(a) The following securities are exempted from § 48-1-104 and, except as the commissioner may otherwise require by rule, §§ 48-1-113 and 48-1-124(e):

lawyer at desk

Ask a legal question, get an answer ASAP!
Click here to chat with a lawyer about your rights.

Terms Used In Tennessee Code 48-1-103

  • Accredited investor: means accredited investor, as that term is defined in Rule 501 of Regulation D under the Securities Act of 1933 (17 C. See Tennessee Code 48-1-102
  • Affiliate: means a person who directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, another person. See Tennessee Code 48-1-102
  • Agent: means any individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities from, in, or into this state. See Tennessee Code 48-1-102
  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
  • board of governors: means the board of governors of an LLC electing to be board-managed or, in the case of a foreign limited liability company, its equivalent. See Tennessee Code 48-202-101
  • Broker-dealer: means any person engaged in the business of effecting transactions in securities for the account of others, or any person engaged in the business of buying or selling securities issued by one (1) or more other persons for such person's own account and as part of a regular business rather than in connection with such person's investment activities. See Tennessee Code 48-1-102
  • Business: includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits. See Tennessee Code 48-202-101
  • Class: when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC. See Tennessee Code 48-202-101
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 48-1-102
  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • delivery: means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and, if authorized in accordance with §. See Tennessee Code 48-11-201
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • Distribution: means a direct or indirect transfer of money or other property (except its own membership interests) with or without consideration, or an incurrence or issuance of indebtedness, (whether directly or indirectly, including through a guaranty) by an LLC to or for the benefit of any of its members in respect of membership interests. See Tennessee Code 48-202-101
  • Electronic: means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. See Tennessee Code 48-11-201
  • Entity: includes the following, whether foreign or domestic: LLCs. See Tennessee Code 48-202-101
  • Executor: A male person named in a will to carry out the decedent
  • Executor: includes an administrator, where the subject matter applies to an administrator. See Tennessee Code 1-3-105
  • Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
  • Fiduciary: A trustee, executor, or administrator.
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Fraud: Intentional deception resulting in injury to another.
  • Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
  • Individual: includes the estate of an incompetent or deceased individual. See Tennessee Code 48-11-201
  • Institutional investor: means a bank (unless the bank is acting as a broker-dealer as such term is defined in §. See Tennessee Code 48-1-102
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • Investment adviser: includes a financial planner or other person who, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or who holds oneself out as providing investment advice to others for compensation. See Tennessee Code 48-1-102
  • Issuer: means every person who issues any security, except that:
    (i) With respect to certificates of deposit, voting-trust certificates, collateral-trust certificates, certificates of interest or shares in an unincorporated investment trust which is of the fixed, restricted management or unit type or which does not have either a board of directors or persons performing similar functions, "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement under which such securities are issued. See Tennessee Code 48-1-102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • offer to sell: includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value. See Tennessee Code 48-1-102
  • Owners: means members in the case of an LLC, shareholders in the case of a corporation, partners in the case of general or limited partnerships and the equivalent with respect to other entities. See Tennessee Code 48-202-101
  • Person: means a natural person, a sole proprietorship, a corporation, a partnership, an association, a limited liability company, a joint-stock company, a trust, a governmental entity or agency, or any other unincorporated organization. See Tennessee Code 48-1-102
  • Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in a perceivable form. See Tennessee Code 1-3-105
  • Savings and loan association: includes a building and loan association, a federal or state savings and loan association, a federal savings bank, and any other financial institution, the accounts of which are insured by the [former] federal savings and loan insurance corporation (FSLIC) or any successor [repealed] of such corporation. See Tennessee Code 1-3-105
  • Security: means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, a life settlement investment or any fractional or pooled interest in a life insurance policy or life settlement investment, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease. See Tennessee Code 48-1-102
  • sell: includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value. See Tennessee Code 48-1-102
  • Service of process: The service of writs or summonses to the appropriate party.
  • Share: means the unit into which the proprietary interests in a corporation are divided. See Tennessee Code 48-11-201
  • signed: includes a mark, the name being written near the mark and witnessed, or any other symbol or methodology executed or adopted by a party with intention to authenticate a writing or record, regardless of being witnessed. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Subscription: includes a mark, the name being written near the mark and witnessed. See Tennessee Code 1-3-105
  • Subsidiary: means a corporation more than fifty percent (50%) of whose outstanding voting shares are owned by its parent and/or the parent's other wholly-owned subsidiaries. See Tennessee Code 48-11-201
  • Trustee: A person or institution holding and administering property in trust.
  • Underwriter: means any person who has purchased from an issuer or an affiliate of an issuer with a view to, or who sells for an issuer or an affiliate of an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking. See Tennessee Code 48-1-102
  • United States: includes district, authority, bureau, commission, department, and any other agency of the United States. See Tennessee Code 48-11-201
  • written: means any information in the form of a document. See Tennessee Code 48-11-201
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(1) Any security (including a revenue obligation) issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency or corporate or other instrumentality of one (1) or more of the foregoing, or any certificate of deposit for any of the foregoing;
(2) Any security issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency or corporate or other instrumentality of one (1) or more of the foregoing, any international bank of which the United States is a member, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor;
(3) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state; or any interest or participation in any common trust fund or similar fund maintained by a bank exclusively for the collective investment or reinvestment of assets contributed thereto by such bank in its capacity as trustee, executor, administrator, guardian, or in a similar fiduciary capacity;
(4) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings and loan association, any federally insured savings and loan or similar association organized under the laws of any state and authorized to do business in this state, or any thrift certificates which are issued and sold by an industrial bank organized and supervised under the laws of this state which is insured pursuant to the Federal Deposit Insurance Act (12 U.S.C. § 1811 et seq.), as that act may be amended from time to time;
(5) Any security issued or guaranteed by any federal credit union or any credit union supervised under the laws of this state;
(6) Any security issued or guaranteed by any railroad, other common carrier, public utility, or holding company which is:

