Current through Register Vol. 41, No. 3, September 23, 2024
A. In accordance with § 13.1-514B 19 of
the Act, any offer or sale of a security by an issuer in a transaction that
meets the requirements of this section is exempt from the securities,
broker-dealer and agent registration requirements of the Act.
B. Sales of securities shall be made only to
persons who are or the issuer reasonably believes are "accredited investors,"
as that term is defined in 17 CFR
230.501(a), and
1. Have sufficient knowledge and experience
in financial and business matters to be capable of evaluating the merits and
risks of the prospective investment, and are able to bear the economic risks of
the prospective investment; or
2.
Together with a purchaser representative or representatives, have sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of the prospective investment, and are able to
bear the economic risks of the prospective investment.
C. 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.
D. 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 §§ 13.1-508 through 13.1-510 of the Act or to an accredited
investor pursuant to an exemption available under the Act.
E.
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:
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
SEC;
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;
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
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. Subdivision 1 of this subsection shall not
apply if:
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;
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
c. 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 section.
F. A general announcement of the proposed
offering may be made by any means. The general announcement shall include only
the following information, unless additional information is specifically
permitted by the commission:
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 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. A statement that:
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 this general
announcement; and
c. The securities
have not been registered with or approved by any state securities agency or the
SEC and are being offered and sold pursuant to an exemption from
registration.
G. The issuer, in connection with an offer,
may provide information in addition to the general announcement under
subsection F of this section, if such information:
1. Is delivered through an electronic
database that is restricted to persons who have been pre-qualified as
accredited investors; or
2. Is
delivered if the issuer reasonably believes that the prospective purchaser is
an accredited investor.
H. 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.
I. 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.
J. The issuer shall file with the commission
no later than 15 days after the first sale in this Commonwealth from an
offering being made in reliance upon this exemption:
1. A notice on the Model Accredited Investor
Exemption Uniform Notice of Transaction form.
2. An executed consent of service of process
(Form U-2) appointing the Clerk of the commission as its agent for purpose of
service of process, unless a currently effective consent to service of process
is on file with the commission.
3.
A copy of the general announcement.
4. A nonrefundable filing fee of $250 payable
to the Treasurer of Virginia.
Statutory Authority
§§ 12.1-13 and 13.1-523.1 of the Code of
Virginia.