§ 23-19-2-2 — Exempt transactions

Indiana § 23-19-2-2

• Jurisdiction: Indiana
• Title 23: BUSINESS AND OTHER ASSOCIATIONS
• Art. 19: INDIANA UNIFORM SECURITIES ACT
• Ch. 2: Exemptions From Registration of Securities

Text

The following transactions are exempt from the
requirements of IC 23-19-3-1 through IC 23-19-3-6 and IC 23-19-5-4:
(1) An isolated nonissuer transaction, whether effected by or
through a broker-dealer or not.
(2) A nonissuer transaction by or through a broker-dealer
registered, or exempt from registration under this article, and a
resale transaction by a sponsor of a unit investment trust
registered under the Investment Company Act of 1940, in a
security of a class that has been outstanding in the hands of the
public for at least ninety (90) days, if, at the date of the
transaction:
(A) the issuer of the security is engaged in business, the issuer
is not in the organizational stage or in bankruptcy or
receivership, and the issuer is not 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;
(B) the security is sold at a price reasonably related to its
current market price;
(C) the security does not constitute the whole or part of an
unsold allotment to, or a subscription or participation by, the
broker-dealer as an underwriter of the security or a
redistribution;
(D) a nationally recognized securities manual or its electronic
equivalent designated by rule adopted or order issued under this
article or a record filed with the Securities and Exchange
Commission that is publicly available contains:
(i) a description of the business and operations of the issuer;
(ii) the names of the issuer's executive officers and the names
of the issuer's directors, if any;
(iii) an audited balance sheet of the issuer as of a date within
eighteen (18) months before the date of the transaction or, in
the case of a reorganization or merger when the parties to the
reorganization or merger each had an audited balance sheet,
a pro forma balance sheet for the combined organization; and
(iv) an audited income statement for each of the issuer's two
(2) immediately previous fiscal years or for the period of
existence of the issuer, whichever is shorter, or, in the case of
a reorganization or merger when each party to the
reorganization or merger had audited income statements, a
pro forma income statement; and
(E) any one (1) of the following requirements is met:
(i) The issuer of the security has a class of equity securities
listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934 or
designated for trading on the National Association of
Securities Dealers Automated Quotation System.
(ii) The issuer of the security is a unit investment trust
registered under the Investment Company Act of 1940.
(iii) The issuer of the security, including its predecessors, has
been engaged in continuous business for at least three (3)
years.
(iv) The issuer of the security has total assets of at least two
million dollars ($2,000,000) based on an audited balance
sheet as of a date within eighteen (18) months before the date
of the transaction or, in the case of a reorganization or merger
when the parties to the reorganization or merger each had
such an audited balance sheet, a pro forma balance sheet for
the combined organization.
(3) A nonissuer transaction by or through a broker-dealer
registered or exempt from registration under this article in a
security of a foreign issuer that is a margin security defined in
regulations or rules adopted by the Board of Governors of the
Federal Reserve System.
(4) A nonissuer transaction by or through a broker-dealer
registered or exempt from registration under this article in an
outstanding security if the guarantor of the security files reports
with the Securities and Exchange Commission under the reporting
requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m or 78o(d)).
(5) A nonissuer transaction by or through a broker-dealer
registered or exempt from registration under this article 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.
(6) A nonissuer transaction by or through a broker-dealer
registered or exempt from registration under this article effecting
an unsolicited order or offer to purchase.
(7) A nonissuer transaction executed by a bona fide pledgee
without the purpose of evading this article.
(8) A nonissuer transaction by a federal covered investment
adviser 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.
(9) A transaction in a security, whether or not the security or
transaction is otherwise exempt, in exchange for one (1) or more
bona fide outstanding securities, claims, or property interests, or
partly in such exchange and partly for cash, if the terms and
conditions of the issuance and exchange or the delivery and
exchange and the fairness of the terms and conditions have been
approved by the commissioner after a hearing.
(10) A transaction between the issuer or other person on whose
behalf the offering is made and an underwriter, or among
underwriters.
(11) A transaction in a note, bond, debenture, or other evidence
of indebtedness secured by a mortgage or other security
agreement if:
(A) the note, bond, debenture, or other evidence of
indebtedness is offered and sold with the mortgage or other
security agreement as a unit;
(B) a general solicitation or general advertisement of the
transaction is not made; and
(C) a commission or other remuneration is not paid or given,
directly or indirectly, to a person not registered under this
article as a broker-dealer or as an agent.
(12) A transaction by an executor, administrator of an estate,
sheriff, marshal, receiver, trustee in bankruptcy, guardian, or
conservator.
