<html> <head> <title>Rule 20:06:04:45 Exemption from insider trading of the act of sales of securities to be acquired.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:04:45"> <META NAME="Description" Content="Administrative Rules 20:06:04:45 Exemption from insider trading of the act of sales of securities to be acquired."> <meta name=Generator content="Microsoft Office HTML Filter 2.0"> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Originator content="Microsoft Word 10"> <style> <!-- --> </style> </head> <body lang=EN-US> <div> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>20:06:04:45.&nbsp;&nbsp;Exemption from insider trading of the act of sales of securities to be acquired.</b> When any person is entitled, as an incident to the person's ownership of an issued security and without the payment of consideration, to receive another security &quot;when issued&quot; or &quot;when distributed,&quot; the security to be acquired is exempt from the operation of SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-5-70">58-5-70</A> provided that:</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1)&nbsp;&nbsp;The sale is made subject to the same conditions as those attaching to the right of acquisition;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2)&nbsp;&nbsp;The person exercises reasonable diligence to deliver the security to the purchaser promptly after the person's right of acquisition matures; and</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3)&nbsp;&nbsp;The person reports the sale on the appropriate form for reporting transaction by persons subject to SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-5-69">58-5-69.</A></p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This section may not be construed as exempting transactions involving both a sale of a security &quot;when issued&quot; or &quot;when distributed&quot; and a sale of the security by virtue of which the seller expects to receive the &quot;when issued&quot; or &quot;when distributed&quot; security, if the two transactions combined result in a sale of more units than the aggregate of those owned by&nbsp; the seller plus those to be received by the seller pursuant to the seller's right of acquisition.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>General Authority:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-5-77">58-5-77.</A></p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Law Implemented:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-5-70">58-5-70.</A></p> </div> </body> </html>