2012 New York Consolidated Laws
ACA - Arts and Cultural Affairs
Title F - THEATRICAL SYNDICATION FINANCING
Article 23 - (23.01 - 23.23) REGULATION OF THEATRICAL SYNDICATION FINANCING
23.03 - Definitions.

 
    § 23.03. Definitions.   1.  The  following  terms,  whenever  used  or
  referred to in this article, shall have the following  meanings,  unless
  the context clearly requires otherwise:
    (a)  A  "theatrical  production" shall mean those live-staged dramatic
  productions, dramatic-musical productions and concerts,  as  defined  in
  this subdivision, which hereafter are shown to the public for profit and
  which  are financed wholly or in part by the offering or sale in or from
  this state, directly, or through agents or distributors,  of  investment
  agreements,   evidences  of  interest,  limited  partnerships,  producer
  shares, equity or debt securities, pre-organization subscriptions or any
  other syndication participation, when any persons are offered, solicited
  to purchase or sell, directly or indirectly, such syndication  interests
  for  moneys  or services within or from the state of New York; provided,
  however, that for purposes of paragraphs (h) and (i) of this subdivision
  a  "theatrical  production"  shall   mean   any   live-staged   dramatic
  production, dramatic-musical production or concert which is presented to
  the public in a place of entertainment as defined in this subdivision.
    (b)  "Fraud",  "deceit", and "defraud", as such terms are used in this
  article, are not limited to common-law deceit.
    (c) "Syndication" shall  mean  all  forms,  methods  and  devices  for
  pooling  of investment funds for the chief purpose of participating in a
  theatrical production company, as defined herein.
    (d) A "principal" shall mean and include every person or firm directly
  or indirectly controlling  the  business  affairs  or  operations  of  a
  theatrical  production  company  or  of a ticket distributor, as defined
  herein.
    (e) A "person" shall mean an individual, firm,  company,  partnership,
  corporation, trust or association.
    (f)  A  "concert"  shall  mean any live performance whether musical or
  spoken, dramatic or nondramatic, by one or  more  performers,  which  is
  presented  to the public in a place of entertainment, as defined in this
  subdivision.
    (g) A "sporting event" shall have the same meaning  as  set  forth  in
  subdivision three of section 23.23 of this article.
    (h)  The  term  "event" shall mean a theatrical production or sporting
  event, as those terms are defined in  this  subdivision,  or  any  other
  public exhibition, game, show, contest or performance which is presented
  to   the  public  in  a  place  of  entertainment  as  defined  in  this
  subdivision.
    (i) A "place of entertainment" shall mean a theatre,  dinner  theatre,
  hall,  coliseum,  convention center, arena, auditorium, stadium, concert
  hall, garden, outdoor space or other place of amusement  operated  as  a
  for  profit  entity  and  located  in  this  state  in  which theatrical
  productions, sporting events or other events are presented.
    (j) A "theatrical production company" shall mean any entity formed  to
  (i) develop, produce, invest in or otherwise exploit, or any combination
  thereof,  one  or more specified or nonspecified theatrical productions,
  and (ii) conduct all activities related thereto.
    (k) The term "advance ticket" shall mean a ticket  of  admission  sold
  more  than  twelve  hours  in  advance of the time of performance of the
  event for which the ticket is purchased.
    (l) The term "ticket distributor" shall have the same meaning  as  set
  forth in subdivision one of section 23.23 of this article.
