Filing Guidelines for Intrastate Offering (Otherwise Known as Crowdfunding)
Ala. Code § 8-6-11(a)(14) OF THE ALABAMA SECURITIES ACT is an intrastate exemption allowing for-profit corporations or other for-profit entities or other business cooperatives with its principal place of business in the State of Alabama to offer/sell securities only to residents of the State of Alabama who are residents at the time of purchase.
- The transaction shall meet the requirements of the federal exemption for intrastate offerings in section 3(a)(11) of the Securities Act of 1933, 15 U.S.C. § 77c(a)(11) and SEC rule 147.
- The sum of all cash and other consideration to be received for all sales of the security in reliance upon this exemption shall not exceed one million dollars ($1,000,000), less the aggregate amount received by the issuer within the twelve months before the first offer or sale made in reliance upon this exemption.
- The issuer shall not accept more than five thousand dollars ($5,000) from any single purchaser unless the purchaser is an accredited investor as defined by Rule 501 SEC regulation D, 17 C.F.R. 230.501.
- Issuer must reasonably believe that all purchasers are purchasing for investment and not for resale.
- Commission or remuneration shall not be paid or given, directly or indirectly, for any person’s participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer or agent in Alabama under the Act.
- All funds received from investors shall be deposited into a bank or depository institution authorized to do business in Alabama, and all funds shall be used in accordance with representations made to investors.
- Issuers shall not use this exemption in conjunction with any other exemption under the Act except the exemption to institutional investors at Ala. Code § 8-6-11(a)(8).
- Issuer shall make all disclosures to investors as required by subsection (f) or SEC Rule 147,17 C.F.R. 230-147(f).
NOT LESS THAN TEN DAYS PRIOR TO THE USE OF ANY GENERAL SOLICITATION OR WITHIN FIFTEEN DAYS AFTER THE FIRST SALE OF THE SECURITY PURSUANT TO THIS EXEMPTION (PROVIDED NO GENERAL SOLICITATION HAS BEEN USED), WHICHEVER COMES FIRST, THE ISSUER SHALL FILE WITH THE COMMISSION:
- Complete Form CF1, Notice of Crowd-Funding Exemption.
- $150.00 non-refundable filing fee
- Flyers or advertising to be used in the solicitation of investors
- Identification of anyone receiving compensation, directly or indirectly, for solicitation of this offering on behalf of the issuer
- Copies of offering documents provided to investors
- Evidence of registration with the Alabama Secretary of State’s Office
Exemption is not available to investment companies defined in Section 3 of the Investment Company Act of 1940, an investment adviser as defined at Ala. Code § 8-6-2(18), or to issuers whereby its officers, controlling people or promoters are subject to a disqualifier enumerated at Ala. Code § 8-6-9.
Nothing in this exemption shall be construed to alleviate any person from the anti-fraud provisions.