(A) Subject to the jurisdiction of the interstate commerce commission;
(B) A registered holding company under the Public Utility Holding Company Act of 1935 [repealed], as amended, or a subsidiary of such a company within the meaning of that act;
(C) Regulated in respect of its rates and charges by a governmental authority of the United States or any state; or
(D) Regulated in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada, or any Canadian province;
(7) Any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional association; provided, that at least ten (10) days prior to any sale of a security pursuant to an exemption under this subdivision (a)(7), such person has filed with the commissioner all information as the commissioner may by rule require and paid a fee of one hundred dollars ($100), and that the commissioner does not by order disallow the exemption under this subdivision (a)(7) and no sales are made until expiration of that ten (10) days; provided further, that the commissioner may restrict the availability of this exemption to any class or subclass of securities of such issuer;
(8) Any security which meets all of the following conditions:

(A) If the issuer is not organized under the laws of the United States or a state, it has appointed a duly authorized agent in this state for service of process and has set forth the name and address of such agent in its prospectus or offering circular;
(B) A class of the issuer’s securities is registered under § 12 of the Securities Exchange Act of 1934 (15 U.S.C. § 78l), as amended, and has been so registered for the three (3) years preceding the offering date, and the issuer has filed all reports required to be filed by § 13 or § 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m and 15 U.S.C. § 78o(d)), respectively, as amended, during the preceding twelve (12) months;
(C) Neither the issuer nor a significant subsidiary has had a material default (which was not cured within ten (10) days) during the last five (5) years in the payment of:

(i) Principal, interest, dividend or sinking fund installment on preferred stock or indebtedness for borrowed money; or
(ii) Rentals under material leases with terms of three (3) years or more;
(D) The issuer has had consolidated net income (before extraordinary items and the cumulative effect of accounting changes) of at least one million dollars ($1,000,000) in four (4) of its last five (5) fiscal years including its last fiscal year and, if the offering is of interest-bearing securities, has had for its last fiscal year, such net income, but before deduction for income taxes and depreciation, of at least one and one-half (11/2) times the issuer’s annual interest expense, giving effect to the proposed offering and the intended use of the proceeds. “Last fiscal year” means the most recent year for which audited financial statements are available; provided, that such statements cover a fiscal period ended not more than fifteen (15) months from the commencement of the offering;
(E) If the offering is of stock or shares, other than preferred stock or shares, such securities have voting rights and such rights include:

(i) The right to have at least as many votes per share; and
(ii) The right to vote on at least as many general corporate decisions, as each of the issuer’s outstanding classes of stock or shares, except as otherwise required by law;
(F) If the offering is of stock or shares, other than preferred stock or shares, outstanding stock or shares of the same class are owned beneficially or of record, on any date within six (6) months prior to the commencement of the offering, by at least one thousand two hundred (1,200) persons, and on such date there are at least seven hundred fifty thousand (750,000) such shares outstanding with an aggregate market value, based on the closing bid price for that day, of at least three million seven hundred fifty thousand dollars ($3,750,000). In connection with the determination of the number of persons who are beneficial owners of the stock or shares of an issuer, the issuer or broker-dealer may rely in good faith, for the purposes of this subdivision (a)(8), upon written information furnished by the record owners; and
(G) If the offering is of interest-bearing securities of a finance company with liquid assets of at least one hundred five percent (105%) of its liabilities (other than deferred income taxes, deferred investment tax credits, capital stock and surplus) at the end of each of its last five (5) fiscal years, the applicable net income requirement of subdivision (a)(8)(D), but before deduction for interest expense, shall be one hundred twenty-five percent (125%) of the issuer’s annual interest expense. “Finance company” means a company engaged, directly or through consolidated subsidiaries, primarily in the business of wholesale, retail, installment, mortgage, commercial, industrial or consumer financing, banking, or factoring. “Liquid assets” means cash receivables payable on demand or not more than twelve (12) years following the close of the company’s last fiscal year, and readily marketable securities, in each case less applicable reserves and unearned income;
(9)

(A) Any class of securities currently listed or approved for listing upon notice of issuance on the New York Stock Exchange, the American Stock Exchange, or any other exchange which the commissioner may by order designate;
(B) Any other security of the same issuer which is of senior or substantially equal rank;
(C) Any security called for by subscription rights or warrants so listed or approved; or
(D) Any warrant or right to purchase or subscribe to any of the foregoing;
(10) Any security exchanged by the issuer exclusively with its existing securities holders where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange;
(11) Securities, stocks, and bonds of corporations organized pursuant to the Cooperative Marketing Law, as compiled in title 43, chapter 16, and domiciled within the state of Tennessee;
(12) Any security issued by a bank holding company or a savings and loan holding company if:

(A) Such bank holding company or savings and loan holding company is registered with the federal reserve board; and
(B) At least ten (10) days prior to any sale of a security in this state pursuant to an exemption under this subdivision (a)(12), such bank holding company or savings and loan holding company has filed with the commissioner all information as the commissioner may by rule require and paid a fee of one hundred dollars ($100), and the commissioner does not by order disallow the exemption under this subdivision (a)(12) and no sales are made until expiration of that ten (10) days. The commissioner may restrict the availability of the exemption under this subdivision (a)(12) to any class or subclass of securities of such issuer; and
(13)

(A) Any security issued by a person that meets the following requirements:

(i) The sale of the security must meet the requirements of the federal exemption for intrastate offerings in either:

