Current through Register Vol. 48, No. 3, March 22, 2024
Any offer or sale of securities made in compliance with Rules
501 through 505 and 507 through 508 of Regulation D (collectively "SEC
Regulation D") under the Securities Act of 1933, as amended from time to time
(except for any subsequent amendment to SEC Regulation D which the Securities
Commissioner, by Rule or Order, specifically excludes) and which satisfies the
following additional conditions and limitations, shall be exempt from Sections
35-1-301
to
35-1-306
of the South Carolina Uniform Securities Act of 2005:
A. Commissions. No commissions, finders fees
or other remuneration shall be paid or given, directly or indirectly, to any
person for soliciting any prospective purchaser unless such person is
registered as a broker-dealer or agent as required by Section
35-1-401
of the South Carolina Uniform Securities Act of 2005.
B. Disqualifications. No exemption under this
Rule shall be available for the securities of an issuer, if the issuer or any
of its affiliates:
(1) is subject to any
order, judgment, or decree of any court of competent jurisdiction temporarily
or preliminary restraining or enjoining or is subject to an order, judgment or
decree of any court of competent jurisdiction, entered within five (5) years
prior to commencement of the offering in reliance upon this exemption,
permanently restraining or enjoining such person 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 any state; or
(2) has been convicted within five (5) years
prior to the commencement of the offering in reliance upon this exemption of
any felony or misdemeanor in connection with the 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, theft by
conversion, theft by deception, larceny or conspiracy to defraud; or
(3) is subject to any order, judgment or
decree issued by any State Securities Administrator, the United States
Securities and Exchange Commission, the United States Commodities Future
Trading Commission or the United States Postal Service in which fraud, deceit
or registration violations were found after notice and opportunity for hearing,
if the order was entered within five (5) years prior to the commencement of the
offering in reliance upon this exemption; or
(4) is subject to an order barring or
suspending membership in any self-regulatory organization registered pursuant
to the Securities Exchange Act of 1934, if the order was entered within five
(5) years prior to the commencement of the offering in reliance upon this
exemption.
C. Waiver of
Disqualification. The disqualification referred to in Subsection B above shall
not apply:
(1) if the issuer or its affiliate
subject to the disqualification is currently registered or licensed to conduct
securities-related business in the jurisdiction where the administrative order
or judgment was entered against such issuer or affiliate; or
(2) if the jurisdiction which created the
basis for disqualification determines upon a showing of good cause that it is
not necessary under the circumstances that the exemption be denied;
or
(3) if the Securities
Commissioner, in his discretion, waives the disqualification.
D. Filing requirements. The
following filing requirements are conditions precedent to the availability of
this exemption:
(1) The issuer shall file with
the Securities Commissioner a notice of intention to sell using the SEC Form D,
described in Rule
503 of SEC Regulation D, or any successor
form, at least five (5) business days prior to the first offering to an
investor in this state in reliance upon this exemption. Said notice of
intention to sell shall be accompanied by the following:
(a) a non-refundable filing fee in the amount
of three hundred ($300.00) dollars;
(b) a consent to service of process
prescribed by Section
35-1-611(a)
of the South Carolina Uniform Securities Act of 2005, on Form U-2, which has
been executed by the issuer; and
(c) a copy of any prospectus or disclosure
documents to be used in connection with the offer and sale of the
securities.
(2) A sales
report shall be filed with the Securities Commissioner no later than thirty
(30) days after the termination of the offering and shall include the names and
addresses of the purchasers.
(3) In
the event that an offering pursuant to this exemption continues for a period of
more than twelve (12) months after the time required for the filing of the
initial SEC Form D in this state, prior to the expiration of twelve (12) months
from such time, the issuer shall file with the Securities Commissioner a notice
stating that such offering is to be renewed for an additional period of up to
twelve (12) months, together with a non-refundable renewal filing fee in the
amount of three hundred ($300.00) dollars and any necessary amendments or
updates to documents previously filed with the Securities
Commissioner.
(4) Any filing
pursuant to this exemption shall be amended by filing with the Securities
Commissioner such information and changes as may be necessary to correct any
material misstatement or omission in the filing. Any prospectus or disclosure
documents required to be filed by this Rule that were not prepared at the time
of the initial filing, or which materially differ from the prospectus or
disclosure documents included in any filing shall be filed with the Securities
Commissioner at least two (2) business days prior to its use in this state.
There shall be no fees charged for amendment of filings pursuant to this
Rule.
(5) Any notice on, amendment
to or renewal of an SEC Form D required by this section shall be manually
signed by a person authorized by the issuer.
(6) For purposes of this exemption, a
document shall be deemed to have been filed with the Securities Commissioner
only when the document has been delivered to the Office of the Securities
Commissioner.
E. Any
prospectus or disclosure document utilized in this State in connection with
offers or sales of securities in reliance on this exemption must carry
substantially the following information shown boldly:
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION
UNDER ONE OR MORE SECURITIES ACTS. IN MAKING AN INVESTMENT DECISION INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE
SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSIONER OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
F. The Securities Commissioner in his
discretion shall be entitled to postpone the effective date of any filing
pursuant to this exemption pending receipt of registered or required documents
or pending further review or to deny the availability of this exemption by
faxing, mailing, or otherwise notifying the issuer prior to the end of the
fifth business day after filing of the SEC Form D referred to in Subsection
D(1) above.
G. An issuer shall be
deemed to have complied with Regulation D as used above if the issuer
demonstrates to the Securities Commissioner that it has made a good faith
effort to comply in all material respects with Regulation D, and the issuer
otherwise qualifies for an exemption from registration under the Securities Act
of 1933.
H. This exemption shall
not apply to transactions offered and sold in reliance upon Rule 504 of SEC
Regulation D, unless the following additional conditions are satisfied:
(1) The aggregate offering price for
securities sold in South Carolina shall not exceed two hundred fifty thousand
($250,000.00) dollars during any twelve (12) month period;
(2) The limitation on the manner of offering
and resale of securities set forth in Rules 502(c) and (d) of SEC Regulation D
shall be satisfied; and
(3) The
"sophisticated investor" qualifications for the nature of purchasers set forth
in Rule 506(b)(2)(ii) of SEC Regulation D shall be satisfied.
I. Nothing in this exemption is
intended to relieve or should be construed as in any way relieving issuers or
persons acting on behalf of issuers from the anti-fraud provisions of the South
Carolina Uniform Securities Act of 2005.
J. The Securities Commissioner may deny,
revoke or suspend the availability of this exemption pending a further
investigation and determination as to whether the issuer and all other parties
acting on behalf of the issuer have effected full compliance with the terms and
conditions hereof, and of the South Carolina Uniform Securities Act of 2005.
Neither compliance nor attempted compliance with this exemption, nor the
absence of any objection or order from the Securities Commissioner with respect
to any offering of securities undertaken pursuant to this exemption, shall be
deemed an approval of any securities offered pursuant to this
exemption.
K. The aggregate number
of unaccredited investors sold under this exemption shall not exceed
thirty-five (35) purchasers in this state during any twelve (12) month period,
exclusive of purchasers acquiring securities registered pursuant to Section
35-1-304
of the South Carolina Uniform Securities Act of 2005.
L. All terms used in this exemption, to the
extent not otherwise defined, shall have the meanings ascribed to them in SEC
Regulation D.