    (m)  The  term  "accredited  investor" shall mean (i) a natural person
  whose individual net worth (or joint net worth with his or  her  spouse)
  will  exceed  one  million  dollars  at  the time of purchase, or (ii) a
  natural person who has an individual income  (exclusive  of  any  income
  attributable  to a spouse) of more than two hundred thousand dollars for

  the past two years or joint income with a  spouse  of  more  than  three
  hundred  thousand  dollars  in  each of those years and has a reasonable
  expectation of reaching the same income level in the  current  year,  or
  (iii)  an  entity  in  which each equity owner is an accredited investor
  under subparagraph (i) or (ii) of this  paragraph,  or  (iv)  either  an
  organization  described  in  section  501 (C)(3) of the Internal Revenue
  Code of 1986, as amended, a  corporation,  a  Massachusetts  or  similar
  business  trust,  or  a  partnership,  in  each  case not formed for the
  specific purpose of acquiring the securities  being  offered,  and  with
  total  assets  in  excess  of five million dollars, or (v) a trust, with
  total assets in excess of five  million  dollars,  not  formed  for  the
  specific  purpose  of  acquiring  the  securities, whose purchase of the
  securities is directed by a person who has such knowledge and experience
  in business and financial matters that he or she is capable, as  defined
  by  the Securities Act of 1933, as amended, of evaluating the merits and
  risks of the prospective investment, or a bank, as  defined  in  section
  3(a)(2)  of  the  Securities  Act of 1933, as amended, (A) acting in its
  fiduciary capacity as trustee, or (B) subscribing for  the  purchase  of
  securities being offered on its own behalf.
    2.  Accurate  books and records of account shall be maintained by each
  theatrical production company. Every producer of a theatrical production
  shall at least once for each twelve month fiscal period  beginning  with
  the  initial  expenditure  of  investors' funds (other than those of any
  principal), within four months after the end of such period or the  last
  public  performance  of  the  original  production  in  New  York state,
  whichever is sooner, furnish to all investors and to the  department  of
  law a written balance sheet and statement of profit and loss which shall
  be  prepared  by an independent public accountant and contain an express
  opinion by such accountant  that  such  statements  fairly  present  the
  financial   position   and  results  of  operations  of  the  theatrical
  production company, hereinafter referred to  as  "certified  statement".
  Notwithstanding  the aforesaid, in no event shall a producer be required
  by this subdivision to submit certified statements to investors for  any
  period  less  than twelve months following the period covered by a prior
  certified statement. Irrespective of  the  aforesaid,  and  in  addition
  thereto,  every  such  producer shall also furnish each investor and the
  department of law with an accurate and truthful  itemized  statement  of
  income  and  expenditure  for  every  six  month period not covered by a
  previously issued certified statement or a certified statement  required
  to  be  issued  hereunder  for  a  period  ending  at  such  time, which
  additional statement shall be subscribed to by the producer as accurate,
  and may be submitted within three months after the  close  of  such  six
  month period. Following the last public performance in New York state of
  the  original  production,  the  producer shall accurately report to the
  investors and the department of law, at least once  within  four  months
  after  the  end  of each year thereafter, with respect to any subsequent
  earnings or expenditures by the theatrical production,  which  shall  be
  truthful  and  accurate and which shall be subscribed to by the producer
  as accurate. The attorney  general  may  adopt,  promulgate,  amend  and
  rescind   rules   and   regulations   setting   forth  other  accounting
  requirements than set forth above, which may be selected by  a  producer
  in  lieu of the accounting requirements set forth above. Upon conditions
  set forth by the  attorney  general,  such  rules  and  regulations  may
  further  provide  for the issuance of an exemption from the requirements
  herein (i) for  offerings  of  less  than  two  hundred  fifty  thousand
  dollars,  (ii)  for offerings made to less than thirty-six persons in or
  from this state, or (iii) for such other offerings and upon  such  other
  grounds as may be determined by the attorney general.

    This  subdivision  shall  not  apply  to  any  production  whose first
  performance in New York state  preceded  June  first,  nineteen  hundred
  sixty-four.
