(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Authorized small business development entity--An
entity incorporated or organized under the laws of Texas and authorized
to do business in Texas that is:
(A) a Type A corporation authorized under the Texas
Local Government Code, Chapter 504;
(B) a Type B corporation authorized under Texas Local
Government Code, Chapter 505;
(C) a Texas nonprofit organization authorized by an
agency or authority of the federal government to distribute housing
and community development block grants;
(D) a Texas municipal corporation;
(E) the Texas Veterans Commission; or
(F) a Texas nonprofit community development financial
institution certified by the Community Development Financial Institutions
Fund.
(2) Registered Small Business Development Entity--An
Authorized Small Business Development Entity registered as a Texas
crowdfunding portal under this section.
(3) Crowdfunding Web Portal--The Internet website of
a Registered Small Business Development Entity through which offers
and sales of securities exempt from registration pursuant to §139.25
of this title (relating to Intrastate Crowdfunding Exemption) and/or §139.26
of this title (relating to Intrastate Crowdfunding Exemption for SEC
Rule 147A Offerings) are made.
(4) Third Party Operator--A third party that a Registered
Small Business Development Entity subcontracts with pursuant to subsection
(h) of this section.
(b) Securities offered and sold. A Registered Small
Business Development Entity must limit the securities offered and
sold on its Crowdfunding Web Portal to those of issuers located within
its service area. Such securities must be exempt from securities registration
pursuant to §139.25 of this title (relating to Intrastate Crowdfunding
Exemption) and/or §139.26 of this title (relating to Intrastate
Crowdfunding Exemption for SEC Rule 147A Offerings).
(c) Internet website. The Crowdfunding Web Portal must
meet the requirements in §115.19(b) of this chapter (relating
to Texas Crowdfunding Portal Registration and Activities).
(d) Prohibited activities. A Registered Small Business
Development Entity shall not engage in the activities listed in §115.19(c)
of this chapter (relating to Texas Crowdfunding Portal Registration
and Activities), except that a Registered Small Business Development
Entity is permitted to hold a financial interest in an issuer offering
securities on its Crowdfunding Web Portal. A Registered Small Business
Development Entity may not operate or facilitate a secondary market
in securities offered and sold through its Crowdfunding Web Portal.
(e) Background and regulatory checks. A Registered
Small Business Development Entity must meet the requirements in §115.19(d)
of this chapter (relating to Texas Crowdfunding Portal Registration
and Activities).
(f) Recordkeeping. A Registered Small Business Development
Entity must meet the requirements in §115.19(e) of this chapter
(relating to Texas Crowdfunding Portal Registration and Activities).
In lieu of a copy of Form 133.15 (relating to Texas Crowdfunding Portal
Registration), the Registered Small Business Development Entity must
maintain a copy of Form 133.20 (relating to Texas Crowdfunding Portal
Registration by an Authorized Small Business Development Entity).
(g) Filings.
(1) Application. In lieu of the application requirements
in §115.2 of this title (relating to Application Requirements),
a complete application of an Authorized Small Business Development
Entity registering as a Texas crowdfunding portal consists of the
following and must be filed with the Securities Commissioner:
(A) Form 133.20, including all applicable schedules
and supplemental information;
(B) Form U-4, for the designated officer and a Form
U-4 for each agent to be registered (officers of a corporation or
partners of a partnership shall not be deemed agents solely because
of their status as officers or partners);
(C) a copy of the articles of incorporation or other
documents which indicate the form of organization, certified by the
Texas Secretary of State or by an officer or partner of the applicant;
(D) any other information deemed necessary by the Commissioner
to determine the financial responsibility, business repute, or qualifications
of the applicant; and
(E) the appropriate registration fee(s).
(2) Post-reporting requirements. A Registered Small
Business Development Entity is subject to the dealer and agent requirements
in §115.9 of this title (relating to Post-Registration Reporting
Requirements).
(3) Renewal. The registration of a Registered Small
Business Development Entity expires at the close of the calendar year,
but subsequent registration for the succeeding year shall be issued
upon written application and upon payment of the appropriate renewal
fee(s), without filing of further statements or furnishing any further
information unless specifically requested by the Commissioner.
(h) Subcontracting of portal operations. A Registered
Small Business Development Entity may subcontract with a Third Party
Operator to operate its Crowdfunding Web Portal under the following
conditions:
(1) The Third Party Operator is located in Texas and
authorized to do business in Texas;
(2) A written agreement is executed between the Registered
Small Business Development Entity and the Third Party Operator specifying:
(A) the scope of work to be performed by the Third
Party Operator;
(B) that the business offices and records reflecting
the activities of the Crowdfunding Web Portal are located in Texas
and those locations are identified in the written agreement; and
(C) the division of responsibility between the Registered
Small Business Development Entity and the Third Party Operator for
maintaining records and instituting procedures to comply with subsections
(c), (d), and (e) of this section; and
(3) A copy of the written agreement required by paragraph
(2) is filed with the Securities Commissioner a minimum of 10 days
prior to the commencement of operations by the Third Party Operator
of the Crowdfunding Web Portal;
(4) A Registered Small Business Development Entity
registered as a Texas Crowdfunding Portal pursuant to this section
is responsible for ensuring the Securities Commissioner is provided
with access to the records and website as required by subsection (f)
of this section and §115.19(e) of this chapter.
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