 
any person who in connection with such transaction is acting as an 
underwriter of such securities, shall be deemed to an underwriter of 
such securities within the meaning of section 2(11) of the Act. This 
paragraph does not refer to arrangements limited to provision for the 
matching and combination of fractional interests in securities into 
whole interests, or the purchase and sale of such fractional interests, 
among security holders of the constituent corporation and to the sale on 
behalf of, and as agent for, such security holders of such number of 
fractional or whole interests as may be necessary to adjust for any 
remaining fractional interests after such matching.
    (c) Any constituent corporation, or any person who is an affiliate 
of a constituent corporation at the time any transaction specified in 
paragraph (a) of this section, is submitted to a vote of the 
stockholders of such corporation, who acquires securities of the issuer 
in connection with such transaction with a view to the distribution 
thereof shall be deemed to be an underwriter of such securities within 
the meaning of section 2(11) of the Act. A transfer by a constituent 
corporation to its security holders of securities of the issuer upon a 
complete or partial liquidation shall not be deemed a distribution for 
the purpose of this paragraph.
    (d) Notwithstanding the provisions of paragraph (c) of this section, 
a person specified therein shall not be deemed to be an underwriter nor 
to be engaged in a distribution with respect to securities acquired in 
any transaction specified in paragraph (a) of this section, which are 
sold by him in brokers' transactions within the meaning of section 4(4) 
of the Act, in accordance with the conditions and subject to the 
limitations specified in paragraph (e) of this section, if such person:
    (1) Does not directly or indirectly solicit or arrange for the 
solicitation of orders to buy in anticipation of or in connection with 
such brokers' transactions;
    (2) Makes no payment in connection with the execution of such 
brokers' transactions to any person other than the broker; and
    (3) Limits such brokers' transactions to a sale or series of sales 
which, together with all other sales of securities of the same class by 
such person or on his behalf within the preceding six months, will not 
exceed the following:
    (i) If the security is traded only otherwise than on a securities 
exchange, approximately one percent of the shares or units of such 
security outstanding at the time of receipt by the broker of the order 
to execute such transactions, or
    (ii) If the security is admitted to trading on a securities 
exchange, the lesser of approximately (a) one percent of the shares or 
units of such security

[[Page 472]]

outstanding at the time of receipt by the broker of the order to execute 
such transactions or (b) the largest aggregate reported volume of 
trading on securities exchanges during any one week within the four 
calendar weeks preceding the receipt of such order.
    (e) For the purposes of paragraph (d) of this section:
    (1) The term brokers' transactions in section 4(4) of the Act shall 
be deemed to include transactions by a broker acting as agent for the 
account of the seller where:
    (i) The broker performs no more than the usual and customary 
broker's functions,
    (ii) The broker does no more than execute an order or orders to sell 
as a broker and receives no more than the usual or customary broker's 
commissions,
    (iii) The broker does not solicit or arrange for the solicitation of 
orders to buy in anticipation of or in connection with such transactions 
and
    (iv) The broker is not aware of any circumstances indicating that 
his principal is failing to comply with the provisions of paragraph (d) 
of this section;
    (2) The term solicitation of such orders in section 4(4) of the Act 
shall be deemed to include the solicitation of an order to buy a 
security, but shall not be deemed to include the solicitation of an 
order to sell a security;
    (3) Where within the previous 60 days a dealer has made a written 
bid for a security or a written solicitation of an offer to sell such 
security, the term solicitation in section 4(4) shall not be deemed to 
include an inquiry regarding the dealer's bid or solicitation.
    (f) For the purposes of this rule, the term constituent corporation 
means any corporation, other than the issuer, which is a party to any 
transaction specified in paragraph (a) of this section. The term 
affiliate means a person controlling, controlled by or under common 
control with a specified person.
    Note: This section is rescinded effective on and after January 1, 
1973, except that it shall remain in effect: (1) For transactions 
submitted before that date for vote or consent of security holders; (2) 
for transactions formally submitted before such date for approval to any 
governmental regulatory agency, if such approval is required by law; and 
(3) for resales of securities received by persons in such transactions.

(Sec. 5, 48 Stat. 77; 15 U.S.C. 77e)

[19 FR 7129, Nov. 3, 1954, as amended at 24 FR 5900, July 23, 1959; 30 
FR 2022, Feb. 13, 1965; 33 FR 566, Jan. 17, 1968. Rescinded at 37 FR 
23636, Nov. 7, 1972]