Florida Statutes 517.0611 – The Florida Limited Offering Exemption
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(1) This section may be cited as “The Florida Limited Offering Exemption.”
(2) The registration provisions of s. 517.07 do not apply to a securities transaction conducted in accordance with this section; however, such transaction is subject to s. 517.301.
(3) The offer or sale of securities under this section must be conducted in accordance with the requirements of the federal exemption for intrastate offerings in s. 3(a)(11) of the Securities Act of 1933, 15 U.S.C. § 77c(a)(11), as amended; Securities and Exchange Commission Rule 147, 17 C.F.R. 230.147, as amended; or Securities and Exchange Commission Rule 147A, 17. C.F.R. s. 230.147A, as amended.
(4) An issuer:
(a) Must be a for-profit business entity that maintains its principal place of business and derives its revenues primarily from operations in this state.
Terms Used In Florida Statutes 517.0611
- Business entity: means any corporation, partnership, limited partnership, limited liability company, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, which may or may not be fictitiously named, doing business in this state. See Florida Statutes 517.021
- Commission: means the Financial Services Commission. See Florida Statutes 517.021
- Dealer: includes , unless otherwise specified, a person, other than an associated person of a dealer, that engages, for all or part of the person's time, directly or indirectly, as agent or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person. See Florida Statutes 517.021
- Fraud: Intentional deception resulting in injury to another.
- Intermediary: means a natural person residing in this state or a corporation, trust, partnership, limited liability company, association, or other legal entity registered with the Secretary of State to do business in this state, which facilitates through its website the offer or sale of securities of an issuer with a principal place of business in this state. See Florida Statutes 517.021
- Issuer: means a person that proposes to issue, has issued, or shall hereafter issue any security. See Florida Statutes 517.021
- offer: means an attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, or an investment or interest in an investment, for value. See Florida Statutes 517.021
- Office: means the Office of Financial Regulation of the commission. See Florida Statutes 517.021
- person: includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations. See Florida Statutes 1.01
- Principal: means an executive officer of a corporation, partner of a partnership, sole proprietor of a sole proprietorship, trustee of a trust, or any other person with similar supervisory functions with respect to any organization, whether incorporated or unincorporated. See Florida Statutes 517.021
- Security: includes any of the following:(a) A note. See Florida Statutes 517.021
- Trustee: A person or institution holding and administering property in trust.
- writing: includes handwriting, printing, typewriting, and all other methods and means of forming letters and characters upon paper, stone, wood, or other materials. See Florida Statutes 1.01
(b) Must conduct transactions for an offering of $2.5 million or more through a dealer registered with the office or an intermediary registered under s. 517.12. For an offering of less than $2.5 million, the issuer may, but is not required to, use such a dealer or intermediary.(c) May not be, before or as a result of the offering, an investment company as defined in s. 3 of the Investment Company Act of 1940, 15 U.S.C. § 80a-3, as amended, or subject to the reporting requirements of s. 13 or s. 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m or s. 78o(d), as amended.(d) May not be a business entity that has an undefined business operation, lacks a business plan, lacks a stated investment goal for the funds being raised, or plans to engage in a merger or acquisition with an unspecified business entity.(e) May not be subject to a disqualification established by the commission or a disqualification described in s. 517.0616 or s. 517.1611. Each director, officer, manager, managing member, or general partner, or person occupying a similar status or performing a similar function, or person holding more than 20 percent of the equity interest of the issuer, is subject to this paragraph.(f) Must deposit all funds received from investors in an account in a federally insured financial institution authorized to do business in this state and maintain all such funds in the account until the target offering amount has been reached or the offering has been terminated or has expired. If the target offering amount has not been reached within the period specified by the issuer in the disclosure statement provided to investors, or if the offering is terminated or expires, the issuer must refund invested funds to all investors within 10 business days after such occurrence.(g) Must use all funds in accordance with the use of proceeds as disclosed to prospective investors.
(5) The issuer must file a notice of the offering with the office, in writing or in electronic form, in a format prescribed by commission rule, together with a nonrefundable filing fee of $200. The filing fee must be deposited into the Regulatory Trust Fund of the office. The commission may adopt rules establishing procedures for the deposit of fees and the filing of documents by electronic means if the procedures provide the office with the information and data required by this section. A notice is effective upon receipt, by the office, of the completed form, filing fee, and an irrevocable written consent to service of civil process, similar to that provided for in s. 517.101. The notice may be terminated by filing with the office a notice of termination. The notice and offering expire 12 months after filing the notice with the office and are not eligible for renewal. The notice must:
(a) Be filed with the office at least 10 days before the issuer commences an offering of securities or the offering is displayed on a website of an intermediary in reliance upon the exemption provided by this section.
