CHAPTER 830-X-6 EXEMPT SECURITIES AND EXEMPT TRANSACTIONS TABLE OF CONTENTS |
830-X-6-.10
Eleemosynary Financing 830-X-6-.11
Limited Offering Exemption 830-X-6-.12 Further Limited Offering Exemption 830-X-6-.13 Federal Crowdfunding Offering Exemption 830-X-6-.10
Eleemosynary Financing. The Commission will waive the testing
requirements of applicants for a securities agent license for the offer or sale
of church or other eleemosynary institutional securities exempt pursuant to Code
of Ala. 1975, §8-6-10(8); provided, however, that the following
requirements are fully satisfied: (a) A filing with the
Commission which meets the requirements set out in the "Offering Circular
Instructions" set out in "Guidelines" [see (e) below], and (b) The submission of a
draft of the Offering Circular proposed to be used in connection with the
offering, and (c) The submission of a
registration form (U-4) for those individuals who are to solicit investor funds
on behalf of the eleemosynary institution and payment of the fee in accordance
with Code of Ala. 1975, §8-6-3(h), and (d) Such other requirements
as the Commission may from time to time adopt. (e) There must be
substantial compliance with the Guidelines for Eleemosynary Financing
("Guidelines") heretofore promulgated by the Commission which are
incorporated herein as a part of this rule by reference. Copies of these
"Guidelines" are available at the office of the Commission. Author: Statutory Authority:
Code of Ala. 1975, §§8-6-10(8), 8-6-23. History: Filed September 30, 1982. Readopted: Filed November 9, 1983. Amended: Filed September 28, 1990. 830-X-6-.11
Limited Offering Exemption. (1) Pursuant to the
Authority delegated to the Alabama Securities Commission by Code of Ala. 1975,
§8-6-11(a)(9), any offer or sale of securities which is made in compliance with
the following requirements of this rule will be deemed to be an exempt
transaction and Code of Ala. 1975, §§8-6-3 through 8-6-9 shall not
apply except as hereinafter in this rule expressly provided: INTERPRETIVE COMMENT:
In response to some questions, it should be understood that this transactional
exemption is an expansion of, and an alternative to, the statutory exemption
found in Code of Ala. 1975, §8-6-11(a)(9). (a) The offer or sale of
securities offered or sold must be in compliance with Rules 501-503, and 505 and
506 of Regulation D, 17 C.F.R. §§230.501 - 230.503, 230.505 and 230.506
adopted under the Securities Act of 1933 and made effective April 15, 1982, and
which also satisfies the following further conditions and limitations: 1. No commission, finders
fee or other remuneration shall be paid or given, directly or indirectly, to any
person for soliciting any prospective purchaser in this state, unless such
person is registered in this state pursuant to Code of Ala. 1975, §8-6-3. 2. No exemption under this
rule shall be available for the securities of any issuer if any of the parties
described in Rule 252(c), (d), (e) or (f) of Regulation A, 17 C.F.R. §230.252(c),
(d), (e), and (f), adopted under the Securities Act of 1933 (generally described
as: the issuer, any of its predecessors or any affiliated issuer; any of the
directors, officers, general partners or beneficial owners of 10% or more of any
equity securities of the issuer; any underwriter of the securities or any
partner, director or officer of any such underwriter; or any issuer subject to
the reporting requirements of the Securities Exchange Act of 1934 who has failed
to file required reports): (i) Has filed a
registration statement which is the subject of a currently effective
registration stop order entered pursuant to any state's securities law within
five years prior to the filing of the notice required under this exemption. (ii) Has been convicted
within five years prior to the filing of the notice required under this
exemption of any felony or misdemeanor in connection with the offer, purchase or
sale of any security or any felony involving fraud or deceit, including but not
limited to forgery, embezzlement, obtaining money under false pretenses, larceny
or conspiracy to defraud. (iii) Is currently subject
to any state administrative enforcement order or judgment entered by that
state's securities administrator within five years prior to the filing of the
notice required under this exemption or is subject to any state's administrative
enforcement order or judgment in which fraud or deceit, including but not
limited to making untrue statements of material facts and omitting to state
material facts, was found and the order or judgment was entered within five
years prior to the filing of the notice required under this exemption. (iv) Is subject to any
state's administrative enforcement order or judgment which prohibits, denies or
revokes the use of any exemption from registration in connection with the offer,
purchase or sale of securities. (v) Is currently subject to
any order, judgment, or decree of any court of competent jurisdiction
