provided by this act, with respect to a security, including authorized but unissued securities, issued after the effective date of this act, it shall be unlawful for—

(a) the issuer or underwriter thereof to make use of any means or instruments of transportation or communication to sell or offer for sale, either directly or indirectly, to the public, in interstate commerce, such security, or to solicit, directly or indirectly, from the public offers to buy such security in such commerce; (b) or for such issuer or underwriter to make any sale or offer of sale of, or any solicitation of an offer to buy, any such security in interstate commerce through the use or medium of any book, magazine, newspaper, or similar publication, or by any circular, advertisement, or printed, written, or other graphic communication or document, or by any spoken communication carried or transmitted through or by any means or instruments of transportation or communication in interstate commerce, or any of them;

(c) or for such issuer or underwriter to carry or cause to be carried in interstate commerce, by any means or instruments of transportation, for the purpose of any such sale or for delivery after any such sale, either directly or indirectly, any such security.

PERSONS REQUIRED TO SIGN REGISTRATION STATEMENT

SEC. 4. That all securities required by section 3 of this act to be registered, shall be registered with the Commission under the terms and conditions hereinafter provided, by filing with the Commission a registration statement signed by the issuer or issuers (or, if not yet formed or organized, by the promoters), and if the issuer be a corporation, association or other entity, by its principal executive officer, its principal financial officer and its directors, trustees, or managers, or if there be no board of directors, by any individual, or the members of any board, having the power of management of such corporation, association or other entity: Provided, That when such statement relates to securities issued by a foreign government or political subdivision thereof, it shall be signed by an official representative of such foreign government or political subdivision, and by the underwriter thereof in the United States, and if such underwriter be a corporation, association, or other entity, by its principal executive officer, its principal financial officer and its directors, trustees or managers, of if there be no board of directors, by any individual, or the members of any board, having the power of management of such corporation, association or other entity. Any person required by the foregoing provisions to sign a registration statement may do so by an agent thereunto duly and specially authorized by power of attorney. The Commission shall have the power, in its discretion, in any particular case where it appears to the Commission that it is impossible or impracticable or will cause undue delay to obtain the signature of an individual so required to sign, to waive the requirement that such individual shall sign such registration statement: Provided, That the Commission shall be satisfied that such waiver is not being sought for the purpose of avoiding any responsibility or liability under this act. Signatures of all such persons when printed on the said statements shall be presumed to be so printed by authority of the person whose signature is so affixed, and the burden of proof, in the event such authority shall be denied, shall be upon the party denying the same. The affixing of any signature without the authority of the purported signer shall constitute a violation of this act.

CONTENTS OF REGISTRATION STATEMENT

SEC. 5. (a) That said statement, when relating to a security other than a security issued by a foreign government or political subdivision thereof, shall contain the following information concerning said security and the issuer thereof: (1) Name under which the issuer is doing or intends to do business, name of the State or other sovereign power under which the issuer is organized, and location of the issuer's principal business office.

(2) Names and addresses of the promoters, if any (in the case of a corporation to be formed), directors, trustees, and principal officers if the issuer be a corporation or association or trust; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual.

(3) A brief description of the general character of the business actually to be transacted by the issuer.

(4) A statement of the capitalization of the issuer, including the authorized and paid-up amounts of its capital stock, the number and classes of shares into which such capital stock is divided, a summary of the respective voting or other

rights, preferences, rights to dividends, profits, or capital of each class with respect to each other class, contained or to be contained, in the articles of association and amendments thereto or similar instruments of the issuer, the amount of capital stock of each class issued or included in the shares of stock to be offered, a statement of the amount of stock, if any, covered by outstanding options, a brief description of the funded debt, giving amounts, dates, maturities, and general character of such debt, and of the security, if any, therefor; a report by independent public or chartered accountants or by the chief accounting officer of the issuer containing a balance sheet of the issuer (or, if the issuer has subsidiary corporations), a consolidated balance sheet of the issuer and such subsidiaries as of the most recent practicable date prior to the date of filing such statement, and showing the general nature of the assets and liabilities of the issuer, together with a profit and loss statement, stating operating and nonoperating income separately, or, if the issuer has subsidiary corporations a consolidated profit and loss statement offsetting items eliminated) of the issuer and of its subsidiaries (if any) for the latest available fiscal year and for the two immediately preceding fiscal years, or if in actual business for less than 1 year, then for the longest practicable period during which the issuer has been in actual business. In case there are any extraordinary items of profit and loss, such as those arising from the sale of capital assets, they shall be enumerated.