(b) Indicate that the issuer is conducting an offering in reliance upon the exemption provided by this section.
(c) Contain the name and contact information, including an e-mail address, of the issuer.
(d) Identify any predecessors, owners, officers, directors, general partners, managers, managing members, or any person occupying a similar status or performing a similar function of the issuer, including that person’s title, status as a partner, trustee, or sole proprietor or a similar role, and ownership percentage.
(e) Identify the federally insured financial institution into which investor funds will be deposited.
(f) If applicable, include the intermediary’s website address where the issuer’s securities will be offered.
(g) State the target offering amount and the date, not to exceed 365 days, by which the target amount must be reached in order to avoid termination of the offering.
(6) The issuer must amend the notice form within 10 business days after any material information contained in the notice becomes inaccurate. The commission may require, by rule, an issuer who has filed a notice under this section to file amendments with the office.
(7) The issuer may engage in general advertising and general solicitation of the offering to prospective investors. Any oral or written statements in advertising or solicitation of the offering which contain a material misstatement, or which fail to disclose material information, are subject to enforcement under this chapter. Any general advertising or other general announcement must state that the offering is limited and open only to residents of this state.
(8) The issuer must provide a disclosure statement to the dealer or intermediary, as applicable; to the office at the time that the notice is filed; and to each prospective investor at least 3 days before the investor’s commitment to purchase or payment of any consideration. The disclosure statement must contain material information about the issuer and the offering, including all of the following:
(a) The name, legal status, physical address, e-mail address, and website address of the issuer.
(b) The names of the directors, officers, managers, managing members, and general partners and any person occupying a similar status or performing a similar function, and the name and ownership percentage of each person holding more than 20 percent of the issuer’s equity interests.
(c) A description of the current business and anticipated business plan of the issuer.
(d) A description of the stated purpose and intended use of the proceeds of the offering.
(e) The target offering amount and the deadline to reach the target offering amount.
(f) The price to the public of the securities.
(g) A description of the ownership and capital structure of the issuer, including:
1. Terms of the securities being offered and each class of security of the issuer, including how those terms may be modified, and a summary of the differences between such securities, including how the rights of the securities being offered may be materially limited, diluted, or qualified by rights of any other class of security of the issuer.
2. A description of how the exercise of the rights held by the principal equity holders of the issuer could negatively impact the purchasers of the securities being offered.
(h) A statement that the security being offered is not registered under federal or state securities laws and that the securities are subject to the limitation on resale contained in Securities and Exchange Commission Rule 147 or Rule 147A.
(i) Any issuer plans, formal or informal, to offer additional securities in the future.
(j) The risks to purchasers of the securities relating to minority ownership in the issuer.
(k) A description of the financial condition of the issuer.
1. For offerings that, in combination with all other offerings of the issuer within the preceding 12-month period, have offering amounts of $500,000 or less, the financial statements of the issuer may be, but are not required to be, included.
2. For offerings that, in combination with all other offerings of the issuer within the preceding 12-month period, have offering amounts of more than $500,000, but not more than $2.5 million, the description must include financial statements prepared in accordance with generally accepted accounting principles and reviewed by a certified public accountant, as defined in s. 473.302, who is independent of the issuer, using professional standards and procedures or standards and procedures established by commission rule for such purpose.
3. For offerings that, in combination with all other offerings of the issuer within the preceding 12-month period, have offering amounts of more than $2.5 million, the description must include audited financial statements prepared in accordance with generally accepted accounting principles by a certified public accountant, as defined in s. 473.302, who is independent of the issuer, and other requirements as the commission may establish by rule.
(l) The following statement in boldface, conspicuous type on the front page of the disclosure statement:
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this disclosure statement is truthful or complete. Any representation to the contrary is a criminal offense.
These securities are offered under, and will be sold in reliance upon, an exemption from the registration requirements of federal and Florida securities laws. Neither the Federal Government nor the State of Florida has reviewed the accuracy or completeness of any offering materials. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as specifically authorized by applicable federal and state securities laws. Investing in these securities involves a speculative risk, and investors should be able to bear the loss of their entire investment.