temporarily or preliminary restraining or enjoining, or is subject to any order,
judgment or decree of any court of competent jurisdiction, permanently
restraining or enjoining, such party from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security or involving
the making of any false filing with the state entered within five years prior to
the filing of the notice required under this exemption. (vi) The prohibitions of
subparagraphs (i), (ii), (iii), and (v) above shall not apply if the person
subject to the disqualification is duly licensed or registered to conduct
securities-related business in the state in which the administrative order or
judgment was entered against such person or if the dealer employing such party
is licensed or registered in this state and the Form BD filed with this state
discloses the order, conviction, judgment or decree relating to such person. No
person disqualified under this subsection may act in a capacity other than that
for which the person is licensed or registered. (vii) Any disqualification
caused by this section may be waived if the state securities administrator or
agency of the state which created the basis for disqualification determines upon
a showing of good cause that it is not necessary under the circumstances that
the exemption be denied. (viii) The
disqualifications found in Rule 505(b)(2)(iii) of Regulation D shall apply also
to offerings made pursuant to Rule 506. INTERPRETIVE COMMENT:
The wording of these "bad boy" disqualifiers is adopted verbatim from
the NASAA ULOE promulgated 9/83 with the exception of a word change in (vii). Subparagraph 2.(viii) is
added to make clear that both the federal and the Alabama "bad boy"
provisions apply to any offering made pursuant to this rule. The intent
is to merge Rules 505 and 506 for purposes of the exemption in Alabama. Alabama recognizes that
Regulation A is interpreted by the SEC to apply only to executive
officers of an underwriter and will follow such interpretation. 3. The issuer shall file
with the Securities Commission: (i) An application for
exemption on Form D, 17 C.F.R. §239.500 no later than five (5) full business
days prior to the commencement of the offering in this state. The application
for exemption shall include two copies of all information furnished by the
issuer to any of the offerees. The exemption shall be deemed available unless
the Commission issues a denial of said exemption prior to the expiration of the
5 full-day business period; (ii) A notice on Part C of
Form D, 17 C.F.R. §239.500, no later than thirty (30) days after the completion
date of the offering; (iii) The notice on Form D,
17 C.F.R. §239.500 required by paragraphs (i) and (ii) above shall be manually
signed by a person duly authorized by the issuer; (iv) Every application for
exemption provided for in paragraph (i) above shall be accompanied by a
nonrefundable filing fee as enumerated at
§8-6-11
(C),Code of Alabama 1975. All applications or exemption and notices
on Form D, 17 C.F.R. §239.500, shall be considered filed with the Securities
Commission as of the date on which received at the office of the Securities
Commission; (v) Unless otherwise
available, included with or in the initial notice shall be a consent to service
of process as provided for in Code of Ala. 1975, §8-6-12. 4. In all sales to
nonaccredited investors the issuer and any persons acting on its behalf shall
have reasonable grounds to believe, and after making reasonable inquiry shall
believe, that both of the following conditions are satisfied: (i) The investment is
suitable for the purchaser upon the basis of the facts, if any, disclosed by the
purchaser as to his other security holdings and as to his financial situation
and needs. For the limited purpose of this condition only, it may be presumed
that if the investment does not exceed 20% of the investors net worth (excluding
principle residence, furnishings therein and personal automobiles) it is
suitable; (ii) The purchaser either
alone or with his purchaser representative(s) has such knowledge and experience
in financial and business matters that he is or they are capable of evaluating
the merits and risks of the prospective investment. 5. In all sales to those
accredited investors defined in §230.501(l)(5)-(7) the issuer and any person
acting on its behalf shall have reasonable grounds to believe and, after making
reasonable inquiry, shall believe that the purchaser either alone or with his
purchaser representative(s) has such knowledge and experience in financial and
business matters that he is or they are capable of evaluating the merits and
risks of the prospective investment. (2) Nothing in this
exemption is intended to relieve, or should be construed as in any way
relieving, issuers or persons acting on behalf of issuers from providing
disclosure to prospective investors adequate to satisfy Section 8-6-17 of the