(13) A sale or offer to sell to:
(A) an institutional investor;
(B) a federal covered investment adviser; or
(C) any other person exempted by rule adopted or order issued
under this article.
(14) A sale or an offer to sell securities of an issuer, if the
transaction is part of a single issue in which:
(A) not more than twenty-five (25) purchasers are present in
this state during any twelve (12) consecutive months, other than
those designated in subdivision (13);
(B) a general solicitation or general advertising is not made in
connection with the offer to sell or sale of the securities;
(C) a commission or other remuneration is not paid or given,
directly or indirectly, to a person other than a broker-dealer
registered under this article or an agent registered under this
article for soliciting a prospective purchaser in this state; and
(D) the issuer reasonably believes that all the purchasers in this
state, other than those designated in subdivision (13), are
purchasing for investment.
(15) A transaction under an offer to existing security holders of
the issuer, including persons that at the date of the transaction are
holders of convertible securities, options, or warrants, if a
commission or other remuneration, other than a standby
commission, is not paid or given, directly or indirectly, for
soliciting a security holder in this state.
(16) An offer to sell, but not a sale, of a security not exempt from
registration under the Securities Act of 1933 if:
(A) a registration or offering statement or similar record as
required under the Securities Act of 1933 has been filed, but is
not effective, or the offer is made in compliance with Rule 165
adopted under the Securities Act of 1933 (17 CFR 230.165);
and
(B) a stop order of which the offeror is aware has not been
issued against the offeror by the commissioner or the Securities
and Exchange Commission, and an audit, inspection, or
proceeding that is public and that may culminate in a stop order
is not known by the offeror to be pending.
(17) An offer to sell, but not a sale of, a security exempt from
registration under the Securities Act of 1933 if:
(A) a registration statement has been filed under this article, but
is not effective;
(B) a solicitation of interest is provided in a record to offerees
in compliance with a rule adopted by the commissioner under
this article; and
(C) a stop order of which the offeror is aware has not been
issued by the commissioner under this article and an audit,
inspection, or proceeding that may culminate in a stop order is
not known by the offeror to be pending.
(18) A transaction involving the distribution of the securities of
an issuer to the security holders of another person in connection
with a merger, consolidation, exchange of securities, sale of
assets, or other reorganization to which the issuer, or its parent or
subsidiary and the other person, or its parent or subsidiary, are
parties.
(19) A rescission offer, sale, or purchase under IC 23-19-5-10.
(20) An offer or sale of a security to a person not a resident of this
state and not present in this state if the offer or sale does not
constitute a violation of the laws of the state or foreign
jurisdiction in which the offeree or purchaser is present and is not
part of an unlawful plan or scheme to evade this article.
(21) Employees' stock purchase, savings, option, profit-sharing,
pension, or similar employees' benefit plan, including any
securities, plan interests, and guarantees issued under a
compensatory benefit plan or compensation contract, contained
in a record, established by the issuer, its parents, its
majority-owned subsidiaries, or the majority-owned subsidiaries
of the issuer's parent for the participation of their employees
including offers or sales of such securities to:
(A) directors; general partners; trustees, if the issuer is a
business trust; officers; consultants; and advisers;
(B) family members who acquire such securities from those
persons through gifts or domestic relations orders;
(C) former employees, directors, general partners, trustees,
officers, consultants, and advisers if those individuals were
employed by or providing services to the issuer when the
securities were offered; and
(D) insurance agents who are exclusive insurance agents of the
issuer, or the issuer's subsidiaries or parents, or who derive
more than fifty percent (50%) of their annual income from
those organizations.
(22) A transaction involving:
(A) a stock dividend or equivalent equity distribution, whether
the corporation or other business organization distributing the
dividend or equivalent equity distribution is the issuer or not, if
nothing of value is given by stockholders or other equity
holders for the dividend or equivalent equity distribution other
than the surrender of a right to a cash or property dividend if
each stockholder or other equity holder may elect to take the
dividend or equivalent equity distribution in cash, property, or
stock;
(B) an act incident to a judicially approved reorganization in
which a security is issued in exchange for one (1) or more
outstanding securities, claims, or property interests, or partly in
such exchange and partly for cash; or
(C) the solicitation of tenders of securities by an offeror in a
tender offer in compliance with Rule 162 adopted under the
Securities Act of 1933 (17 CFR 230.162).