NOTE. This section should be carefully considered with public accountants. (5) A statement setting forth

(a) a brief description of the purpose or object of the issue of the proposed security;

(b) date and brief description of the proposed security;

(c) a brief description of the security, if any, pledged or to be pledged for the proposed issue. A copy of the instrument or indenture under which the securities are to be issued shall be filed with the Commission, when prepared; (d) price at which it is proposed that the security shall be offered to the public; (e) the price to be paid to the issuer, and if any of the securities are to be issued for considerations in whole or in part, other than cash, a detailed statement of such considerations;

(f) names of the underwriters of said security, and the amount of all commissions, bonuses, and other considerations paid or to be paid by the issuer for or in respect of the issue, sale or offer of said security, including any capital stock or other securities or considerations to be set aside and disposed of in connection with such purchases or undertaking.

(6) If the issuer is a corporation there shall be filed with said statement a certified copy of its articles of incorporation with all existing amendments and of its existing by-laws. If the issuer is a trustee there shall be filed with the statement a copy of all instruments by which the trust is created or declared, and in which it is accepted and acknowledged. If the issuer is a partnership or an unincorporated association, or joint-stock company, or any other form of organization whatsoever, there shall be filed with the statement a copy of its articles of partnership or association and all other papers pertaining to its organization. If any of the instruments required by this subsection 6 shall already be on file with the Commission, there need be filed only such amendments or supplemental instruments, if any, as shall be necessary to bring to date the instruments already on file.

(7) It shall be deemed a compliance with this section if a draft or outline of any certificate of incorporation or mortgage shall be filed with the registration statement, provided that within ten days after the execution of said mortgage or the filing of said certificate of incorporation copies thereof in final form shall be filed. Failure to file such papers in final form shall render the issuer liable to a penalty of $- for each day's delay in not filing, but shall not affect the validity of such registration.

(b) That said statement when relating to a security issued by a foreign government or political subdivision thereof shall contain the following information concerning said security and the issuer thereof:

(1) Name of the borrowing government or subdivision thereof; (2) A brief description of the issue of the proposed security;

(3) Date and terms of the proposed security;

(4) Security, if any, pledged or to be pledged for the proposed issue;

(5) Date and terms of the purchase agreement, including the net amount to be paid to the borrowing government or subdivision thereof for such security, the names of the underwriters of said security; a statement of all bonuses and commissions, except ordinary selling commissions paid to members of any selling

syndicate, selling group and salesmen, paid or to be paid by the underwriter or underwriters, directly or indirectly, in connection therewith; and a statement by the underwriters that they know of none to be paid in connection therewith by the foreign borrowing government, excepting only such as may be expressly stated in the statement.

(6) Budgetary receipts and disbursements of the borrowing government or subdivision thereof for the latest available fiscal period and for the two immediately preceding fiscal periods, and a statement of its funded debt, both external and internal, as furnished by the chief financial officer thereof.

(7) Whether or not the borrower has, within a period of ten years prior to the filing of said statement, defaulted on the principal or interest when due of any other security publicly sold in the United States or other foreign country, and if so, the date, amount and circumstances of said default;

(c) At the time of filing said statement, as hereinbefore prescribed in subsections (a) and (b) of this section, the applicant shall pay to the Commission a fee of one one-hundredth of 1 per centum of the aggregate price at which such securities are to be offered to the public, but in no case shall such fee be less than $50.

(d) The filing with the Commission of a registration statement and the payment to the Commission of the required fee shall constitute formal registration of the issue of security concerned. Such filing and payment may be effected by forwarding the registration statement, accompanied by a United States postal money order, or a certified bank check, for the required fee, by registered mail, postage prepaid, properly addressed to the Commission at Washington, District of Columbia.