Act. Further, the Private
Placement Memorandum providing such disclosure must carry substantially the
following information shown boldly on the outside cover: "THESE SECURITIES ARE
OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE ALABAMA SECURITIES ACT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED
WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES NOT RECOMMEND
OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE." Alternatively, any
consolidated legend in substantially the following form will be acceptable: "THE UNITS OFFERED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH LAWS. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL." (3) Offers and sales which
are exempt under this rule may not be combined with offers and sales by issuers
in transactions which are exempt under any other rule or section of this Act;
however, nothing herein shall be deemed an election. If the offer and sale
should for any reason fail to comply with all of the conditions for this
exemption, the issuer may claim the availability of any other applicable
exemption. (4) In view of the
objective of this rule and the purposes and policies underlying the Act, this
exemption is not available to any issuer with respect to any transaction which,
although in technical compliance with the rule, is part of a plan or scheme to
evade registration or the conditions or limitations explicitly stated in this
rule. (5) No exemption under this
rule shall be granted if compliance with the terms and conditions of this rule
has not been effected by the issuer at all times prior to, during or subsequent
to any offering of securities hereunder. The Securities Commission may stop
order, deny, revoke or suspend the availability of any exemption pursuant to
this rule pending a further investigation and determination as to whether the
issuer has effected compliance with the terms and conditions of this rule.
Neither compliance nor attempted compliance with this rule nor the absence of
any objection or order by the securities commission with respect to any offering
of securities undertaken pursuant to this rule shall be deemed approval of any
securities offered pursuant to this rule. Author: Statutory Authority:
Code of Ala. 1975, §§8-6-11(a)(9), 8-6-23. History: Filed September 30, 1982. Amended: Filed September 30, 1983. Readopted: Filed November 9, 1983. Amended: Filed September 28, 1990. Emergency rule filed September 9, 1991. Amended: Filed October 23, 2009; effective November 27, 2009. 830-X-6-.12
Further Limited Offering Exemption. (1) Pursuant to the Authority delegated to the Alabama Securities Commission by Code of Ala. 1975, §8611(a)(9), any offer or sale of INTERPRETIVE COMMENT: In response to some questions, it should be understood that this transactional exemption is an expansion of, and an alternative to, the statutory exemption found in Code of Ala. 1975, §8611(a)(9). Therefore, it is not necessary to comply with the provisions of this Rule 830X6.12 if the offering complies with Code of Ala. 1975, §8611(a)(9) which exempts offerings to no more than ten (10) purchasers. (a) Sales of the securities
which are part of an issue are not made to more than 25 persons [other than
those designated in Code of Ala. 1975, §8-6-11(a)(8)] in this State
during any period of 12 consecutive months. (b) No commission, finders
fee or other remuneration shall be paid or given, directly or indirectly, to any
person for soliciting any prospective purchaser in this State, unless such
person is registered in this State pursuant to Code of Ala. 1975, §8-6-3; (c) No exemption under this
rule shall be available for the securities of any issuer if any of the parties
described in Rule 262(a) or (b) of Regulation A, 17 C.F.R. §230.262(a) and (b),
adopted under the Securities Act of 1933 (generally described as: the issuer,
any of its predecessors or any affiliated issuer; any director, officer or
general partner of the issuer, beneficial owners of 10% or more of any class of
its equity securities or any promoter of the issuer presently connected with it
in any capacity; any underwriter of the securities to be offered, or any
partner, director or officer of any such underwriter): (i) Has filed a
registration statement which is the subject of a currently effective
registration stop order entered pursuant to any state’s securities law within
five years prior to the filing of the notice required under this exemption. (ii) Has been convicted
within five years prior to the filing of the notice required under this
exemption of any felony or misdemeanor in connection with the offer, purchase or
sale of any security or any felony involving fraud or deceit, including but not
limited to forgery, embezzlement, obtaining money under false pretenses, larceny
or conspiracy to defraud. (iii) Is currently subject
to any state administrative enforcement order or judgment entered by that
state’s securities administrator within five years prior to the filing of the
