Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
032 - OFFICE OF SECURITIES
Chapter 537 - EXEMPTION FOR OFFERS AND SALES TO ACCREDITED INVESTORS
Section 032-537-3 - Requirements of Exemption

Universal Citation: 02 ME Code Rules ยง 032-537-3

Current through 2024-38, September 18, 2024

To qualify for this exemption, the transaction must meet the following requirements:

1. Sales of securities are made only to persons:

A. who are accredited investors; or

B. whom the issuer reasonably believes are accredited investors.

2. The exemption is not available to an issuer in the development stage that either:

A. has no specific business plan or purpose; or

B. has 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. The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to, or for sale in connection with, a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sale shall be presumed to be with a view to distribution and not for investment, unless the resale is made either:

A. pursuant to a registration statement effective under Section 16303 or 16304 of the Maine Uniform Securities Act; or

B. to an accredited investor pursuant to an exemption available under the Maine Uniform Securities Act.

4. The exemption is not available to an issuer if:

A. the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director, or officer of such underwriter:
(1) within the last five years, has filed a registration statement which is the subject of a currently effective registration stop order entered by any state securities administrator or the United States Securities and Exchange Commission;

(2) within the last five years, has been convicted of any criminal offense in connection with the offer, purchase, or sale of any security, or involving fraud or deceit;

(3) is currently subject to any state or federal administrative enforcement order or judgment, entered within the last five years, finding fraud or deceit in connection with the purchase or sale of any security; or

(4) is currently subject to any order, judgment, or decree of any court of competent jurisdiction, entered within the last five 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.

B. Subsection 4(A) of this section shall not apply if:
(1) the party subject to the disqualification is licensed or registered to conduct securities related business in the state in which the order, judgment, or decree creating the disqualification was entered against such party;

(2) before the first offer under this exemption, the state securities administrator, or the court or regulatory authority that entered the order, judgment, or decree, waives the disqualification; or

(3) the issuer establishes that it did not know, and in the exercise of reasonable care, based on a factual inquiry, could not have known, that a disqualification existed under this paragraph.

5. Any general announcement used by the issuer in connection with the transaction must meet the following requirements:

A. A general announcement of the proposed offering may be made by any means.

B. A general announcement shall include only the following information, unless additional information is specifically permitted by the administrator:
(1) The name, address, and telephone number of the issuer of the securities;

(2) The name, a brief description, and price (if known) of any security to be issued;

(3) A brief description of the business of the issuer in 25 words or less;

(4) The type, number, and aggregate amount of securities being offered;

(5) The name, address, and telephone number of the person to contact for additional information; and

(6) The following statements:
(a) Sales will only be made to accredited investors;

(b) No money or other consideration is being solicited or will be accepted by way of the general announcement; and

(c) The securities have not been registered with or approved by the United States Securities and Exchange Commission or any state securities agency and are being offered and sold pursuant to exemptions from registration.

6. The issuer, in connection with an offer, may provide information in addition to the general announcement permitted under Subsection 5 of this section, if such information:

A. is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; or

B. is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.

7. No telephone solicitation is permitted unless, prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.

8. Dissemination of the general announcement of the proposed offering to persons who are not accredited investors does not disqualify the issuer from claiming the exemption under this rule.

9. No later than 15 days after the first sale in this state, the issuer pays a $300 filing fee for each security sold in this state and files with the Office of Securities:

A. A notice of transaction on the form Model Accredited Investor Exemption Uniform Notice of Transaction;

B. A consent to service of process on Uniform Form U-2 signed by the issuer; and

C. A copy of any general announcement.

The Securities Administrator hereby adopts the form Model Accredited Investor Exemption Uniform Notice of Transaction under 32 M.R.S.A. §16605.

Disclaimer: These regulations may not be the most recent version. Maine 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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