South Dakota Codified Laws 37-25A-15. Form and content of disclosure statement
The disclosure document shall have a cover sheet entitled, in at least ten–point bold type, “DISCLOSURE REQUIRED BY SOUTH DAKOTA.” Under the title shall appear the statement in at least ten–point type that “THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY SOUTH DAKOTA. THE INFORMATION CONTAINED IN THIS DISCLOSURE DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE TO BE PROVIDED TEN (10) BUSINESS DAYS TO REVIEW THIS DOCUMENT BEFORE SIGNING ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT TO THE SELLER OR THE SELLER’S REPRESENTATIVE.” The seller’s name and principal business address, along with the date of the disclosure document shall also be provided on the cover sheet. No other information may appear on the cover sheet. The disclosure document shall contain the following information unless the seller uses a disclosure document as provided in subdivision 37-25A-8 (1):
(1) The names and residential addresses of those salespersons who shall engage in the offer or sale of the business opportunity in this state;
Terms Used In South Dakota Codified Laws 37-25A-15
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Docket: A log containing brief entries of court proceedings.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Nolo contendere: No contest-has the same effect as a plea of guilty, as far as the criminal sentence is concerned, but may not be considered as an admission of guilt for any other purpose.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: includes natural persons, partnerships, associations, cooperative corporations, limited liability companies, and corporations. See South Dakota Codified Laws 2-14-2
- Property: includes property, real and personal. See South Dakota Codified Laws 2-14-2
- Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
- sell: includes every contract or agreement of sale, contract to sell, disposition of a business opportunity or interest in a business opportunity for value. See South Dakota Codified Laws 37-25A-1
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(2) The name of the seller, whether the seller is doing business as an individual, partnership or corporation, the names under which the seller has done, is doing or intends to do business, and the name of any parent or affiliated company that shall engage in business transactions with purchasers or which shall be responsible for statements made by the seller;
(3) The names, addresses and titles of the seller’s officers, directors, trustees, general managers, principal executives, agents and any other person charged with responsibility for the seller’s business activities relating to the sale of the business opportunity;
(4) Prior business experience of the seller relating to business opportunities including: the name, address and a description of any business opportunity previously offered by the seller; the length of time the seller has offered each such business opportunity; and the length of time the seller has conducted the business opportunity currently being offered to the purchaser;
(5) With respect to a person identified in subdivision (3) of this section, a description of the person’s business experience for the ten–year period preceding the filing date of this disclosure document. The description of business experience shall list principal occupations and employers, and a listing of the educational and professional background including, the names of schools attended and degrees received, and any other information that demonstrates sufficient knowledge and experience to perform the services proposed;
(6) Whether the seller or any person identified in subdivision (3) of this section:
(a) Has been convicted of any felony, or pleaded nolo contendere to a felony charge, or has been the subject of any criminal, civil or administrative proceedings alleging the violation of any business opportunity law, securities law, commodities law, franchise law, fraud or deceit, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable allegations;
(b) Has filed bankruptcy, been adjudged bankrupt, been reorganized due to insolvency, or was an owner, principal officer or general partner or any other person that has so filed or was so adjudged or reorganized during or within the last seven years.
(7) The name of any person identified in subdivision (6) of this section, nature of and parties to the action or proceeding, court or other forum, date of institution of the action, docket references to the action, current status of the action or proceeding, terms and conditions or any order of decree, the penalties or damages assessed and terms of settlement;
(8) The initial payment required, or if the exact amount cannot be determined, a detailed estimate of the amount of the initial payment to be made to the seller;
(9) A detailed description of the actual services the seller agrees to perform for the purchaser;
(10) A detailed description of any training the seller agrees to provide for the purchaser;
(11) A detailed description of services the seller agrees to perform in connection with the placement of equipment, products or supplies at a location, as well as any agreement necessary in order to locate or operate equipment, products or supplies on a premises neither owned nor leased by the purchaser or seller;
(12) A detailed description of any license or permit that is necessary in order for the purchaser to engage in or operate the business opportunity;
(13) The business opportunity seller who is required to secure a bond pursuant to § 37-25A-23, shall state in the disclosure document “As required by the State of South Dakota, the seller has secured a bond issued by (insert name and address of surety company), a surety company, authorized to do business in this state. Before signing a contract or agreement to purchase this business opportunity, you should check with the surety company to determine the bond’s current status.”;
(14) Any representations made by the seller to the purchaser concerning sales or earnings that may be made from this business opportunity, including, but not limited to:
(a) The bases or assumptions for any actual, average, projected or forecasted sales, profits, income or earnings;
(b) The total number of purchasers who, within a period of three years of the date of the disclosure document, purchased a business opportunity involving the product, equipment, supplies or services being offered to the purchaser; and
(c) The total number of purchasers who, within three years of the date of the disclosure statement, purchased a business opportunity involving the product, equipment, supplies or services being offered to the purchaser who, to the seller’s knowledge, have actually received earnings in the amount or range specified;
(15) Any seller who makes a guarantee to a purchaser shall give a detailed description of the elements of the guarantee. Such description shall include, but is not limited to, the duration, terms, scope, conditions, and limitations of the guarantee;
(16) A statement of:
(a) The total number of business opportunities that are the same or similar in nature to those that have been sold or organized by the seller;
(b) The names and addresses of purchasers who have requested a refund or rescission from the seller within the last twelve months and the number of those who have received the refund or rescission; and
(c) The total number of business opportunities the seller intends to sell in this state within the next twelve months;
(17) A statement describing any contractual restrictions, prohibitions, or limitations on the purchaser’s conduct. Attach a copy of all business opportunity and other contracts or agreements proposed for use or in use in this state including, without limitation, all lease agreements, option agreements and purchase agreements;
(18) The rights and obligations of the seller and the purchaser regarding termination of the business opportunity contract or agreement;
(19) A statement accurately describing the grounds upon which the purchaser may initiate legal action to terminate the business opportunity contract or agreement;
(20) A copy of the most recent audited financial statement of the seller, prepared within thirteen months of the first offer in this state, together with a statement of any material changes in the financial condition of the seller from that date. The director may allow the seller to submit a limited review in order to satisfy the requirements of this subdivision;
(21) A list of the states in which this business opportunity is registered;
(22) A list of the states in which this disclosure document is on file;
(23) A list of the states which have denied, suspended or revoked the registration of this business opportunity;
(24) A section entitled “Risk Factors” containing a series of short concise statements summarizing the principal factors which make this business opportunity a high risk or one of a speculative nature. Each statement shall include a cross–reference to the page on which further information regarding that risk factor can be found in the disclosure document;
(25) Any additional information as the director may require by rule or order.
Source: SL 1985, ch 305, § 15.