Current through August 31, 2023
01.
In
General. Sections
30-14-301 through
30-14-305, Idaho Code, shall not
apply to any offer or sale of a security by an issuer in a transaction that
meets the requirements of this rule. A designated matching service shall not be
deemed a broker-dealer subject to registration within the meaning of the Act or
the rules thereunder. (3-23-22)
02.
Definitions. The following words and terms, when used in this
rule, shall have the following meanings, unless the context clearly indicates
otherwise. (3-23-22)
a. Designated Matching
Service. Means a matching service designated by the Administrator under Section
062 of these rules.
(3-23-22)
b. Designated Matching
Service Facility. Means a computer system operated, or a seminar or meeting
conducted, by a designated matching service. (3-23-22)
c. Individual Accredited Investor. Means any
natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his or her purchase, exceeds one million
dollars ($1,000,000) or any natural person who had an individual income in
excess of two hundred thousand dollars ($200,000) in each of the two (2) most
recent years or joint income with that person's spouse in excess of three
hundred thousand dollars ($300,000) in each of those years and has a reasonable
expectation of reaching the same income level in the current year. In addition
each purchaser must evidence such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
prospective investment. The term "individual accredited investor" also includes
any self-directed employee benefit plan with investment decisions made solely
by persons that are "individual accredited investors" as defined in Subsection
062.02.c. of this rule, and
the individual retirement account of any such individual accredited investor.
(3-23-22)
d. Investor Member. Means
an investor who has been properly qualified by and uses a designated matching
service. Either of the following investors may be properly qualified: any
institutional investor as described in Section
30-14-102(11),
Idaho Code, or an individual accredited investor as defined in this rule.
(3-23-22)
e. Issuer Member. Means
an issuer who uses a designated matching service facility. (3-23-22)
f. Summary Business Plan. Means a brief
statement specifically describing the issuer, its management, its products or
services, and the market for those products or services. Other information,
including, specifically, financial projections, must not be included in a
summary business plan. (3-23-22)
03.
Application. A person may
apply to the Administrator to be a designated matching service by filing such
forms as required by the Administrator. No designation will be made unless the
applicant demonstrates that it: (3-23-22)
a.
Owns, operates, sponsors, or conducts a matching service facility limited to
providing investor members with the summary business plans and identities of
issuer members; (3-23-22)
b. Will
not be involved in any manner in the sale, offer for sale, solicitation of a
sale or offer to buy, a security other than as set forth in Subsection
062.03.a. of this rule;
(3-23-22)
c. Will make a reasonable
factual inquiry to determine whether an investor member is properly qualified;
(3-23-22)
d. Is a governmental
entity, quasi-governmental entity, an institution of higher education or an
Idaho nonprofit corporation that is associated with a governmental or
quasi-governmental entity or an institution of higher education;
(3-23-22)
e. Does not employ any
person required to be registered under the Act as a broker-dealer, investment
adviser, agent, or investment adviser representative; (3-23-22)
f. Does not have, and does not employ any
person who has a business relationship with any investor member or issuer
member other than to provide such member access to the matching service
facility; (3-23-22)
g. Charges fees
only in an amount necessary to cover its reasonable operating costs and that
are unrelated to the amount of money being raised by any issuer member or the
amount of securities sold by any issuer member; (3-23-22)
h. Agrees to not use any advertisement of its
matching service facility that advertises any particular issuer or any
particular securities or the quality of any securities or that is false or
misleading or otherwise likely to deceive a reader thereof; and
(3-23-22)
i. Meets such other
conditions as the Administrator considers appropriate for the protection of
investors and consistent with the purposes fairly intended by the policy and
provisions of the Act, and the rules thereunder. (3-23-22)
04.
Designation Consistent with
Act. Designation under this rule is not available to any matching
service formed in a manner that constitutes part of a scheme to violate or
evade the provisions of the Act or rules thereunder. (3-23-22)
05.
Withdrawal of Designation.
The Administrator, upon ten (10) days notice and hearing before the
Administrator or a hearing officer, may withdraw a person's designation as a
matching service if the person does not meet the standards for designation
provided in this rule. (3-23-22)
06.
Disqualifications. (3-23-22)
a. No exemption under this rule is available
for the securities of any issuer if the issuer: (3-23-22)
i. Within the last five (5) years, has filed
a registration statement which is the subject of a currently effective
registration stop order entered by the United States Securities and Exchange
Commission or any state securities administrator; (3-23-22)
ii. Within the last five (5) years, has been
convicted of any criminal offense in connection with the offer, purchase, or
sale of any security or any felony involving fraud or deceit or a misdemeanor
involving financial fraud; (3-23-22)
iii. Is the subject of any state or federal
administrative enforcement order, entered within the last five (5) years,
finding fraud or deceit in connection with the purchase or sale of any
security; or (3-23-22)
iv. Is the
subject of any order, judgment or decree of any court of competent
jurisdiction, entered within the last five (5) years, temporarily,
preliminarily or permanently restraining or enjoining such party from engaging
in or continuing to engage in any conduct or practice involving fraud or deceit
in connection with the purchase or sale of any security.
(3-23-22)
b. For purposes
of this rule, the term "issuer" includes: (3-23-22)
i. Any of the issuer's predecessors or any
affiliated issuer; (3-23-22)
ii.
Any of the issuer's directors, officers, general partners, or beneficial owners
of ten percent (10%) or more of any class of its equity securities (beneficial
ownership meaning the power to vote or direct the vote or the power to dispose
or direct the disposition of such securities); (3-23-22)
iii. Any of the issuer's promoters presently
connected with the issuer in any capacity, including: (3-23-22)
(1) Any person who, acting alone or in
conjunction with one (1) or more other persons, directly or indirectly takes
initiative in founding and organizing the business or enterprise of an issuer;
or (3-23-22)
(2) Any person who, in
connection with the founding and organizing of the business or enterprise of an
issuer, directly or indirectly receives in consideration of services or
property, or both services and property, ten percent (10%) or more of any class
of securities of the issuer or ten percent (10%) or more of the proceeds from
the sale of any class of such securities; however, a person who receives such
securities or proceeds either solely as underwriting commissions or solely in
consideration of property shall not be deemed a promoter within the meaning of
Subsection 062.06.b.iii. of this
rule, if such person does not otherwise take part in founding and organizing
the enterprise. (3-23-22)
iv. Any underwriter of the issuer.
(3-23-22)
c. The
exemption under this rule is not available to an issuer that is in the
development stage that either has no specific business plan or purpose or had
indicated that its business plan is to engage in a merger or acquisition with
an unidentified company or companies, or other entity or person.
(3-23-22)
07.
Notice of Transaction. The issuer shall file with the
Administrator a notice of transaction, consent to service of process (Form
U-2), and a copy of its summary business plan within fifteen (15) days after
the first sale in this state. (3-23-22)