Illinois Administrative Code
Title 14 - COMMERCE
Part 130 - REGULATIONS UNDER ILLINOIS SECURITIES LAW OF 1953
Subpart E - REGISTRATION OF SECURITIES
Section 130.525 - Procedures for Registration of Securities by Qualification under Section 5.B(7) of the Act, Small Company Offering Registration ("SCOR") on Form U-7

Universal Citation: 14 IL Admin Code ยง 130.525

Current through Register Vol. 48, No. 38, September 20, 2024

a) To be eligible to use Form U-7, an issuer must comply with each of the following requirements:

1) The issuer must be a corporation or a limited liability company organized under the laws of one of the states or possessions of the United States that engages in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries. "Blind pool" offerings and other offerings for which the specific business or properties cannot now be described are ineligible to use Form U-7;

2) The securities may be offered and sold only on behalf of the issuer, and Form U-7 may not be used by any selling security-holder (including underwriters in a firm commitment underwriting) to register the securities for resale;

3) The offering price for common stock (and the exercise price, if the securities are options, warrants or rights for, and the conversion price if the securities are convertible into common stock) must be equal to or greater than $1.00 per share;

4) The issuer may engage salespersons to sell the securities. Commissions, fees, or other remuneration for soliciting any prospective purchaser in this State in connection with the offering may only be paid to persons who are registered as salespersons;

5) Form U-7 shall not be available for the securities of any issuer if the issuer or any of its officers, directors, 10% stockholders, promoters or any salesperson of the securities to be offered, or any officer, director or partner of the issuer:
A) has filed a registration statement that is the subject of a currently effective registration stop order entered pursuant to any state's securities law within five years prior to the filing of the application for registration;

B) has been convicted within five years prior to the filing of the application for registration of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

C) is currently subject to any state administrative enforcement order or judgment entered by that state's securities administrator within five years prior to the filing of the application for registration or is subject to any state's administrative enforcement order or judgment in which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the application for registration;

D) is subject to any state's administrative enforcement order or judgment that prohibits, denies or revokes the use of any exemption from registration in connection with the subject offer, purchase or sale of securities included in the application for registration; or

E) is currently subject to any order, judgment or decree of any court of competent jurisdiction temporarily or preliminarily restricting, enjoining, or subject to any order, judgment or decree of any court of competent jurisdiction, permanently restraining or enjoining, from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the application for registration;

6) The prohibitions of subsections (a)(5)(A), (B), (C) and (E) shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against that person or if the dealer employing thatparty is licensed or registered in this State and the Form BD filed with this State discloses the order, conviction, judgment or decree relating to that person. If any of the circumstances in subsection (a)(5)(B), (C) or (E) has occurred more than five years from the date of the application for registration, these circumstances should be described in response to Question 45 of Form U-7 as a Miscellaneous Factor;

7) Use of Form U-7 is available to any offering of securities by an issuer, the aggregate offering price of which within or outside this State shall not exceed $1,000,000, less the aggregate offering price for all securities sold within the 12 months before the sale of, and during the offering of, the securities under SEC Rule 504 in reliance on any exemption under section 3(b) of the Federal 1933 Act not in violation of section 5(a) of that Act. Form U-7 is not available to a company that is an investment company (including mutual funds) or is subject to the reporting requirements of section 13 or 15(d) of the Federal 1934 Act;

8) The issuer shall file with the SEC a Form D pursuant to Regulation D under the Federal 1933 Act claiming exemption of the offering from registration under the Federal 1933 Act pursuant to Rule 504 under that Act. A copy of the Form D with Illinois signature pages shall be filed with the Securities Department at the same time it is filed with the SEC.

b) Application for registration of securities pursuant to Section 5.B(7) of the Act shall be made by:

1) filing the following documents with the Securities Department in the form required by Section 5.B of the Act:
A) A completed Application to Register Securities on Form U-1, executed by the applicant, if a natural person; or by an officer of the applicant, if a corporation; or in other cases by a credible person having knowledge of the facts, setting forth the name and address of the issuer, the title and total amount of the securities to be offered, the amount of the securities to be registered in this State pursuant to the Application, and the proposed maximum aggregate price for the securities being registered as defined in Section 130.251;

B) A copy of the Form U-7, Disclosure Document, with a response to each question in each paragraph of the Form U-7; if a question is not applicable, the response should so indicate; each response should be clearly and concisely stated and should not include nominal, immaterial or insignificant information;

C) Form of Selling Agency Agreement, if any;

D) Issuer's articles of incorporation or other charter documents and all amendments to those Articles or documents;

E) Issuer's by-laws, as amended to date;

F) Copy of any resolutions by directors setting forth terms and provisions of capital stock to be issued;

G) Any indenture, form of note or other contractual provision containing terms of notes or other debt, or of options, warrants or rights to be offered, if any;

H) Specimen of security to be offered (including any legend restricting resale);

I) Copy of all advertising or other materials, including electronic media and correspondence, directed to or to be furnished investors in the offering;

J) Form of escrow agreement for escrow of proceeds, if any;

K) Form of any subscription agreement for the purchase of securities in the offering;

L) Opinion of counsel as to the legality of the securities to be issued;

M) Consent to inclusion in the disclosure document of tax advisor's opinion or description of tax consequences, if any;

N) Consent to inclusion in the disclosure document of any evaluation of litigation or administrative action by counsel, if any;

O) Schedule setting forth the name and residential street address of each officer, director and principal stockholder;

P) Work sheets showing computations of responses to questions 6, 7(a), 8(a), 8(b) and 17(b) of Form U-7;

Q) Undertaking to file promptly with the Securities Department any and all amendments of and supplements to the disclosure document previously filed under Section 5.B of the Act, accompanied by the examination fee specified in Section 130.110; and

R) Name of the registered dealer who will be selling the securities, if any; or Form U4s for each individual who will be selling the securities, together with the filing fee required by Section 8.C(7) of the Act in the form and amount required by Section 130.110 or a description of the method by which the securities being registered will be offered and sold in Illinois in compliance with Section 8 of the Act.

2) Paying to the Securities Department the examination fee and filing fee required by Section 5.B(2)(g) and 5.C(1), respectively, of the Act in the form and amount required by Section 130.110 of this Part.

c) The Securities Department shall within a reasonable time examine the application and documents filed, and unlessthe Securities Department makes a determination that the application and documents so filed do not conform to the requirements of Section 5.B(7) of the Act and this Section; or the application for registration is then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act, the Department shall declare the Form U-7 effective and register the securities for offer and sale in this State under Section 5.B of the Act.

d) Issuer notification requirements to the Securities Department after the securities are registered:

1) Notification within two business days after the occurrence of any event that requires a material change in Form U-7 and submission of the following:
A) a complete Form U-7 as revised, amended or supplemented, marked to show changes from the previously filed version; and

B) the amendment filing fee as required by Section 5.B(2)(g) of the Act and in the form and amount required by Section 130.110 of this Part;

2) Monthly sales report disclosing the total dollar amount of securities sold in this State, to be filed not later than 10 business days following the end of each month;

3) Final sales report disclosing the total dollar amount of securities sold in this State, to be filed not later than 10 business days following the completion or termination of the offering; and

4) Affidavit of termination, as required pursuant to Section 5.D of the Act, to be filed not later than 30 days following completion or termination of the offering.

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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