LIABILITY OF DIRECTORS AND OTHERS

SEC. 6. That every person purchasing any security, a part of an issue of securities so registered, within six months after the original public offering of such securities for sale to the public, shall be presumed to have relied upon the representations set forth in the registration statement with respect thereto, unless the contary is proved, and, in case such registration statement shall be untrue in any material respect, any person shall have the right within one year after the original public offering of such securities for sale to the public to obtain damages for any and all losses sustained by him as a direct consequence of such untrue statements, from any one or more of the signers of such registration statement.

No signer of a registration statement, however, shall be held liable for damages under the provisions of this section on account of any statement contained therein if it is proved that:

(a) As regards any untrue statement purporting to be a statement by a public or chartered accountant, engineer, appraiser, lawyer, or other expert, or contained in what purports to be a copy of or extract from a report, valuation, or opinion of any expert, which fairly represents the statement, or was a correct and fair copy of or extract from such report, valuation, or opinion, and that such person had reasonable grounds to believe that the person making such statement, report, valuation, or opinion was competent to make it, and that it was obtained and accepted in good faith; or

(b) As regards any untrue statement contained in a public official document, such statement was so contained in such document, and was accepted in good faith by such person; or

(c) As regards any untrue statement not purporting to be made on authority of an expert or a public official document, such person had reasonable grounds to believe, and did, up to the time of the purchase of the securities with respect to which such damages are claimed by the person claiming such damages, believe that the statement was true; or

(d) Upon becoming aware of any untrue statement contained in such registration statement such person had, prior to the purchase by the person claiming such damages of the securities with respect to which such damages are claimed, notified the Commission of such error and given such reasonable public notice, if any, with respect thereto as shall be directed by the Commission.

No signer of a registration statement shall be held liable for damages under the provisions of this section on account of any failure to disclose any information in any registration statement if:

(a) He proves that he in good faith exercised due diligence and was not cognizant of the matter not disclosed; or

(b) He proves that the failure to disclose such matter arose from an honest mistake of fact on his part; or

(c) The matter not disclosed was in respect of a matter which in the opinion of the court dealing with the case was immaterial or was otherwise such as ought, in the opinion of that court, having due regard to all the circumstances of the case, reasonably to be excused.

Any condition, stipulation, or provision, binding any person acquiring any securities required by this Act to be registered to waive compliance with any of the provisions of this Act shall be void. The rights and remedies herein provided for shall be in addition to any other rights and remedies that may exist at law or in equity.

Any person who becomes liable to make any payment under this section may recover contribution as in cases of contract from any person who, if sued separately, would have been liable to make the same payment, unless the person who has become so liable was, and the other person was not, guilty of fraudulent misrepresentation.

CIRCULARS

SEC. 7. That it shall be unlawful to carry or transmit, or cause to be carried or transmitted, in interstate commerce, any circular or other written, printed, or other graphic communication or document announcing, offering, or advertising the original issuance and distribution to the public of any securities required by the provisions of this act to be registered, unless such circular or other written, printed, or other graphic communication contains the following information concerning the security so offered:

Copies of all such circulars shall within five days after distribution thereof be filed with the Commission, together with a reference to the registration of the securities so offered.

Any sale of a security registered under this act not made in connection with an original offering or original distribution of such security to the public shall be exempt from the provisions of this section.

(a) Name of the issuer and of the underwriter, if any, offering the same directly or indirectly to the public; amount of capitalization of the issuer authorized and paid up; location of the principal office of the issuer and, if incorporated, the place of incorporation.

(b) A brief description of the security offered, the amount of the issue, its rights with reference to dividends or fixed returns, and voting power and relative position with reference to other outstanding securities having prior rights.

(c) The price at which the security is offered to the public, a brief statement of the purpose of the offering, and the price paid to the issuer.

(d) The names of the principal executive officers, directors, trustees, or general partners of the issuer.

(e) A summary statement showing the issuer's assets and liabilities as of the date of the balance sheet filed with the registration statement; and the earnings of the issuer during each of three consecutive periods, each of twelve calendar months covered by the profit and loss statement filed with the registration statement.

