(a) The Attorney General shall not refuse to register an offering prospectus pursuant to General Business Law section 684.7, without giving the applicant an opportunity to be heard in any case required by law.

(b) In any case in which the Bureau of Investor Protection and Securities determines that an offering prospectus should be denied registration and in which the applicant would be entitled to a hearing as required by law, it shall notify the applicant that the registration is denied. The notice shall include the statutory authority for the denial and a statement that the applicant is entitled to a hearing. The applicant, within five days of such notice, may then demand a hearing and the bureau shall thereafter commence an adjudicatory proceeding pursuant to the provisions of the State Administrative Procedure Act within the time limited for the issuing of a registration or deficiency letter pursuant to General Business Law, section 683.7. The commencement of such a proceeding tolls the time within which an application and prospectus is required to be accepted for filing and registered, or refused registration and filing.