30-10-319. Applicability of safe harbor for forward-looking statements.
30-10-319. Applicability of safe harbor for forward-looking statements. (1) For the purposes of this section, the following definitions apply:
(a) "Forward-looking statement" means:
(i) a statement containing a projection of revenue; income per share, including income loss; earnings per share, including earnings loss; capital expenditures; dividends; capital structure; or other financial items;
(ii) a statement of the plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer;
(iii) a statement of future economic performance, including any statement contained in a discussion and analysis of financial condition by the management or in the results of operations;
(iv) any statement of the assumptions underlying or relating to any statement described in subsection (1)(a)(i), (1)(a)(ii), or (1)(a)(iii);
(v) any report issued by an outside reviewer retained by an issuer, to the extent that the report assesses a forward-looking statement made by the issuer; or
(vi) a statement containing a projection or estimate of other items as may be specified by rule or regulation of the commissioner.
(b) "Going private transaction" has the meaning given that term under the rules or regulations of the United States securities and exchange commission issued pursuant to section 13(e) of the Securities Exchange Act of 1934, 15 U.S.C. 78m(e).
(c) "Investment company" has the same meaning as in section 3(a) of the federal Investment Company Act of 1940, 15 U.S.C. 80a-3(a).
(d) (i) "Issuer" has the meaning provided in 30-10-103.
(ii) The term does not include a broker-dealer as defined in 30-10-103.
(e) "Penny stock" has the same meaning as in section 3(a)(51) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(51), and the rules and regulations or orders issued pursuant to that section.
(f) "Person acting on behalf of an issuer" means an officer, director, or employee of the issuer.
(g) The terms "blank check company", "direct participation investment program", "executive officer of an entity", "limited liability company", "partnership", and "rollup transaction" have the meanings given those terms by rule or regulation of the commissioner.
(2) This section applies only to a forward-looking statement made by:
(a) an issuer that, at the time that the statement is made, is subject to the reporting requirements of section (13)(a) or (15)(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78m(a) or 15 U.S.C. 78o(d);
(b) a person acting on behalf of an issuer subject to the provisions of subsection (2)(a);
(c) an outside reviewer retained by an issuer subject to the provisions of subsection (2)(a) making a statement on behalf of that issuer; or
(d) an underwriter, with respect to information provided by an issuer subject to the provisions of subsection (2)(a) or information derived from information provided by that issuer.
(3) Except to the extent otherwise specifically provided by rule, regulation, or order of the securities and exchange commission, this section does not apply to a forward-looking statement:
(a) that is made with respect to the business or operations of the issuer, if the issuer:
(i) during the 3-year period preceding the date on which the statement was first made:
(A) was convicted of any felony or misdemeanor described in section 15(b)(4)(B)(i) through (iv) of the Securities Exchange Act of 1934, 15 U.S.C. 78o(b)(4)(B), or was convicted under 30-10-306;
(B) has been made the subject of a judicial or administrative decree or order arising out of a governmental action that:
(I) prohibits future violations of the antifraud provisions of state or federal securities laws;
(II) requires that the issuer cease and desist from violating the antifraud provisions of state or federal securities laws; or
(III) determines that the issuer violated the antifraud provisions of state or federal securities laws;
(ii) makes the forward-looking statement in connection with an offering of securities by a blank check company;
(iii) issues penny stock;
(iv) makes the forward-looking statement in connection with a rollup transaction; or
(v) makes the forward-looking statement in connection with a going private transaction; or
(b) that is:
(i) included in a financial statement prepared in accordance with generally accepted accounting principles;
(ii) contained in a registration statement of, or otherwise issued by, an investment company;
(iii) made in connection with a tender offer;
(iv) made in connection with an initial public offering;
(v) made in connection with an offering by, or relating to the operations of, a partnership, a limited liability company, or a direct participation investment program; or
(vi) made in a disclosure of beneficial ownership in a report required to be filed with the United States securities and exchange commission pursuant to section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78m(d).
(4) (a) Except as provided in subsection (3), in any private action arising under this part that is based on an untrue statement of a material fact or omission of a material fact necessary to make the statement not misleading, a person referred to in subsection (2) is not liable with respect to any forward-looking statement, whether written or oral, if and to the extent that:
(i) the forward-looking statement is identified as a forward-looking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement or is immaterial; or
(ii) the plaintiff fails to prove that the forward-looking statement:
(A) if made by a natural person, was made with actual knowledge by that person that the statement was false or misleading; or
(B) if made by a business entity, was made by or with the approval of an executive officer of that entity and made or approved by that officer with actual knowledge by that officer that the statement was false or misleading.
(b) In the case of an oral forward-looking statement made by an issuer that is subject to the reporting requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78m(a) or 15 U.S.C. 78o(d) or by a person acting on behalf of the issuer, the requirement in subsection (4)(a) must be considered satisfied under the following circumstances:
(i) if the oral forward-looking statement is accompanied by a cautionary statement that the particular oral statement is a forward-looking statement and that the actual results could differ materially from those projected in the forward-looking statement; and
(ii) if the oral forward-looking statement is accompanied by an oral statement that additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statement is contained in a readily available written document or portion of the written document;
(iii) if the accompanying oral statement referred to in subsection (4)(b)(ii) identifies the document or portion of the document that contains the additional information about those factors relating to the forward-looking statement; and
(iv) if the information contained in that written document is a cautionary statement that satisfies the standard established in subsection (4)(a).
(c) Any document filed with the commissioner or with the securities and exchange commission or generally disseminated must be considered to be readily available for purposes of this section.
(5) This section does not impose upon any person a duty to update a forward-looking statement.
(6) On any motion to dismiss based on subsection (4)(a), the court shall consider:
(a) any statement cited in the complaint; and
(b) any cautionary statement accompanying the forward-looking statement that is not subject to material dispute and that is cited by the defendant.
(7) In any private action arising under this part, the court shall stay discovery, other than discovery that is specifically directed to the applicability of the exemption provided for in this section, during the pendency of any motion by a defendant for summary judgment that is based on the grounds that:
(a) the statement or omission upon which the complaint is based is a forward-looking statement within the meaning of this section; and
(b) the exemption provided for in this section precludes a claim for relief.
History: En. Sec. 5, Ch. 468, L. 1997.