Current through Bulletin 2024-06, March 15, 2024
(A)
Authority and purpose
(1) The Division enacts
this rule under authority granted by Subsection
61-1-14(2)(v)
and Section
61-1-24.
(2) This rule provides an exemption for
offers and sales to accredited investors. The rule also permits a limited use
advertisement.
(B)
Definitions
(1) "Accredited Investor" means
an accredited investor as defined in
17 CFR
230.501(a) which is
incorporated by reference.
(2)
"Division" means the Division of Securities, Utah Department of
Commerce.
(3) "Exemption" means the
exemption provided in Subsection
61-1-14(2)(v).
(C) Exemption
The Division finds that registration is not necessary or
appropriate for the protection of investors pursuant to Section
61-1-14(2)(v)
in connection with any offer or sale of a security by an issuer in a
transaction that meets the requirements of this rule.
(D) Purchaser qualifications
Sales of securities shall be made only to persons who are or
the issuer reasonably believes are accredited investors.
(E) Issuer Limitations
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.
(F) Investment Intent
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 Sections
61-1-9,
or
6-1-10 or
to an accredited investor pursuant to an exemption under Section
61-1-14.
(G) Disqualifications
(1) 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:
(1)(a) 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;
(1)(b) 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;
(1)(c) 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
(1)(d) 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.
(2) Subparagraph (G)(1) shall not apply if:
(2)(a) 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)(b) 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
(2)(c) the
issuer establishes that it did not know and in the exercise of reasonable care
could not have known that a disqualification existed under Paragraph
(G).
(H)
General Announcement
(1) A general
announcement of the proposed offering may be made by any means.
(2) The general announcement shall include
only the following information, unless additional information is specifically
permitted by the Division:
(2)(a) The name,
address and telephone number of the issuer of the securities;
(2)(b) The name, a brief description and
price (if known) of any security to be issued;
(2)(c) A brief description of the business of
the issuer in 25 words or less;
(2)(d) The type, number and aggregate amount
of securities being offered;
(2)(e)
The name, address and telephone number of the person to contact for additional
information; and
(2)(f) A statement
that:
(2)(f)(i) sales will only be made to
accredited investors;
(2)(f)(ii) no
money or other consideration is being solicited or will be accepted by way of
this general announcement; and
(2)(f)(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.
(I) Additional Information
The issuer, in connection with an offer, may provide
information in addition to the general announcement under paragraph (H), if
such information:
(1) is delivered
through an electronic database that is restricted to persons who have been
prequalified as accredited investors; or
(2) is delivered after the issuer reasonably
believes that the prospective purchaser is an accredited investor.
(J) Telephone Solicitations
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.
(K) Effect of dissemination of general
announcement to nonaccredited investors
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 rule.
(L) Filing Requirements
The issuer shall file with the Division, within 15 days after
the first sale in Utah:
(1) one
manually signed Form 14-25s, Accredited Investor Exemption Uniform Notice of
Transaction Form;
(2) NASAA Form
U-2, Uniform Consent to Service of Process;
(3) a copy of the general announcement;
and
(4) a fee as specified in the
Division's fee schedule.