(a) Section 3(a)(11) of the Securities Act of 1933 (15 U.S.C. § 77c(a)(11)), and 17 C.F.R. § 230.147 or 17 C.F.R. § 230.147A; or
(b)17 C.F.R. § 230.147A;
(ii) The sum of all cash and other consideration to be received for all sales of the security in reliance upon this subdivision (a)(13)(A) shall not exceed five million dollars ($5,000,000) less the aggregate amount received for all sales of securities by the issuer within the twelve (12) months before the first offer. The commissioner may, by rule, require a sales report in a designated format;
(iii) The issuer shall not accept more than ten thousand dollars ($10,000) from an investor unless the investor is an accredited investor pursuant to 17 C.F.R. § 230.501;
(iv) All funds received from the sale of a security in reliance upon this subdivision (a)(13)(A) shall be deposited in a bank, trust company, or depository institution authorized to do business in this state, and all funds received from buyers of a security in reliance upon this subdivision (a)(13)(A) shall be used consistent with written representations made by the issuer to investors;
(v) Before offering to sell any security, the issuer shall provide a notice to the commissioner in writing or in electronic form; the notice shall specify that the issuer will offer or has sold the security in reliance upon this subdivision (a)(13)(A) and shall include the names and addresses of the following:

(a) The issuer;
(b) All persons who will sell or offer to sell the security on behalf of the issuer; and
(c) The bank, trust company, or depository institution in which proceeds from the sale of the security will be deposited;
(vi) The issuer shall not be, either before or as a result of the offering, an investment company as defined in § 3, Investment Company Act of 1940 (15 U.S.C. § 80a-3) or subject to the reporting requirements of § 13, Securities Exchange Act of 1934 (15 U.S.C. § 78m) or § 15(d), Securities Exchange Act of 1934 (15 U.S.C. § 78o(d)); and
(vii) The issuer shall inform all buyers prior to the sale of a security that falls within this subdivision (a)(13)(A) that the security has not been registered under this part and:

(a) With respect to issuers utilizing 17 C.F.R. § 230.147, the issuer shall also inform all buyers that the security is subject to the limitation on resales contained in 17 C.F.R. § 230.147(e); or
(b) With respect to issuers utilizing 17 C.F.R. § 230.147A, the issuer shall also inform all buyers that the security is subject to the limitations on resales contained in 17 C.F.R. § 230.147A(e);
(B)

(i) Subdivision (a)(13)(A) shall not be used with any other exemption under this part unless the offer or sale is to any of the following:

(a) An officer, director, partner, or trustee of the entity offering the sale of the security, or an individual occupying similar status or performing similar functions for the entity offering the sale of the security; or
(b) A person owning ten percent (10%) or more of the outstanding shares of any class or classes of securities issued by the entity offering the sale of the security; and
(ii) Offers or sales to persons listed in subdivisions (a)(13)(B)(i)(a) and (b) shall not count toward the monetary limit of sales set out in subdivision (a)(13)(A)(ii); and
(C) Subdivision (a)(13)(A) shall not be available to the issuer:

(i) If the person selling or offering to sell the security is subject to a disqualifying event specified in § 48-1-112(a)(2)(A)-(H);
(ii) If the offering does not qualify for the exemption provided in 17 C.F.R. § 230.147 or 17 C.F.R. § 230.147A. The burden of proof of qualification for either exemption is on the issuer claiming the exemption. Failure to qualify for the claimed exemption will result in any offers or sales of the security to be unregistered offers to sell or sales in violation of § 48-1-104; or
(iii) If the issuer, any of the issuer’s predecessors, any affiliate of the issuer, any of the issuer’s directors, officers, general partners, or beneficial owners of ten percent (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 past five (5) years, has filed a registration statement that is the subject of a currently effective registration stop order entered by any state securities administrator or the securities and exchange commission;
(b) Within the past five (5) 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 past five (5) 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 past five (5) years, that temporarily, preliminarily, or permanently restrains or enjoins the 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) The following transactions are exempted from § 48-1-104 and, except as the commissioner may otherwise require by rule, §§ 48-1-113 and 48-1-124(e):

(1) Any transaction by a person acting as an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;
(2) Any bona fide pledge transaction;
(3) Any sale to an institutional investor or to a broker-dealer;
(4) Any transaction involving the sale of securities of an issuer by or on behalf of such issuer or an affiliate of such issuer if all of the following conditions are met:

(A) The aggregate number of persons in this state purchasing such securities from the issuer and all affiliates of the issuer pursuant to this subdivision (b)(4) during the twelve-month period ending on the date of such sale shall not exceed fifteen (15) persons, exclusive of persons who acquire such securities in transactions which are not subject to this part or which are otherwise exempt from registration under this section or which have been registered pursuant to § 48-1-105 or § 48-1-106;
(B) Such securities are not offered for sale by means of publicly disseminated advertisements or sales literature; and
(C) All purchasers in this state have purchased such securities with the intent of holding such securities for investment for their own accounts and without the intent of participating directly or indirectly in a distribution of such securities. Any person who holds such securities for a period of two (2) years or more from the date such securities have been fully paid for by such person shall be presumed to have purchased such securities for investment;
(5) Any transaction in the outstanding securities of an issuer by an affiliate of such issuer; provided, that:

(A) Such affiliate is not acting as an underwriter with respect to the sale of such securities;
(B) Such securities are sold by the affiliate, through a broker-dealer registered under § 48-1-109, in “broker’s transactions” as defined by Rule 144 of the securities and exchange commission (17 C.F.R. § 230.144);
(C) There is no solicitation, directly or indirectly, of orders to purchase any of such securities by the issuer or the affiliate; and
(D) Neither the issuer nor the affiliate makes any payments directly or indirectly in connection with the execution of such transactions other than to the broker-dealer who executes the order to sell the securities;
(6) Any offering of securities by or on behalf of an issuer organized under the laws of or domiciled in this state in which the aggregate amount sold in this state does not exceed two hundred fifty thousand dollars ($250,000) during any twelve-month period, if no commission or other remuneration is paid or given directly or indirectly for soliciting any purchaser in this state, exclusive of any amount of securities sold in exempt transactions pursuant to subdivision (b)(3); provided, that this exemption shall not be available for any offering of certificates of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease;
(7) Any transaction in the outstanding securities of an issuer by or on behalf of a person who is neither the issuer of such securities nor an affiliate of such issuer, at a price reasonably related to the market price and:

(A) If the issuer is required to file reports with the securities and exchange commission pursuant to § 13 or § 15 of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m and 78o) respectively, as amended, the issuer is not delinquent in the filing of any such reports at the date of sale;
(B) In the case of issuers which are not required to file such reports, if there is publicly available the information concerning the issuer specified in Rule 15c2-11 (17 C.F.R. § 240.15c2-11), promulgated under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.); or
(C) The issuer is an investment company registered under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), as amended, and is not delinquent in filing any reports required pursuant to such act;
(8) Any isolated transaction in securities not involving the issuer of such securities, an underwriter of such securities, or an affiliate of the issuer of such securities;
(9)

(A) Any transaction involving the issuance of a security:

(i) In connection with a stock bonus plan requiring payment of no consideration other than services;
(ii) In connection with a stock bonus, pension, profit sharing, savings, thrift, or retirement plan for employees or self-employed individuals qualified under § 401 of the Internal Revenue Code of 1954 (26 U.S.C. § 401), as amended, or individual retirement accounts qualified under § 408 of the Internal Revenue Code of 1954 (26 U.S.C. § 408), as amended; or
(iii) In connection with a transaction that meets the following requirements:

