Selection of Lead State
Timing of Process
The Comment Letter
Lead State's Responsibilities
Coordinated Review-SCOR-West (CR-SCOR-West) is a program available to issuers seeking to sell equity securities in multiple Western states pursuant to SCOR and Regulation A offerings. It provides a uniform state registration process designed to coordinate the blue-sky registration process in all states in the Region in which the issuer seeks to sell. In addition to creating uniformity in the review, the program is designed to expedite the registration process, saving the issuer time and money. Eleven (11) western states are currently participating in the program.
If you are considering offering in additional states, consult the central website for the CR-SCOR programs, which include CR-SCOR-Mid-Atlantic, CR-SCOR-Midwest, CR-SCOR-New England, and CR-SCOR-Southwest. If you are considering offering on a national basis, check out the Coordinated Review-Equity Program.
States currently participating in the CR-SCOR-West program include:
* Because the state of Colorado does not review Regulation A offerings, they are participating in the program only as to SCOR offerings.
Eligibility for CR-SCOR-West
CR-SCOR-West is only available to SCOR and Regulation A (Model A or Model B) offerings of common stock, preferred stock, warrants, rights and units comprised of equity securities.
- Forms: The issuer should submit directly to each state in which it wishes to register the forms required by that state. These forms typically include
- the Form U-1 (Uniform Application to Register Securities)
- the Form U-2 (Uniform Consent to Service of Process)
- the Form U-2A (Uniform Form of Corporate Resolution)
- the Form CR-SCOR-West-1 (Application for CR-SCOR-West)
- a copy of the completed SCOR Form or Form 1A and exhibits.
Please note that a new SCOR Form was adopted by NASAA on September 28, 1999. The SEC has not yet acted to adopt the new SCOR Form. Therefore, issuers intending to file under Regulation A should use the old SCOR Form until such time as the SEC approves the new form.
- Fees: The issuer is required to remit the payment required by each state in which it seeks to sell its securities. Such payment shall be submitted to that state along with the other documentation.
- Financial Statements: The participating CR-SCOR-West states differ in their requirements regarding financial statements of the issuer. For offerings of $1,000,000 or less, Washington does not require reviewed or audited financial statements. The issuer, however, must provide financial statements prepared according to generally accepted accounting principles (GAAP) with appropriate footnotes. The Division strongly recommends that an issuer without reviewed or audited statements retain a CPA to compile the issuer's financial statements into GAAP format.
With regard to SCOR offerings, many other states in the region require compliance with NASAA's Policy Statement Regarding Small Company Offering Registrations, which requires at least reviewed and, in some cases, audited financial statements.
For offerings in excess of $1 million, Washington, and most other states in the region, require audited financial statements.
- Agent Licensure: Washington requires that securities offered under the CR-SCOR-West program be sold through appropriately licensed securities salespersons. Although Washington law requires securities salespersons to be licensed, it does not require examinations for officers and directors of the company who sell the securities without receiving commission or other sales based compensation. In order to obtain a license, each salesperson must submit a Form U-4 and a $40 filing fee. The agent licensing requirements of other CR-SCOR-West states may differ.
- Detailed Information concerning the filing requirements of each of the CR-SCOR-West states may be found in CR-SCOR-West Filing Requirements .
Washington’s Role as Program Administrator
Washington acts as the CR-SCOR-West Program Administrator. In addition to submitting the paperwork to each state in which it seeks to sell, the issuer shall also file Form CR-SCOR-West-1 with the State of Washington if the issuer’s principal place of business is not located in one of the participating CR-SCOR-West states. In these instances, Washington is responsible for selecting the "lead" jurisdiction from those selected by the issuer on the Form CR-SCOR-West-1. If the issuer’s principal place of business is within the one of the participating states, that state, known as the Home State, will either be the lead jurisdiction or coordinate the selection of the lead jurisdiction. If the issuer does not seek to sell its securities in Washington, the issuer submits only the Form CR-SCOR-West-1. If the issuer seeks to sell in Washington, it should also submit the appropriate registration forms, offering documents, and fees.
Selection of the Lead State
The issuer does not have the option of requesting a specific lead state. Washington, as Program Administrator, or the Home State will select the lead state based on a number of factors, including the state’s resources, experience in CR-SCOR-West applications, and a number of other considerations. While the Home State will frequently be the lead state, the factors cited above may dictate the selection of a different lead state.
Timing of the CR-SCOR-West Process
Within three business days after receipt of the issuer’s Form CR-SCOR-West-1, the Home State or Program Administrator (Washington) will designate a lead state. This state is selected from the states the issuer has chosen on the Form CR-SCOR-West-1. All participating states have ten business days to comment on the issuer’s application and forward those comments to the lead state. Within another five business days, the lead state will collect and consolidate all the comments and send one coordinated comment letter to the issuer. The lead state then works to resolve outstanding comments with the issuer or its counsel. Once the lead state clears the application, all participating states agree to clear it as well. The issuer should anticipate that the CR-SCOR-West process will take a minimum of 30 days.
The Comment Letter
The comment letter will cover disclosure issues, merit issues, and any state specific comments.
- Merit or substantive Issues: Merit or substantive comments will be based on various provisions of certain NASAA Statements of Policy.
- Disclosure Issues: These comments may come from the NASAA Statements of Policy and/or be generated independently by the various examiners.
- State Specific Comments: As the CR-SCOR-West process does not encompass all areas of regulatory oversight, the examiners may make state specific comments. These comments generally concern administrative matters such as issuer dealer/agent registration, appropriate fees/documents, compliance with certain Internet offering requirements, etc. These comments may initially be resolved through the lead states. However, the issuer may ultimately have to resolve the issue directly with the state that issued the comment.
The Lead State’s Responsibilities
The lead state is responsible for the following:
- Collecting comments from the participating states;
- Drafting one comment letter to the issuer including disclosure, merit and state specific comments;
- Forwarding a copy of the initial comment letter to the participating states;
- Forwarding a copy of the issuer’s response letter to the participating states;
- Negotiating the resolution of comments with the issuer;
- Negotiating the resolution of comments with the participating states;
- Making all final decisions regarding the resolution of comments; and
- Recommending registration of the issuer’s offering and forwarding that recommendation to all participating states.
The Issuer’s Responsibilities
The Issuer is responsible for the following:
- Filing the Application for CR-SCOR-West Form CR-SCOR-West-1 and all other appropriate documents and fees with each participating state in which it seeks to sell;
- Filing the Application for CR-SCOR-West Form CR-SCOR-West-1 in Washington if the issuer’s principal place of business is not within one of the states participating in CR-SCOR-West;
- Filing all amendments with the participating states;
- Communicating with the lead examiner to resolve comments;
- Forwarding all amendments to the issuer’s registration statement or offering documents to the participating states;
- If necessary, negotiating the resolution of state specific comments with the participating states; and
- For Regulation A filings, forwarding notice to all participating states that the Securities and Exchange Commission has cleared issuer’s offering.
If you need copies of the requirements or assistance contact Dan Matthews at email@example.com or 360-902-8785.