(9) The sum of all cash and other consideration received for sales of a security under this section may not exceed $5 million, less the aggregate amount received for all sales of securities by the issuer within the 12 months preceding the first offer or sale made in reliance upon this exemption. Offers or sales to a person owning 20 percent or more of the outstanding equity interests of any class or classes of securities or to an officer, director, manager, managing member, general partner, or trustee, or a person occupying a similar status, do not count toward this limitation.
(10) Unless the investor is an accredited investor, or the issuer reasonably believes that the investor is an accredited investor, the aggregate amount of securities sold by an issuer to an investor in a 12-month period may not exceed $10,000.
(11) A notice-filing under this section must be summarily suspended by the office if:
(a) The payment for the filing is dishonored by the financial institution upon which the funds are drawn. For purposes of s. 120.60(6), failure to pay the required notice filing fee constitutes an immediate and serious danger to the public health, safety, and welfare. The office shall enter a final order revoking a notice-filing in which the payment for the filing is dishonored by the financial institution upon which the funds are drawn; or
(b) The issuer made a material false statement in the issuer’s notice-filing. The summary suspension remains in effect until a final order is entered by the office. For purposes of s. 120.60(6), a material false statement made in the issuer’s notice-filing constitutes an immediate and serious danger to the public health, safety, and welfare. If an issuer made a material false statement in the issuer’s notice-filing, the office must enter a final order revoking the notice-filing, issue a fine as prescribed by s. 517.191(9), and issue permanent bars under s. 517.191(10) to the issuer and all owners, officers, directors, managers, managing members, general partners, and control persons, or any person occupying a similar status or performing a similar function of the issuer, including title; status as a partner, trustee, sole proprietor, or similar role; and ownership percentage.
(12) If the issuer employs the services of an intermediary, the intermediary must:
(a) Take measures, as established by commission rule, to reduce the risk of fraud with respect to the offering.
(b) Provide information on its website regarding the high risk of investment in and limitation on the resale of exempt securities and the potential for loss of an entire investment. The information must include, but need not be limited to, all of the following:
1. A description of the financial institution into which investor funds will be deposited and the conditions for the use of such funds by the issuer.
2. A description of whether financial information provided by the issuer has been audited by an independent certified public accountant, as defined in s. 473.302.
(c) Obtain from each prospective investor a zip code or residence address, a copy of a driver license, and any other proof of residency in order for the issuer or intermediary to reasonably believe that the potential investor is a resident of this state. The commission may adopt rules authorizing additional forms of identification and prescribing the process for verifying any identification presented by the prospective investor.
(d) Obtain information sufficient for the issuer or intermediary to reasonably believe that a particular prospective investor is an accredited investor.
(e) Provide a monthly update for each offering, after the first full month after the date of the offering. The update must be accessible on the intermediary’s website and must display the date and amount of each sale of securities, and each cancellation of commitment to invest, in the previous calendar month.
(f) Take reasonable steps to protect personal information collected from investors, as required by s. 501.171.
(g) Prohibit its directors, officers, managers, managing members, general partners, employees, and agents from having any financial interest in the issuer using its services.
(13) An intermediary not registered as a dealer under s. 517.12(5) may not:
(a) Offer investment advice or recommendations. A refusal by an intermediary to post an offering that it deems not credible or that represents a potential for fraud may not be construed as an offer of investment advice or recommendation.
(b) Solicit purchases, sales, or offers to buy securities offered or displayed on its website.
(c) Compensate employees, agents, or other persons for the solicitation of, or based on the sale of, securities offered or displayed on its website.
(d) Hold, manage, possess, or otherwise handle investor funds or securities.
(e) Compensate promoters, finders, or lead generators for providing the intermediary with the personal identifying information of any prospective investor.
(f) Engage in any other activities set forth by commission rule.
(14) If the issuer does not employ a dealer or an intermediary for an offering pursuant to the exemption created under this section, the issuer must fulfill each of the obligations specified in paragraphs (12)(c)-(f).
(15) Any sale made pursuant to the exemption created under this section is voidable by the purchaser within 3 days after the first tender of consideration is made by such purchaser to the issuer by notifying the issuer that the purchaser expressly voids the purchase. The purchaser’s notice to the issuer must be sent by e-mail to the issuer’s e-mail address set forth in the disclosure statement that is provided to the purchaser or purchaser’s representative or by certified mail or overnight delivery service with proof of delivery to the mailing address set forth in the disclosure statement.