(23) A nonissuer transaction in an outstanding security by or
through a broker-dealer registered or exempt from registration
under this article, if the issuer is a reporting issuer in a foreign
jurisdiction designated by this subdivision or by rule adopted or
order issued under this article; has been subject to continuous
reporting requirements in the foreign jurisdiction for not less than
one hundred eighty (180) days before the transaction; and the
security is listed on the foreign jurisdiction's securities exchange
that has been designated by this subdivision or by rule adopted or
order issued under this article, or is a security of the same issuer
that is of senior or substantially equal rank to the listed security
or is a warrant or right to purchase or subscribe to any of the
foregoing. For purposes of this subdivision, Canada, together with
its provinces and territories, is a designated foreign jurisdiction
and The Toronto Stock Exchange, Inc., is a designated securities
exchange. After an administrative hearing in compliance with this
article, the commissioner, by rule adopted or order issued under
this article, may revoke the designation of a securities exchange
under this subdivision, if the commissioner finds that revocation
is necessary or appropriate in the public interest and for the
protection of investors.
(24) Subject to the following, an offer or sale of securities by an
issuer made after June 30, 2014, only to persons who are or the
issuer reasonably believes are accredited investors:
(A) The exemption under this subdivision 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:
(i) an unidentified company or companies; or
(ii) another entity or person.
(B) 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 the exemption under this
subdivision within twelve (12) months after sale is presumed to
be with a view to distribution and not for investment, except:
(i) a resale under a registration statement effective under IC 23-19-3; or
(ii) a resale to an accredited investor under an exemption
available under the Indiana Uniform Securities Act.
(C) Except as provided in clause (D), the exemption under this
subdivision 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 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 the underwriter:
(i) within the last 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;
(ii) within the last five (5) years, has been convicted of any
criminal offense in connection with the offer, purchase, or
sale of any security, or any criminal offense involving fraud
or deceit;
(iii) is currently subject to any state or federal administrative
enforcement order or judgment entered within the last five (5)
years, finding fraud or deceit in connection with the purchase
or sale of any security; or
(iv) is currently subject to any order, judgment, or decree of
any court with jurisdiction, entered within the last five (5)
years, temporarily, preliminarily, or permanently restraining
or enjoining 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.
(D) Clause (C) does not apply if:
(i) 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 the party;
(ii) before the first offer under the exemption described in
this subdivision, the state securities administrator, or the
court or regulatory authority that entered the order, judgment,
or decree, waives the disqualification; or
(iii) 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
subdivision.
(E) A general announcement of the proposed offering may be
made by any means. A general announcement described in this
clause must 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 (if known) of any
security to be issued.
(iii) A brief description of the business of the issuer in
twenty-five (25) words or less.
(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.
(vi) A statement that indicates that sales will be made only to
accredited investors, that no money or other consideration is
being solicited or will be accepted by way of the general
announcement, that the securities have not been registered
with or approved by any state securities agency or the
Securities and Exchange Commission, and that the securities
are being offered and sold under an exemption from
registration.
(F) The issuer, in connection with an offer, may provide
information in addition to the general announcement under
clause (E), if the information:
(i) is delivered through an electronic data base that is
restricted to persons who have been prequalified as
accredited investors; or
(ii) is delivered after the issuer reasonably believes that the
prospective purchaser is an accredited investor.
(G) No telephone solicitation is permitted unless before placing
the call, the issuer reasonably believes that the prospective
purchaser to be solicited is an accredited investor.
(H) Dissemination of the general announcement of the
proposed offering to persons who are not accredited investors
does not disqualify the issuer from claiming the exemption
under this subdivision.
(I) The issuer shall file with the division a notice of transaction,
a consent to service of process, a copy of the general
announcement, and a fee established by the commissioner
within fifteen (15) days after the first sale in Indiana.
(25) An offer to sell or a sale of a security of an issuer made after
June 30, 2014, if:
(A) the transaction is part of a single issue in which:
(i) the offer or sale is made in compliance with 17 CFR
230.504 and 17 CFR 230.506;
(ii) the issuer is required to submit a notice filing on a Form
D (17 CFR 239.500) or a successor form, as promulgated by
the Securities and Exchange Commission, to the
commissioner together with a consent to service of process
complying with IC 23-19-6-11, signed by the issuer, not later
than fifteen (15) days after the first sale of securities in
Indiana; and
(iii) by submitting the notice described in item (ii), the issuer
agrees, upon written request by the commissioner, to furnish
to the commissioner any information the issuer furnished to
offerees;
(B) for offerings made in compliance with 17 CFR 230.504, no
commission, fee, or other remuneration is paid or given,
directly or indirectly, to any broker-dealer for soliciting any
prospective purchaser in this state unless the broker-dealer is
appropriately registered under this article. It is a defense to a
violation of this clause if the issuer sustains the burden of proof
that the issuer did not know and, in the exercise of reasonable
care could not have known, that the person who received the
commission, fee, or other remuneration was not properly
registered; and
(C) in all sales to purchasers other than those described in
subdivision (13) for offerings made in compliance with 17 CFR
230.504, at least one (1) of the following is satisfied:
(i) The investment is suitable for the purchaser upon the basis
of facts, if any facts are disclosed by the purchaser, as to the
purchaser's other securities holdings, financial situation, and
needs. For purposes of this item only, it is presumed that, if
the investment does not exceed ten percent (10%) of the
investor's net worth, the investment is suitable.
