Illinois Administrative Code
Title 14 - COMMERCE
Part 130 - REGULATIONS UNDER ILLINOIS SECURITIES LAW OF 1953
Subpart D - EXEMPT TRANSACTIONS
Section 130.493 - Crowdfunding Pursuant to Section 4.T of the Act - Issuers
Universal Citation: 14 IL Admin Code ยง 130.493
Current through Register Vol. 48, No. 38, September 20, 2024
a) Duties of the Issuer
For purposes of this Section, "investor" means a purchaser or prospective purchaser, and "internet portal" means a registered internet portal as defined in Section 8d(b) of the Act and required by Section 4.T of the Act and Section 130.494 of this Part.
1)
Filing Requirements and Forms
A) Notice
Filing. The issuer shall file a notice on Form CF (Crowdfunding Issuer Form)
with the Secretary of State not less than 15 days before the earlier of the
first offer or sale of securities or the use of any general solicitation with
respect to the offering. The Form CF must include the offering statement and
all required information and documentation specified on the form.
B) Annual Renewal. The notice filed pursuant
to this subsection (a)(1) shall be effective for up to 12 months, subject to
annual renewal. The annual renewal shall be filed on Form CF within 30 days
before the expiration of the original filing, and shall include a sales report
indicating the number of investors in the offering and the number of, and value
of, securities sold.
C) Termination
of Offering. The issuer shall file Form CF-T with the Secretary of State, and
provide a copy to the relevant internet portal, no later than 15 days after the
termination of the offering. Termination shall include those offering that are
completed for purposes of this exemption.
D) Filing Fees. The filing of Form CF,
including the filing of a renewal Form CF and an amended Form CF, shall include
the payment of the filing fee of $100 required by Section 18.1 of the
Act.
E) Review of Filing. If, upon
review of the Form CF, the Secretary of State determines that the form is
incomplete, or that the offering should not be permitted, the Secretary of
State shall notify the issuer (and the broker, dealer or internet portal if
applicable) on or before the initial commencement date of the offering. Absent
that notification, the offering is deemed permitted. Nothing in this Part
limits the authority of the Secretary of State to investigate, issue orders or
enforce any provisions of the Act or rules thereunder with regard to the filing
of Form CF and the subject offering.
2) Escrow Agreements and Accounts
A) The issuer shall enter into an escrow
agreement with a qualified escrowee, providing that, at a minimum:
i) all funds to be received in connection
with the proposed offering shall be delivered to, and held by, the qualified
escrowee pursuant to the terms of the escrow agreement; and
ii) the issuer shall not have access to the
escrow funds, or any portion of those funds, until the aggregate funds received
by the qualified escrowee in connection with the proposed offering equal or
exceed the minimum amount of securities to be sold as established by the
issuer.
B) Investors
shall receive a return of the entirety of their investment funds if the target
offering amount is not raised by the deadline date established in the offering
materials.
3) Required
Disclosures. In additional to all other material disclosures that are required
by law or rules, the issuer must disclose the following to investors:
A) Offering Maximum and Minimum Amounts. The
issuer shall establish a maximum amount and a minimum amount of securities to
be sold and a deadline date for selling the designated minimum amount of
securities. This information shall be conspicuously disclosed in any agreement
evidencing the investor's subscription agreement to purchase the securities.
The minimum amount designated for sale shall be no less than 50% of the maximum
amount.
B) Cancellation Rights. An
investor may cancel, without penalty, an investment commitment until 5 business
days after making the commitment. The issuer shall conspicuously disclose in
the investor's subscription agreement this right of cancellation. Upon receipt
of the notice after cancellation, the intermediary shall direct the refund of
investor funds within 5 business days.