(f) A statement to the effect that additional information is on file and may be secured from the Commission at Washington, District of Columbia: Provided, That any such circular announcing, offering, or advertising for original sale to the public any securities of a foreign government or political subdivision thereof shall contain such information as the Commission may specify.

INFORMATION AVAILABLE TO PUBLIC

SEC. 8. That the information contained in registration statements and circulars filed with the Commission under the provisions of this act shall be made available to the public under such regulations as the Commission may prescribe.

EXEMPT SECURITIES

SEC. 9. That, except as hereinafter otherwise expressly provided, the provisions of this act shall not apply to any of the following classes of securities:

(a) Any security issued or guaranteed by the United States or any Territory or insular possession thereof, or by the District of Columbia, or by any State of the United States or political subdivision, or by any instrumentality or agency of any of the foregoing.

(b) Any security issued by and repesenting an interest in or a direct obligation of any common carrier or other public utility subject to regulation or supervision as to the issue of its securities, by a commission, board, or officer of the Govern

ment of the United States, or of any State, Territory or insular possession thereof, or of the District of Columbia; or any such security issued by any National or State bank, or trust company or insurance company; or by any corporation created and controlled by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States.

(c) Any security issued by a corporation organized exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person.

(d) Bonds or notes secured by mortgage upon real estate, improved or about to be improved by a residential or agricultural structure, when the total encumbrances against any single property so mortgaged, including the mortgage securing the bonds or notes exempted by this paragraph do not exceed $25,000. (e) Negotiable promissory notes or commercial paper maturing within twelve months of the date of issue.

(f) Securities issued by any building and loan association under the supervision of a public commission, board or officer of any State, Territory or insular possession of the United States or of the District of Columbia.

EXEMPT TRANSACTIONS

SEC. 10. That, except as hereinafter otherwise expressly provided, the provisions of this Act shall not apply to any of the following transactions:

(a) Any and all communications, negotiations, and contracts between the issuer and the underwriter or underwriters and relating to the formation of purchasing, underwriting or distributing syndicates, with respect to securities proposed to be offered to the public.

(b) Judicial, executor's, administrator's, guardian's or conservator's sale, or any sale by a receiver or trustee in insolvency or bankruptcy.

(c) Sales by or for the account of a pledgee or holder of a mortgage, selling or offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provisions of this Act, to liquidate a bona fide debt, a security pledged in good faith as collateral for such debt.

(d) Transactions in which any security is sold, offered for sale, subscription or delivery by the owner or owners thereof, or by his or their representative, for the owners' account, such sale or offer for sale, subscription or delivery not being made in connection with an offering or distribution of such security to the public.

(e) The distribution by a corporation, actively engaged in the business authorized by its charter, of securities to its stockholders or other security holders, or assigns, exclusively, as a stock dividend or other distribution out of earnings or surplus; or the issuance of additional capital stock of a corporation sold or distributed by it exclusively among its own stockholders or assigns, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale or distribution of such increased capital stock; or the distribution of securities issued under a bona fide reorganization or recapitalization by a corporation or corporations party thereto, or formed pursuant thereto or in connection therewith, entirely to its or their security holders or existing creditors or assigns, made in good faith and not for the purpose of avoiding the provisions of this act, either in exchange for the securities of such security holders or claims of such creditors or partly for cash and partly in exchange for the securities or claims of such security holders or creditors.

(f) Bonds or notes secured by mortgage upon real estate or tangible personal property where the entire mortgage together with all of the bonds and notes secured thereby in the original transaction are sold to not more than five purchasers, and not intended to be offered directly or indirectly to the public.

(g) The issue or delivery of any security in exchange for any other security pursuant to a right of conversion, or the issue and delivery of a security upon the exercise of a warrant or the surrender of a certificate of deposit or receipt, or pursuant to a subscription for such security entitling the holder of the security surrendered to receive in exchange, to receive the security issued or delivered; or the ssuance of any certificate of deposit or receipt against the deposit or delivery of the security represented thereby, or any similar transaction.

(h) Subscription for shares of the capital stock of a corporation prior to the incorporation thereof under the laws of any State, when no commission, compen