| (3) In view of the objective of this subsection and
the purposes and policies underlying the Texas Securities Act, the
exemption is not available to any issuer with respect to any transaction
which, although in technical compliance with this subsection, is part
of a plan or scheme to evade registration or the conditions or limitations
explicitly stated in this subsection.
(4) Nothing in this subsection is intended to relieve
registered dealers, or agents from the due diligence, suitability,
or know your customer standards or any other requirements of law otherwise
applicable to such registered persons.
(5) The staff of the State Securities Board will review
all notice filings made under this subsection to determine if the
correct filing fee was submitted. If the staff determines that the
fee paid was deficient, the staff will notify the filer through the
EFD system or by email if the filing was not made through EFD. A filer
who receives such a notice may correct the deficiency within 30 days
of the date that the notice is sent by the staff. If a timely correction
is made, the filing shall be deemed to be complete and in compliance
with the filing requirements as of the date the original filing was
received.
(6) When an offering is made in compliance with Regulation
D of the SEC and the offering will be made by or through a registered
securities dealer, the issuer and its directors, officers, agents,
and employees may make themselves available to answer questions from
offerees, as required by Rule 502(b)(2)(v) of Regulation D, without
being required to register as securities dealers or agents under the
Act, §12.
(l) Intrastate limited offering exemption. In addition
to sales made under the Texas Securities Act, §5.I, the State
Securities Board, pursuant to the Act, §5.T, exempts from the
registration requirements of the Act, §7, any offer or sale of
any securities by the issuer itself, or by a registered dealer acting
as agent for the issuer provided all offers and sales are made pursuant
to an offering made and completed solely within this state and all
the conditions in paragraphs (1) - (11) of this subsection are satisfied.
(1) The sale is made, without the use of any public
solicitation or advertisements, as set forth in subsection (a) and
subsection (b) of this section to:
(A) not more than 35 new security holders of the issuer
who meet the criteria stated in subsection (a) of this section and
who became security holders during the period of 12 months ending
with the date of the sale in question (subject to paragraph (7) of
this subsection); and
(B) other well-informed investors who are "accredited
investors" as defined in §107.2 of this title (relating to Definitions).
(For purposes of this subsection, the term "well informed" shall have
the same meaning as set out in subsection (a)(1) of this section,
and the term "5.I" in such subsection shall include sales made pursuant
to this subsection.)
(2) Neither the issuer nor the registered dealer (as
such terms are defined in paragraph (4) of this subsection):
(A) is currently subject to any administrative order
issued by state or federal authorities within five years of the expected
offer and sale of securities in reliance upon this exemption, which
order:
(i) is based upon a finding that such person has engaged
in fraudulent conduct; or
(ii) has the effect of enjoining such person from activities
subject to federal or state statutes designed to protect investors
or consumers against unlawful or deceptive practices involving securities,
insurance, commodities or commodity futures, real estate, franchises,
business opportunities, consumer goods, or other goods and services;
(B) has been convicted within five years prior to commencement
of the offering of any felony or misdemeanor of which fraud is an
essential element, or which is a violation of the securities laws
or regulations of this state, or of any other state of the United
States, or of the United States, or any foreign jurisdiction; or which
is a crime involving moral turpitude; or which is a criminal violation
of statutes designed to protect consumers against unlawful practices
involving insurance, securities, commodities or commodity futures,
real estate, franchises, business opportunities, consumer goods, or
other goods and services;
(C) is subject to any order, judgment, or decree entered
within five years prior to commencement of the offering by any court
of competent jurisdiction which temporarily or permanently restrains
or enjoins such person from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security
or involving any false filing with any state; or which restrains or
enjoins such person from activities subject to federal or state statutes
designed to protect consumers against unlawful or deceptive practices
involving insurance, commodities or commodity futures, real estate,
franchises, business opportunities, consumer goods, or other goods
and services.
(3) The prohibitions of subparagraphs (A) - (C) of
paragraph (2) shall not apply if the party subject to the disqualifying
order is duly licensed to conduct securities-related business in the
state in which the administrative order or judgment was entered against
such party or, if the order or judgment was entered by federal authorities,
the prohibitions of subparagraphs (A) - (C) of paragraph (2) shall
not apply if the party subject to the disqualifying order is duly
licensed to conduct securities-related business by the Securities
and Exchange Commission. Any disqualification caused by paragraph
(2) is automatically waived if the state or federal authorities which
created the basis for disqualification determine upon a showing of
good cause that it is not necessary under the circumstances that the
exemption be denied.
(4) For purposes of paragraphs (2) and (3) only, "issuer"
includes any directors, executive officers, general partners, or beneficial
owners of 10% or more of any class of its equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities), and
"registered dealer" shall include any partners, directors, executive
officers, or beneficial owner of 10% or more of any class of the equity
securities of the registered dealer (beneficial ownership meaning
the power to vote or direct the vote and/or the power to dispose or
direct the disposition of such securities).
(5) Upon application, and for good cause shown, the
Commissioner may waive a disqualification contained in paragraph (2).
(6) The offering complies with subsections (a) - (d)
and (j) of this section. However, persons who are "accredited investors"
as defined in §107.2 of this title are deemed to be "sophisticated"
as defined in subsection (a)(2) of this section.
(7) This subsection may not be combined with the Securities
Act, §5.I(a) or §5.I(c), or subsection (k) of this section
to make sales to more than 35 unaccredited security holders during
a 12-month period. Except for accredited investors who became security
holders pursuant to this subsection, security holders who purchase
in sales made in compliance with this subsection are included in the
count of security holders under §5.I(a) or purchasers under §5.I(c),
but this subsection may be used to exceed the numbers of security
holders or purchasers allowed by such sections over an extended period
of time.
(8) Issuers who offer and sell securities under this
subsection only through a securities dealer registered in Texas may
do so without filing any notice with the State Securities Board.
(9) Notice filing requirements.
(A) An issuer who is not a registered securities dealer
and who does not sell securities by or through a registered securities
dealer shall file a sworn notice on Form 133.29 not less than 10 business
days before any sale claimed to be exempt under this subsection may
be consummated for sales under paragraph (1)(B) of this subsection,
in whole or in part to individual accredited investors, as defined
in §107.2 of this title.
(B) For the purpose of filing Form 133.29, "business
days" means ordinary business days and does not include Saturdays,
Sundays, or state holidays.
(C) No notice is required for sales made under paragraph
(1)(A) of this subsection or under paragraph (1)(B) of this subsection
where the sales are made exclusively to institutional accredited investors
as defined in §107.2 of this title.
(D) The issuer may be required by the Securities Commissioner
to give details concerning any information requested in Form 133.29
and may be required to furnish any additional information deemed necessary
by the Securities Commissioner to determine the issuer's business
repute and qualifications.
Cont'd... |
