Section 115.20 - Texas Crowdfunding Portal Registration and Activities of Small Business Development Entities(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Authorized small business development entity--An entity incorporated or organized under the laws of Texas and authorized to do business in Texas that is: (A) a Type A corporation authorized under the Texas Local Government Code, Chapter 504;(B) a Type B corporation authorized under Texas Local Government Code, Chapter 505;(C) a Texas nonprofit organization authorized by an agency or authority of the federal government to distribute housing and community development block grants;(D) a Texas municipal corporation;(E) the Texas Veterans Commission; or(F) a Texas nonprofit community development financial institution certified by the Community Development Financial Institutions Fund.(2) Registered Small Business Development Entity--An Authorized Small Business Development Entity registered as a Texas crowdfunding portal under this section.(3) Crowdfunding Web Portal--The Internet website of a Registered Small Business Development Entity through which offers and sales of securities exempt from registration pursuant to §RSA 139.25 of this title (relating to Intrastate Crowdfunding Exemption) and/or § 139.26 of this title (relating to Intrastate Crowdfunding Exemption for SEC Rule 147A Offerings) are made.(4) Third Party Operator--A third party that a Registered Small Business Development Entity subcontracts with pursuant to subsection (h) of this section.(b) Securities offered and sold. A Registered Small Business Development Entity must limit the securities offered and sold on its Crowdfunding Web Portal to those of issuers located within its service area. Such securities must be exempt from securities registration pursuant to §RSA 139.25 of this title (relating to Intrastate Crowdfunding Exemption) and/or § 139.26 of this title (relating to Intrastate Crowdfunding Exemption for SEC Rule 147A Offerings).(c) Internet website. The Crowdfunding Web Portal must meet the requirements in § RSA 115.19(b) of this chapter (relating to Texas Crowdfunding Portal Registration and Activities).(d) Prohibited activities. A Registered Small Business Development Entity shall not engage in the activities listed in § RSA 115.19(c) of this chapter (relating to Texas Crowdfunding Portal Registration and Activities), except that a Registered Small Business Development Entity is permitted to hold a financial interest in an issuer offering securities on its Crowdfunding Web Portal. A Registered Small Business Development Entity may not operate or facilitate a secondary market in securities offered and sold through its Crowdfunding Web Portal.(e) Background and regulatory checks. A Registered Small Business Development Entity must meet the requirements in § RSA 115.19(d) of this chapter (relating to Texas Crowdfunding Portal Registration and Activities).(f) Recordkeeping. A Registered Small Business Development Entity must meet the requirements in § RSA 115.19(e) of this chapter (relating to Texas Crowdfunding Portal Registration and Activities). In lieu of a copy of Form 133.15 (relating to Texas Crowdfunding Portal registration), the Registered Small Business Development Entity must maintain a copy of Form 133.20 (relating to Texas Crowdfunding Portal Registration by an Authorized Small Business Development Entity).(g) Filings. (1) Application. In lieu of the application requirements in § RSA 115.2 of this title (relating to Application Requirements), a complete application of an Authorized Small Business Development Entity registering as a Texas crowdfunding portal consists of the following and must be filed with the Securities Commissioner: (A) Form 133.20, including all applicable schedules and supplemental information;(B) Form U-4, for the designated officer and a Form U-4 for each agent to be registered (officers of a corporation or partners of a partnership shall not be deemed agents solely because of their status as officers or partners);(C) a copy of the articles of incorporation or other documents which indicate the form of organization, certified by the Texas Secretary of State or by an officer or partner of the applicant;(D) any other information deemed necessary by the Commissioner to determine the financial responsibility, business repute, or qualifications of the applicant; and(E) the appropriate registration fee(s).(2) Post-reporting requirements. A Registered Small Business Development Entity is subject to the dealer and agent requirements in § RSA 115.9 of this title (relating to Post-Registration Reporting Requirements).(3) Renewal. The registration of a Registered Small Business Development Entity expires at the close of the calendar year, but subsequent registration for the succeeding year shall be issued upon written application and upon payment of the appropriate renewal fee(s), without filing of further statements or furnishing any further information unless specifically requested by the Commissioner.(h) Subcontracting of portal operations. A Registered Small Business Development Entity may subcontract with a Third Party Operator to operate its Crowdfunding Web Portal under the following conditions: (1) The Third Party Operator is located in Texas and authorized to do business in Texas;(2) A written agreement is executed between the Registered Small Business Development Entity and the Third Party Operator specifying: (A) the scope of work to be performed by the Third Party Operator;(B) that the business offices and records reflecting the activities of the Crowdfunding Web Portal are located in Texas and those locations are identified in the written agreement; and(C) the division of responsibility between the Registered Small Business Development Entity and the Third Party Operator for maintaining records and instituting procedures to comply with subsections (c), (d), and (e) of this section; and(3) A copy of the written agreement required by paragraph (2) is filed with the Securities Commissioner a minimum of 10 days prior to the commencement of operations by the Third Party Operator of the Crowdfunding Web Portal;(4) A Registered Small Business Development Entity registered as a Texas Crowdfunding Portal pursuant to this section is responsible for ensuring the Securities Commissioner is provided with access to the records and website as required by subsection (f) of this section and § RSA 115.19(e) of this chapter.7 Tex. Admin. Code § 115.20
Adopted by Texas Register, Volume 41, Number 24, June 10, 2016, TexReg 4251, eff. 6/14/2016; Amended by Texas Register, Volume 43, Number 23, June 8, 2018, TexReg 3780, eff. 6/12/2018