Alabama Administrative Code
Title 830 - ALABAMA SECURITIES COMMISSION
Chapter 830-X-6 - EXEMPT SECURITIES AND EXEMPT TRANSACTIONS
Section 830-X-6-.11 - Limited Offering Exemption
Current through Register Vol. 42, No. 5, February 29, 2024
(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).
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.
(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: Joseph P. Borg
Statutory Authority: Code of Ala. 1975, §§ 8-6-11(a)(9), 8-6-23.