Compilation of Rules and Regulations of the State of Georgia
Department 590 - RULES OF OFFICE OF SECRETARY OF STATE
Chapter 590-4 - COMMISSIONER OF SECURITIES
Subject 590-4-2 - EXEMPTIONS
Rule 590-4-2-.05 - Nonpublic Offering Exemption

Universal Citation: GA Rules and Regs r 590-4-2-.05

Current through Rules and Regulations filed through March 20, 2024

(1) For purposes of calculating the number of purchasers under Section 10-5-11(14) of the Act, the following rules shall apply:

(a) The following purchasers shall be excluded:
1. Any person related to the purchaser by blood or marriage having the same principal residence as the purchaser.

2. Any trust or estate in which a purchaser and any of the persons related to the purchaser (as specified in clause (1) or (3)) collectively have more than fifty percent (50%) of the beneficial interest (excluding contingent interests).

3. Any corporation or other organization of which a purchaser and any of the persons related to the purchaser (as specified in clause (1) or (2)) collectively are beneficial owners of more than fifty percent (50%) of the equity securities (excluding directors' qualifying shares) or equity interest.

(b) A corporation, partnership, or other entity shall be counted as one (1) purchaser; however, if such entity is organized for the specific purpose of acquiring the securities offered and such entity is not an Accredited Investor, then each beneficial owner of equity securities or equity interests in the entity shall count as separate purchasers for purposes of calculating the number of purchasers pursuant to Section 10-5-11(14) of the Act.

(2) The issuer must satisfy all necessary provisions of Section 10-5-11(14) of the Act for all purchasers whether or not they are included in calculating the number of purchasers. Clients of an investment adviser or customers of a broker-dealer shall be considered the purchasers under Section 10-5-11(14) of the Act regardless of the amount of discretion given to the investment adviser or broker-dealer to act on behalf of the client or customer.

(3) In all Offerings and sales under Section 10-5-11(14) of the Act, the issuer shall make itself available to each purchaser and Purchaser Representative, if any, at a reasonable time prior to the purchase of securities, the opportunity to:

(a) Ask questions and receive answers concerning the terms and conditions of the Offering;

(b) Inspect and copy all material documents relating to the Offering; and

(c) Inspect and copy additional information that the issuer possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished in connection with the Offering.

(4) Offers and sales that are exempt under Section 10-5-11(14) of the Act may not be combined with offers and sales exempt under any other section or provision of the Act, provided, however, that this limitation shall not require an issuer to make an election and an issuer failing to satisfy Section 10-5-11(14) of the Act may claim the availability of any other applicable exemption. In any proceeding involving the availability of an exemption under Section 10-5-11(14) of the Act, the burden of proving compliance with the conditions of the exemption is upon the person claiming the exemption.

(5) The exemption provided by Section 10-5-11(14) of the Act is only an exemption for the initial Offering from the registration requirements of Section 10-5-20 of the Act. It is not an exemption for subsequent offers or resales of the securities from the initial Offering.

(6) Section 10-5-11(14) of the Act does not provide an exemption from any section of the Act other than Section 10-5-20 of the Act, including the antifraud and civil liability provisions.

O.C.G.A. Secs. 10-5-2, 10-5-3, 10-5-10, 10-5-11, 10-5-70.

Disclaimer: These regulations may not be the most recent version. Georgia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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