notice required under this exemption or is subject to any state’s
administrative enforcement order or judgment in which fraud or deceit,
including, but not limited to, making untrue statements of material facts and
omitting to state material facts, was found and the order or judgment was
entered within five years prior to the filing of the notice required under this
exemption. (iv) Is subject to any
state’s administrative enforcement order or judgment which prohibits, denies
or revokes the use of any exemption from registration in connection with the
offer, purchase or sale of securities. (v) Is currently subject to
any order, judgment, or decree of any court of competent jurisdiction
temporarily or preliminarily restraining or enjoining, or is subject to any
order, judgment or decree of any court of competent jurisdiction, permanently
restraining or enjoining, such party from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security or involving
the making of any false filing with the state entered within five years prior to
the filing of the notice required under this exemption. (vi) Any disqualifications
caused by this section may be waived if the state securities administrator or
agency of the State which created the basis for disqualification determines upon
a showing of good cause that it is not necessary under the circumstances that
the exemption be denied. (vii) The disqualification
found in Rule 505(b)(2)(iii) of Regulation D shall apply also to offerings made
pursuant to this rule. INTERPRETATIVE COMMENT:
Subparagraph (c)(vii) is added to make clear that both the federal and the
Alabama "bad boy" provisions apply to any offering made pursuant to
this rule. Alabama recognizes that
Regulation A is interpreted by the SEC to apply only to executive officers of an
underwriter and will generally follow such interpretation. (d) The issuer shall file a
notice with the Securities Commission as follows: (i) If in connection with
the transaction, the issuer is filing a notice with the Securities and Exchange
Commission pursuant to Section 4(6) of the Securities Act of 1933 or Regulation
D (Rule 230.503), the notice may be a copy of the form first filed pursuant to
those provisions. The filing fee required by subsection (iv) below must
accompany the filing. Each issuer (other than an Alabama corporation) must also
file a consent to service of process in accordance with subsection (v) below,
unless it already has a consent to service of process on file with the
Securities Commission. The filing should be accompanied with a cover letter
indicating that the filing is pursuant to Rule 830-X-6-.12, and if a consent to
service of process is not included, a statement that the issuer already has a
consent to service of process on file with the Securities Commission; (ii) Unless a notice is
filed pursuant to paragraph (i), the notice shall be in the form and contain the
information specified by subsection (vi) below and in accordance with the
instructions thereto and be accompanied by the fee required by subsection (iv)
below; (iii) A notice required by
this section shall be filed with the Securities Commission no later than fifteen
(15) calendar days after the latter to occur of (i) the sale of a security to
the eleventh purchaser, wherever such purchaser is located, in a transaction
involving purchasers in this State or (ii) the first sale to a purchaser located
in this State. Each notice filed with the Securities Commission shall expire
12-months following the first sale of a security of the transaction in this
State. At the written request of the issuer and upon proper showing, the
Securities Commission may extend the term of the notice for up to 12 months; INTERPRETIVE COMMENT:
Regulation D of the Securities Act of 1933 requires that notice be given no
later than fifteen (15) days after the first sale of a security. As previously
stated, this rule 830-X-6-.12 is an expansion of, and an alternative to, the
statutory exemption contained in Code of Ala. 1975, §8-6-11(a)(9) which
provides for an exemption from registration for sales made to no more than ten
(10) purchasers. Consequently, this rule presumes that an issuer would not elect
to rely upon this rule in lieu of the statutory exemption contained in Code
of Ala. 1975, §8-6-11(a)(9) until the issuer makes a sale to the eleventh
purchaser in the offering, regardless of where such purchasers resides.
Accordingly, the fifteen (15) calendar day filing requirement commences upon the
eleventh rather than the first sale of a security of an offering involving
purchasers in this State so as not to preclude reliance upon this rule by an
issuer who initially chooses to rely upon the statutory exemption contained in Code
of Ala. 1975, §8-6-11(a)(9). (iv) Each notice provided
in (i) or (ii) above shall be accompanied by a nonrefundable filing fee as
enumerated at
§8-6-11(C),
Code of Alabama 1975.
