(a) Securities may be registered by notification under this subchapter if the securities are issued by an issuer that:
(1) has been in continuous operation for at least three years; and
(2) has shown, during at least the three years preceding the date of registration under this subchapter, average annual net earnings after deducting all prior charges, including income taxes but not including charges on securities to be retired out of the proceeds of sale, as follows:
(A) for interest-bearing securities, not less than one and one-half times the annual interest charges on those securities and on all other outstanding interest-bearing securities of equal rank;
(B) for securities with a specified dividend rate, not less than one and one-half times the annual dividend requirements on those securities and on all other outstanding securities of equal rank; and
(C) for securities with no specified dividend rate, not less than five percent on all outstanding securities of equal rank, together with the amount of those securities then offered for sale, based on the maximum price at which the securities are to be offered for sale.
(b) For purposes of calculating average annual net earnings under Subsection (a)(2)(C), an issuer’s ownership of more than 50 percent of the outstanding voting stock of a corporation:
(1) is construed as the issuer’s proportionate ownership of that corporation; and
(2) permits the inclusion of that corporation’s earnings applicable to the payment of dividends on the stock owned in the earnings of the issuer of the securities being registered by notification.