La. Admin. Code tit. 10 § XIII-703

Current through Register Vol. 50, No. 11, November 20, 2024

Section XIII-703 - Uniform Limited Offering Exemption

A. By authority delegated to the commissioner in R.S. 51:709(15) to promulgate rules thereunder, a transaction described in Subsection B is determined to be exempt from the registration provisions of R.S. 51:705.

B. Any offer or sale of securities offered or sold in compliance with the Securities Act of 1933, Regulation D, Rules 230. 501-503 and 230.507-508, and any one of 230.505, or 230.506, as made effective in Release No. 33-6389 and as amended in Release Nos. 33-6437, 33-6663, 33-6758 and 33-6825 and as may be hereafter amended from time-to-time, and which satisfies the following further conditions and limitations.

1. No commission, fee or other remuneration shall be paid or given, directly or indirectly, to any person for soliciting any prospective purchaser in this state unless such person is appropriately registered in this state. It is a defense to a violation of this Paragraph B.1 if the issuer sustains the burden of proof to establish that it did not know and in the exercise of reasonable care could not have known that the person who received a commission, fee or other remuneration was not appropriately registered in this state.

2. No exemption under this Section shall be available for the securities of any issuer if any of the parties described in Securities Act of 1933, Regulation A, Rule 230.252 Sections (c), (d), (e) or (f):

a. has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any state's securities law within five years prior to the filing of the notice required under this exemption;

b. has been convicted within five years prior to the filing of the notice required under this Section of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

c. is currently subject to any state administrative enforcement order or judgment entered by the state securities administrator within five years prior to the filing of the notice required under this Section or is subject to any state's administrative enforcement order judgment in which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the notice required under this exemption;

d. is subject to any state's administrative enforcement order or judgment which prohibits, denies or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities;

e. is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of false filing with the state entered within five years prior to the filing of the notice required under this Section:

i. the prohibitions of Subparagraphs 2.a-c and e above shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities-related business in the state in which the administrative order or judgment was entered against such person or if the broker/dealer employing such party is licensed or registered in this stale and the Form B-D filed with this state discloses the order, conviction, judgment or decree relating to such person. No person disqualified under this Paragraph 2 may act in a capacity other than that for which the person is licensed or registered;

ii. any disqualification caused by Paragraph 2 is automatically waived if the state securities administrator or agency of the state which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

3. If notice on Form D is then required by Regulation D under the Securities Act of 1933 to be filed with the Securities and Exchange Commission by the issuer, then the issuer shall file with the commissioner a notice on Form D (17 CFR 239.500) :

a. no later than 15 days after the receipt of consideration from an investor in this state that results from an offer being made in reliance upon this exemption and at such other times thereafter and in the form required under Regulation D, Rule 230.503 to be filed with the Securities and Exchange Commission;

b. the notice shall contain an undertaking by the issuer to furnish to the commissioner, upon written request, the information furnished by the issuer to offerees, except where the commissioner pursuant to regulation requires that the information be filed at the same time with the filing of the notice;

c. unless otherwise available, included with or in the initial notice shall be a consent to service of process;

d. a person filing the initial notice provided for in Subparagraph 3.a above shall pay a filing fee of $300.

4. In all sales to non-accredited investors in this state the issuer and any person acting on its behalf shall have reasonable grounds to believe and after making reasonable inquiry shall believe that one of the following conditions is satisfied.

a. The investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to his other security holdings and as to his financial situation and needs. For the purpose of this condition only, it may be presumed that if the investment does not exceed 25 percent of the investor's net worth, it is suitable.

b. The purchaser either alone or with his/her purchaser representative(s) has such knowledge and experience in financial and business matters that he/she is or they are capable of evaluating the merits and risk of the prospective investment.

C. Transactions which are exempt under this Section may not be combined with offers and sales exempt under any other section of the Louisiana Securities Law; however, nothing in this limitation shall act as an election. Should for any reason the offer and sale fail to comply with all of the conditions for this exemption, the issuer may claim the availability of any other applicable exemption.

D. Any general partner, or executive officer of any general partner, of an issuer of an issuer or executive officer of an issuer, shall not be deemed to be in violation of §703. B.1 so long as he is not paid or given, directly or indirectly, any commission, fee, or other remuneration for soliciting any prospective purchaser in this state and such solicitation activities do not constitute his principal service to such issuer or such partner of such issuer. Such persons shall not be deemed to have received a commission, fee, or other remuneration within the meaning of §703. B.1 by reason of having received payments from an issuer or from a partner of an issuer for services performed for the payor that are not directly related to the solicitation of prospective purchasers.

E. The commissioner may, by rule or order, increase the number of purchasers or waive any other conditions of the exemption.

F. The exemption authorized by this Section shall be known and may be cited as the "Uniform Limited Offering Exemption."

La. Admin. Code tit. 10, § XIII-703

Promulgated by the Department of Commerce, Office of Financial Institutions, LR 10:742 (October 1984), amended by the Department of Economic Development, Office of Financial Institutions, LR 16:677 (August 1990).

AUTHORITY NOTE: Promulgated in accordance with R.S. 51:709(15).