    3. (a) Except as otherwise provided herein, no offering of syndication
  interests  in  a theatrical production company, as defined herein, shall
  be made within or from this state without the use  of  a  prospectus  or
  offering  circular  making  full  and  fair disclosure of material facts
  pertaining to the particular venture.  The  attorney  general  may  also
  issue  rules  and  regulations  requiring  the submission to prospective
  investors in such offerings an offering circular and amendments  thereto
  containing  a  concise  and  accurate  description  of the nature of the
  offering, profits  to  promoters  and  others,  the  background  of  the
  producers,  a  description  of  subsidiary  rights  and  other pertinent
  information  as  will  afford  potential  investors  or  purchasers  and
  participants  an  adequate basis upon which to found their judgment, but
  the attorney general shall accept offering  literature  filed  with  the
  Securities and Exchange Commission and authorized for use by such agency
  as  complying  therewith as of the date of receipt of a true copy by the
  department of law of such literature and proof of authorization  by  the
  Securities  and  Exchange  Commission  by  affidavit  or  otherwise. The
  attorney general may also provide for the method of filing  of  offering
  literature  other  than  that  filed  with  the  Securities and Exchange
  Commission, as well as underlying documents, with the department of  law
  at  its  office  in  the  city of New York, prior to the offering of the
  syndication interest involved; however, any such regulation  also  shall
  provide  that  all  funds  derived  from  the  sale  of  such theatrical
  syndication interests shall be held in trust in a special  bank  account
  until  the  attorney general has issued to the issuer or other offeror a
  letter stating that the offering has been permitted to be filed; but  in
  that  event  such  regulation  promulgated by the attorney general shall
  also provide that the attorney general,  not  later  than  fifteen  days
  after such submission, shall issue such a letter or, in the alternative,
  a notification in writing indicating deficiencies therein.
    (b) Where not more than one million dollars is the total amount of the
  theatrical offering, including the right to an involuntary overcall, the
  provisions  of  this  subdivision shall be deemed to be satisfied by the
  use of an investment agreement clearly setting forth in easily  readable
  print  all  of the terms of the offering. A copy of such document may be
  filed with the department of law in lieu of  a  prospectus  or  offering
  circular  in the manner set forth in this article and shall be deemed to
  be offering literature.
    (c) The provisions of this subdivision shall not apply to offerings to
  fewer than thirty-six persons (plus an unlimited  number  of  accredited
  investors)  where  express waivers in writing to the filing and offering
  circular requirements of this subdivision are filed with the  department
  of law by or on behalf of all investors.
    4.  A  limited  partnership that is a theatrical production company is
  exempt from the requirement for publishing  its  certificate  or  notice
  under sections ninety-one, 121-201 and 121-902 of the partnership law so
  long  as  the  words "limited partnership" appear in its name. A limited
  liability company that is a theatrical production company is exempt from
  the requirement for publishing its articles of organization, application
  for authority  or  a  notice  containing  the  substance  thereof  under
  sections  two hundred six and eight hundred two of the limited liability
  company law so long as the words "limited liability company"  appear  in
  its name.

    5.  It shall be unlawful for any person, in connection with the offer,
  sale,  or  purchase  of  any  syndication  interest  in  any  theatrical
  production company, as defined herein, directly or indirectly:
    (a) To employ any device, scheme, or artifice to defraud;
    (b)  To  willfully  make any untrue statement of a material fact or to
  omit to state a material fact necessary in order to make such  statement
  made, not misleading; or
    (c)  To  engage  in  any act, practice, or course of business which he
  knows or reasonably should have known operates or  would  operate  as  a
  fraud or deceit upon any person.
    6. Any person, partnership, corporation, company, trust or association
  or  any agent or employee thereof, who (or which), having engaged in any
  act or practice constituting a violation of  subdivision  five  of  this
  section,   commits  additional  acts  under  such  circumstances  as  to
  constitute a felony, the crime of conspiracy,  petit  larceny,  or  more
  than  one of the aforesaid, shall be punishable therefor, as well as for
  the violation of subdivision five of this section, and may be prosecuted
  for each crime, separately or in the  same  information  or  indictment,
  notwithstanding any other provision of law.