Each request for an extension as provided in (iii) above shall be accompanied by
a nonrefundable filing fee of $300. All notices shall be considered filed with
the Securities Commission as of the date on which received at the offices of the
Securities Commission; (v) Unless otherwise
available or the issuer is an Alabama corporation, included with or in the
initial notice shall be a consent to service of process as provided for in Code
of Ala. 1975, §8-6-12; (vi) A notice filing in the
following form is to be used for transactions covered by subsection (d)(ii): Fee (Page 1 of 3) See master code for form Fee (page 2 of 3) See master code for form Fee (page 3 0f 3) See master code for form Fee Instructions See master code for form Fee Instructions See master code for form (e) In all sales to
nonaccredited investors the issuer and any persons acting on its behalf shall
have reasonable grounds to believe, and after making diligent inquiry shall
believe, that both of the following conditions are satisfied: (i) The investment is
suitable for the purchaser upon the basis of the facts, if any, disclosed by the
purchaser as to his other security holdings and as to his financial situation
and needs. For the limited purpose of this condition only, it may be presumed
that if the investment does not exceed 20% of the investors net worth (excluding
principal residence, furnishings therein and personal automobiles) it is
suitable; (ii) The purchaser either
alone or with his purchaser representative(s) has such knowledge and experience
in financial and business matters that he is or they are capable of evaluating
the merits and risks of the prospective investment. (f) The following legend
shall be placed on the certificate or other document which evidences the
securities: "THE SECURITIES
EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH NOR APPROVED OR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR BY THE
SECURITIES REGULATORY AUTHORITY OF ANY STATE AND SUCH REGISTRATION IS NOT
CONTEMPLATED. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE." (g) No public advertising
or general solicitation is used in connection with the issue of which the
transaction in reliance on this exemption is a part. (3) Offers and sales which
are exempt under this rule may not be combined with offers and sales by issuers
in transactions which are exempt under any other rule or section of this Act;
however, nothing herein shall be deemed an election. If the offer and sale
should for any reason fail to comply with all of the conditions for this
exemption, the issuer may claim the availability of any other applicable
exemption. (4) In view of the
objective of this rule and the purposes and policies underlying the Act, this
exemption is not available to any issuer with respect to any transaction which,
although in technical compliance with the rule, is part of a plan or scheme to
evade registration or the conditions or limitations explicitly stated in this
rule. Author: Joseph
P. Borg Statutory Authority: Code
of Ala. 1975, §§8-6-11(a)(9),
8-6-23. History: Rule 830-X-6-.12 entitled "Further Conditioning of Limited Offering Exemption" filed March 15, 1984. Repealed: Filed September 28, 1990. New Rule: Filed October 23, 1997; effective November 27, 1997. Amended: Filed October 13, 1998; effective November 17, 1998. Amended: Filed August 18, 1999; effective September 22, 1999. Amended: Filed October 23, 2009; effective November 27, 2009. |
830-X-6-.13
Notice Filing Requirements for Federal Crowdfunding Offerings.. The following provisions apply to offerings made under federal Regulation Crowdfunding and Section 18 (b) (4) of the Securities Act of 1933:
(1) Filing Requirements.
(a) An issuer whose principal place of business is in this state, or if residents of this state have purchased fifty percent or greater of the aggregate amount of the offering, shall file the following with the Commission:
1. A completed Uniform Notice of Federal Crowdfunding Offering form or copies of all documents filed with the Securities and Exchange Commission;
2. A consent to service of process on Form U-2
if not filing on the Uniform Notice of Federal Crowdfunding Offering form; and
3. The filing fee prescribed by § 8-6-8 (d).
(b) If the issuer has
its principal place of business in this state, the filing required under
subsection (a) of this section shall be filed with the Securities Commission
when the issuer makes its initial Form C filing concerning the offering with
the Securities and Exchange Commission. If the issuer does not have its
principal place of business in this state but residents of this state have
purchased fifty percent or greater of the aggregate amount of the offering,
the filing required under subsection (a) of this section shall be filed when
the issuer becomes aware that such purchases have met this threshold and in
no event later than fifteen days from the date of completion of the offering.
(2) Amendments. An issuer
may increase the amount of securities offered in this state by submitting a
completed Uniform Notice of Federal Crowdfunding Offering form marked "amendment"
or other document describing the transaction and a fee calculated pursuant to
§ 8-6-8 (d) to cover the increase in the amount of securities being offered prior
to selling additional securities in this state.