4) General Announcement of Offering. The
issuer, through an internet portal or otherwise, may distribute a general
announcement preceding the general solicitation or offering that is limited to
the following information: a statement that the issuer is conducting an
offering in reliance on Section 4T of the Act; the legal identity, business
location and website of the issuer; the name and web address (or internet link)
of the registered internet portal, broker, funding portal or dealer handling
the offering; the maximum and minimum amount of the offering; a one sentence
description of the business of the issuer; the telephone number or email
address of the representative of the issuer and a statement noting that only
Illinois residents are eligible to participate in the offering. An issuer, or
person acting on behalf of the issuer, may communicate with investors and
potential investors about the terms of the offering through communication
channels provided by the internet portal, provided that the issuer identifies
itself as the issuer in all communications. Persons acting on behalf of the
issuer must identify their affiliation with the issuer in all communications.
The issuer (and to the extent an internet portal is used, that internet portal)
shall take reasonable measures to limit access to any information concerning
the offer or sale of the subject securities to residents of Illinois.
5) Early Completion of Offering. If an issuer
reaches the maximum offering amount prior to the deadline identified in its
offering materials, the issuer may close the offering on a date earlier than
the deadline identified in its offering materials.
6) Material Changes of the Offering. If there
is a material change to the terms of the offering or to the information
provided by the issuer, the issuer must provide notice of the material changes
to the Secretary of State, the relevant internet portal and the investors
(communication to investors may occur through the internet portal).
7) Return of Funds if Offering is Not
Completed. If an issuer does not complete an offering, the internet portal
must, within 5 business days:
A) Notify each
investor of the cancellation, disclosing the reason for the cancellation and
the amount of funds that the investor is expected to receive;
B) Direct the refund of investor
funds;
C) Prevent investors from
making investment commitments with respect to that offering on the issuer's
internet platform.
8)
Investor Qualification
A) Each time before
accepting any investment commitment (including any additional investment
commitment from the same person), an issuer must have a reasonable basis for
believing that the investor satisfies the requirements of Section 4.T of the
Act and this Section.
B) The issuer
may rely on an investor's representations regarding compliance with the
investment limitation requirements concerning the investor's annual income and
net worth, and the amount of the investor's other investments made pursuant to
Section 4.T of the Act, unless the issuer has reason to question the
reliability of the representation. The issuer may obtain the required investor
affirmations through the internet portal.
C) The issuer may establish Illinois
residency by relying on:
i) a valid Illinois
driver's license or official personal identification card issued by the
Illinois Secretary of State;
ii) a
current Illinois voter registration; or
iii) general property tax records showing the
investor owns and occupies property in Illinois as his or her principal
residence.
9)
Financial Disclosures. The issuer shall provide at least annually to each
purchaser, free of charge, financial statements of the issuer, which shall be
audited or reviewed by a public accountant that is independent of the issuer.
If audited statements or reviewed statements are not available, the issuer
shall provide financial statements that are certified by the principal
executive officer of the issuer attesting that the financials are fair,
complete and accurate. Financial statements shall include blanace sheets,
statements of comprehensive income, statements of cash flows, statements of
changes in stockholders' equity and notes to the financial statements. The
issuer or internet portal shall inform investors when the information becomes
available and shall make the information accessible to investors through the
issuer's or internet portal's website. The financial statements shall be
available no later than 120 days after the end of each fiscal year, and shall
remain available until the succeeding financial statements until the earlier
of:
A) the date the issuer liquidates or
dissolves (other than by administrative dissolution) in accordance with
applicable law;
B) the date the
issuer, or another party, purchases or repurchases all of the securities issued
by the issuer under Section 4T of the Act, including any payment in full of
debt securities or any complete redemption of redeemable securities.
b) Disqualifications. No exemption under Section 4.T of the Act and this Section shall be available for a sale of securities if the issuer, any predecessor of the issuer, any affiliated issuer, any director, officer, general partner or managing member of the issuer, any beneficial owner of 20% or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power, any promoter connected with the issuer in any capacity at the time of the sale, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sales of securities, or any general partner, director, officer or managing member of any such solicitor:
1) Is or has been subject to any of the
statutory disqualification provisions set forth in Section 8.E(1) of the
Illinois Securities Act; or
2) Has
filed a registration statement within the last 5 years that is the subject of a
currently effective registration stop order entered by any state securities
administrator or the U.S. Securities and Exchange Commission.
Disclaimer: These regulations may not be the most recent version. Illinois 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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