Current through Reg. 49, No. 38; September 20, 2024
Any offer or sale of a security by an issuer in a transaction
that meets the requirements of this section is exempted from the securities
registration requirements of the Texas Securities Act and exempted from the
filing requirements contained in the Texas Securities Act, §22.A, and
Chapter 137 of this title (relating to Administrative Guidelines for Regulation
of Offers).
(1) Who may purchase.
Sales of securities shall be made only to persons who are or the issuer
reasonably believes are accredited investors. "Accredited investor" is defined
in §
RSA 107.2 of this
title (relating to Definitions).
(2) Unavailable for certain issuers. The
exemption is not available to an issuer that is in the development stage that
either has no specific business plan or purpose or 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) Investment intent; resales. 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, except a resale pursuant to a registration statement effective
under the Texas Securities Act, §7, or to an accredited investor pursuant
to an exemption available under the Texas Securities Act or Board
rules.
(4) Disqualifications.
(A) The exemption is not available to an
issuer if 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:
(i) 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;
(ii) 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;
(iii) 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
(iv) 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) Subparagraph (A) of this paragraph shall
not apply if:
(i) 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;
(ii) 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
(iii) 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) General announcement.
(A) A general announcement of the proposed
offering may be made by any means.
(B) The general announcement shall include
only the following information, unless additional information is specifically
permitted by the Securities Commissioner:
(i)
the name, address, and telephone number of the issuer of the
securities;
(ii) the name, a brief
description, and price (if known) of any security to be issued;
(iii) a brief description of the business of
the issuer in 25 words or less;
(iv) the type, number, and aggregate amount
of securities being offered;
(v)
the name, address, and telephone number of the person to contact for additional
information; and
(vi) a statement
that:
(I) sales will only be made to
accredited investors;
(II) no money
or other consideration is being solicited or will be accepted by way of this
general announcement; and
(III) the
securities have not been registered with or approved by any state securities
agency or the U.S. Securities and Exchange Commission and are being offered and
sold pursuant to an exemption from registration.
(6) Provision of
additional information. The issuer, in connection with an offer, may provide
information in addition to the general announcement under paragraph (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) Telephone solicitation. No
telephone solicitation shall be permitted unless prior to placing the call, the
issuer reasonably believes that the prospective purchaser to be solicited is an
accredited investor.
(8) Loss of
exemption. Dissemination of the general announcement of the proposed offering
to persons who are not accredited investors shall not disqualify the issuer
from claiming the exemption under this section.
(9) Filing. The issuer shall file with the
Securities Commissioner a notice of transaction on the Model Accredited
Investor Exemption Uniform Notice of Transaction form, a consent to service of
process, and a copy of the general announcement within 15 days after the first
sale in this state.
(10) Dealer and
agent registration. Although the issuer is not required to register as a dealer
to conduct sales pursuant to this section, third parties must comply with the
dealer and agent registration requirements of the Texas Securities Act and
Board rules. For the purposes of this section, the term "issuer" includes any
director, officer, or employee of the issuer provided all the following
conditions are satisfied:
(A) the director,
officer, or employee was not hired for the purpose of offering or selling such
securities;
(B) the director's,
officer's, or employee's activity involving the offer and sale of such
securities is strictly incidental to his or her bona fide primary
non-securities related work duties; and
(C) the director's, officer's, or employee's
compensation is based solely on the performance of other such duties, i.e., the
director, officer, or employee does not receive any compensation for offering
for sale, selling, or otherwise aiding in the sale of securities.