(a) The offering meets the requirements of Rule 701 of the regulations under the Securities Act of 1933 (17 C.F.R. § 230.701), as amended; and
(b) The offering is exempt from § 5 of the Securities Act of 1933 (15 U.S.C. § 77e), as amended.
(c) [Deleted by 2023 amendment.]
(B) No commission, discount, or other remuneration is paid or given in connection with any transaction in this state under this subdivision (b)(9) unless paid or given to a broker-dealer or agent registered under this part; and
(C) The issuance of any security representing an interest in a collective investment fund is exempt only if such security is issued pursuant to a plan established and administered by a bank organized under the laws of the United States or any bank or trust company organized and supervised under the laws of any state of the United States or sponsored by any investment company registered under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), as amended, or sponsored by any insurance company licensed to do business in this state;
(10) Any issuance and delivery of securities of a bank holding company, as defined in § 45-2-1402, to a bank or another bank holding company or to the security holders thereof in exchange for all or substantially all of the assets or the voting securities of the bank or other bank holding company, or in connection with a consolidation or merger of the bank holding company and a bank or other bank holding company; provided, that such exchanges, consolidations or mergers are made in accordance with the applicable statutory requirements;
(11) Any transaction which the commissioner by rule or order exempts as not being in the public interest or necessary for the protection of investors. Any rule under this section may require a notice filing, and may require the payment of a filing fee not in excess of that required by § 48-1-107(b). In the event of withdrawal of a notice filing, no funds shall be returned to the applicant;
(12) Any transaction pursuant to an offer to existing security holders of the issuer, including the persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than ninety (90) days of their issuance if no commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in this state;
(13)

(A) Any offer or sale of a security by an issuer in a transaction that meets the following requirements:

(i) Sales of securities are made only to persons who are, or who the issuer reasonably believes are, accredited investors. An issuer’s belief under this subdivision (b)(13) shall be deemed reasonable if the issuer:

(a) Obtains from such a person a written certification certifying that the person has reviewed the definition of “accredited investor” in § 48-1-102, and certifying that such person meets the definition of “accredited investor” in § 48-1-102;
(b) Obtains from such person such other information as the commissioner may by rule require; and
(c) Maintains, for a period of not less than three (3) years from the date of sale, the written certification and other information required by the commissioner;
(ii) The issuer reasonably believes that all purchasers are purchasing for investment and not with a view to or for resale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within twelve (12) months of sale shall be presumed to be with a view to distribution and not for investment, except a resale to which any of the following applies:

(a) The resale is pursuant to a registration statement effective under § 48-1-105 or § 48-1-106;
(b) The resale is to an accredited investor; or
(c) The resale is to an institutional investor in an exempt transaction pursuant to subdivision (b)(3);
(B) The exemption under this subdivision (b)(13) is not available to an issuer that is in the development stage and 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 entities or persons;
(C)

(i) The exemption under this subdivision (b)(13) is not available to an issuer if the issuer, any of the issuer’s predecessors, any affiliate of the issuer, any of the issuer’s directors, officers, general partners, or beneficial owners of ten percent (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 past five (5) years, has filed a registration statement that is the subject of a currently effective registration stop order entered by any state securities administrator or the securities and exchange commission;
(b) Within the past five (5) 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 past five (5) 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 past five (5) years, that temporarily, preliminarily, or permanently restrains or enjoins the 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;
(ii) Subdivision (b)(13)(C)(i) is inapplicable if any of the following applies:

(a) The party subject to the disqualification is licensed or registered to conduct securities business in the state in which the order, judgment, or decree creating the disqualification was entered against the party described in subdivision (b)(13)(C)(i);
(b) Before the first offer is made under this exemption, the state securities administrator, the court, or regulatory authority that entered that order, judgment, or decree, waives the disqualification; or
(c) The issuer did not know and, in the exercise of reasonable care based on reasonable investigation, could not have known that a disqualification from the exemption existed under subdivision (b)(13)(C)(i);
(D) A general announcement of the proposed offering may be made by any means; provided, the general announcement shall include only the following information, unless additional information is specifically permitted by the commissioner:

(i) The name, address, and telephone number of the issuer of the securities;
(ii) The name, a brief description, and price of any security to be issued;
(iii) A brief description of the business of the issuer;
(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:

(a) Sales will be made only 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 administrator or the securities and exchange commission and are being offered and sold pursuant to an exemption from registration;
(E) The issuer, in connection with an offer, may provide information in addition to the general announcement described in subdivision (b)(13)(D); provided, that either of the following applies:

