Coordinated Review-SCOR-Midwest (CR-SCOR-Midwest) is a program available to issuers seeking to sell equity securities in multiple mid-Western states in an offering to be made using the Small Company Offering Registration (SCOR) Form. The program coordinates the registration process in all states in the region in which the issuer seeks to sell, saving the issuer time and money. The program expedites the registration by allowing an issuer to complete the registration while only interacting with one state regulator regardless of the number of states in which the offering will be registered. As an added benefit, most of the merit or fair and equitable standards will be waived by the states in which the issuer files for CR-SCOR-Midwest. Ten (10) states participate 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-West, and CR-SCOR-Southwest. If you are considering offering on a national basis, check out the Coordinated Review-3(b) Program for Regulation A offerings and the Coordinated Review-Equity Program for federally registered equity offerings. Offerings of interests in real estate investment trusts, business development companies, oil and gas programs and other direct participation programs can take advantage of Coordinated Review-Direct Participation Programs.
States currently participating in the CR-SCOR-Midwest program include:
Coordinated review is only available if the issuer intends to register in two (2) or more of these states.
CR-SCOR-Midwest is only available to SCOR offerings of common stock, preferred stock, membership interests, or units consisting of equity securities and warrants to purchase equity securities that do not exceed $5 million will be considered for coordinated review. The offering must be exempt from federal registration under Rule 504 of Regulation D. The offering must comply with the requirements of the NASAA Statement of Policy Regarding Small Company Registration.
If the proposed business of the company requires a minimum amount of proceeds to commence, or to proceed with the business in the manner proposed, the issuer shall immediately deposit all proceeds received from investors into an escrow account with a bank or savings and loan association or other similar depository institution acting as independent escrow agent until the minimum amount of proceeds has been raised.
If you are considering a differing type of offering, please consider using one of the other coordinated review programs that are available. More information is available at www.coordinatedreview.org.
How to Apply for Coordinated Review
To apply for registration through CR-SCOR-Midwest, the issuer will need to make a filing in each state in which the offering is to be registered. The filing will consist of certain documents and a filing fee.
- Documents: The issuer should submit the following forms directly to each state in which it wishes to register the offering:
- Uniform Application to Register Securities (Form U-1) with exhibits;
- Uniform Consent to Service of Process (Form U-2);
- Uniform Form of Corporate Resolution (Form U-2A);
- Application for Coordinated Review-SCOR-Midwest (Midwest Regional Review Application);
- Copy of the completed SCOR Form with exhibits;
- Copy of the Form D filed with the Securities and Exchange Commission;
- Copy of any resolutions by the board of directors setting forth terms and provisions of stock to be issued;
- Copy of Subscription Agreement;
- Escrow of Proceeds Agreement;
- Accountant’s consent letter;
- Legal opinion letter;
- Consent to inclusion in the disclosure document of tax advisor’s opinion or description of tax consequences, if any;
- Consent to inclusion in the disclosure document of any evaluation of litigation or administrative action by counsel, if any; and
- Schedule setting forth the name and residential street address of each officer, director, and principal shareholder.
- Financial Statements: The participating CR-SCOR-Midwest states differ in their requirements regarding financial statements of the issuer. For offerings of $1,000,000 or less, audited financial statements may not be required, however the issuer must generally provide financial statements prepared in accordance with generally accepted accounting principles (GAAP) with appropriate footnotes. An issuer without reviewed or audited financial statements is strongly encouraged to retain a CPA to compile the issuer’s financial statements into GAAP format. For offerings in excess of $1 million, most states in the region require audited financial statements.
- 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.
- Salesperson Licensing: Most states in the region require that securities offered under the CR-SCOR-Midwest program be sold through appropriately licensed securities salespersons. Examinations may not be required 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 generally submit a Form U-4 and a nominal filing fee. If an application neglects to include the necessary salesperson application materials, the states participating in coordinated review will inform the issuer of the requirements in their initial coordinated review comment letter.
Selection of the Lead Examiner
A lead examiner will be assigned from among the states selected on the Midwest Regional Review Application. The lead examiner will contact the issuer with any comments. The issuer does not have the option of requesting a specific lead state. The issuer’s home state will select the lead examiner based on a number of factors, including the state’s resources, experience in CR-SCOR-Midwest applications, and a number of other considerations. While the home state will frequently be the lead examiner, the factors cited above may dictate the selection of a lead examiner from a different state.
The lead examiner will be appointed within a few business days. The lead examiner will gather comments from the participating states and generate a single comment letter usually within 3-4 weeks of receipt of the application for registration.
Lead Examiner Responsibilities
The lead examiner is responsible for the following:
- Collecting comments from the participating states;
- Drafting one comment letter to the issuer;
- 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 is responsible for the following:
- Filing a complete application for CR-SCOR-Midwest in each of the participating states in which the issuer is to offer and sell securities under this program;
- 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 the issuer’s offering.
Who to Contact with Questions
If you have any questions about CR-SCOR-Midwest, please contact the Kansas Office of the Securities Commissioner at 785-296-3307.
 Except for offerings in Iowa which cannot exceed $1 million.