(i) The information is delivered through an electronic database that is restricted to persons who are accredited investors; or
(ii) The information is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor;
(F) No telephone solicitation shall be conducted, unless prior to placing the telephone call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor;
(G) Dissemination of the general announcement described in subdivision (13)(D) to persons who are not accredited investors does not disqualify the issuer from claiming an exemption under this subdivision (b)(13); and
(H) No later than fifteen (15) days after the first sale in this state, the issuer shall file with the commissioner a notice of transaction, on a form adopted by the commissioner, accompanied by a consent to service of process, a copy of the general announcement, if one is made regarding the proposed offering, and a nonrefundable filing fee of five hundred dollars ($500);
(14) Any offer or sale of a charitable gift annuity as that term is defined in § 56-52-102;
(15) An offer or sale of a security effected by a Canadian broker-dealer and its agents if, at the time of the offer or sale, the Canadian broker-dealer and its agents have qualified for exemption from registration with the commissioner of commerce and insurance pursuant to § 48-1-109;
(16) A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this part in a security that:

(A) Is rated at the time of the transaction by a nationally recognized statistical rating organization in one (1) of its four (4) highest rating categories; or
(B) Has a fixed maturity or a fixed interest or dividend, if:

(i) A default has not occurred during the current fiscal year or within the three (3) previous fiscal years or during the existence of the issuer and any predecessor if less than three (3) fiscal years, in the payment of principal, interest, or dividends on the security; and
(ii) The issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous twelve (12) months a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;
(17) A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this part in a security of a foreign issuer:

(A) That is a margin security defined in regulations or rules adopted by the board of governors of the federal reserve system; or
(B) That relates to securities, including american depository receipts (ADRs) representing such securities, that are exempted from § 12(g) of the Securities Exchange Act of 1934 (15 U.S.C. § 78l(g)), pursuant to § 12(g)(3) (15 U.S.C. § 78l(g)(3)). This subdivision (b)(17)(B) shall apply if the foreign issuer of the securities is in compliance with the conditions of Rule 12g3-2(b) (17 C.F.R. § 240.12g3-2(b)), promulgated under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), and the primary trading market of the foreign issuer:

(i) Qualifies as a primary trading market as that term is defined in Rule 12g3-2(b), note 1 to paragraph (b)(1);
(ii) Maintains listing requirements;
(iii) Has delisting authority; and
(iv) Has disclosure requirements; or
(C) If, at the time of the transaction, the foreign issuer maintains a listing that:

(i) Includes the following:

(a) A description of the business and operations of the foreign issuer;
(b) The names of the executive officers and directors (or their corporate equivalents in the foreign issuer’s country of domicile), if any;
(c) An audited balance sheet of the foreign issuer as of a date within eighteen (18) months before the date of the transaction or, in the case of a reorganization or merger, either an audited balance sheet of each party to the reorganization or merger or a pro forma balance sheet of the combined organization, in each case as of a date within eighteen (18) months before the date of the transaction; and
(d) An audited income statement for each of the foreign issuer’s immediately preceding two (2) fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger either an audited income statement of each party to the reorganization or merger or a pro forma income statement of the combined organization, in each case as of a date within eighteen (18) months before the date of the transaction; and
(ii) Is published in a securities manual designated by the commissioner through rule promulgated in accordance with § 48-1-116;
(18) A nonissuer transaction by an investment adviser registered pursuant to § 203 of the federal Investment Advisers Act of 1940 (15 U.S.C. § 80b-3), with investments under management in excess of one hundred million dollars ($100,000,000) acting in the exercise of discretionary authority in a signed record for the account of others; and
(19) Any nonissuer transaction by or through a broker-dealer, registered or exempt from registration under this chapter, effecting an unsolicited order or offer to purchase; provided, that the broker-dealer acts solely as an agent for the purchaser, has no direct or indirect interest in the sale or distribution of the security ordered, and receives no commission, profit, or other compensation from any source other than the purchaser; and provided further, that the commissioner may by rule require that the customer acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each such form be preserved by the broker-dealer for a specified period.
  Previous section
Next section  
 Part 1 Contents