(ii) The purchaser, either alone or with the purchaser's
representative or representatives, has the knowledge and
experience in financial and business matters that demonstrate
that the purchaser is capable of evaluating the merits and
risks of the prospective investment.
(26) Any offer or sale of securities after June 30, 2014, by an
issuer that meets the requirements of the federal exemption for
intrastate offerings in Section 3(a)(11) of the Securities Act of
1933, 15 U.S.C. 77c(a)(11), and Securities and Exchange
Commission Rule 147, 17 CFR 230.147. However, all the
following apply:
(A) The issuer must make a notice filing with the division on a
form prescribed by the commissioner within thirty (30) days
after the first sale in Indiana.
(B) Any commission, discount, or other remuneration for sales
of securities in Indiana must be paid or given only to dealers or
salespersons licensed under this article.
(C) The issuer must pay the fee established by the
commissioner. However, no filing fee is required to file
amendments to the form described in clause (A).
(D) Within ten (10) days of receiving the form required by this
subdivision, the commissioner may require the issuer to furnish
any additional information considered necessary by the
commissioner to determine the issuer's qualifications.
(27) An offer or sale of a security made after June 30, 2014, by an
issuer if the offer or sale is conducted in accordance with all the
following requirements:
(A) The issuer of the security is a business entity organized
under the laws of Indiana and authorized to do business in
Indiana.
(B) The transaction meets the requirements of the federal
exemption for intrastate offerings in Section 3(a)(11) of the
Securities Act of 1933 (15 U.S.C. 77c(a)(11)) and Rule 147
adopted under the Securities Act of 1933 (17 CFR 230.147).
(C) Except as provided in clause (E), the sum of all cash and
other consideration to be received for all sales of the security in
reliance on the exemption under this subdivision, excluding
sales to any accredited investor or institutional investor, does
not exceed the following amount:
(i) If the issuer has not undergone and made available to each
prospective investor and the commissioner the documentation
resulting from a financial audit of its most recently completed
fiscal year that complies with generally accepted accounting
principles, one million dollars ($1,000,000), less the
aggregate amount received for all sales of securities by the
issuer within the twelve (12) months before the first offer or
sale made in reliance on the exemption under this
subdivision.
(ii) If the issuer has undergone and made available to each
prospective investor and the commissioner the documentation
resulting from a financial audit of its most recently completed
fiscal year that complies with generally accepted accounting
principles, two million dollars ($2,000,000), less the
aggregate amount received for all sales of securities by the
issuer within the twelve (12) months before the first offer or
sale made in reliance on the exemption under this
subdivision.
(D) An offer or sale to an officer, director, partner, trustee, or
individual occupying similar status or performing similar
functions with respect to the issuer or to a person owning ten
percent (10%) or more of the outstanding shares of any class or
classes of securities of the issuer does not count toward the
monetary limitations in clause (C).
(E) The issuer does not accept more than five thousand dollars
($5,000) from any single purchaser unless the purchaser is an
accredited investor.
(F) Unless waived by written consent by the commissioner, not
less than ten (10) days before the commencement of an offering
of securities in reliance on the exemption under this
subdivision, the issuer must do all the following:
(i) Make a notice filing with the division on a form prescribed
by the commissioner.
(ii) Pay the fee established by the commissioner. However, no
filing fee is required to file amendments to the form
described in item (i).
(iii) Provide the commissioner a copy of the disclosure
document to be provided to prospective investors under
clause (L).
(iv) Provide the commissioner a copy of an escrow agreement
with a bank, regulated trust company or corporate fiduciary,
savings bank, savings and loan association, or credit union
authorized to do business in Indiana in which the issuer will
deposit the investor funds or cause the investor funds to be
deposited. The bank, regulated trust company or corporate
fiduciary, savings bank, savings and loan association, or
credit union in which the investor funds are deposited is only
responsible to act at the direction of the party establishing the
escrow agreement and does not have any duty or liability,
contractual or otherwise, to any investor or other person.
(v) The issuer shall not access the escrow funds until the
aggregate funds raised from all investors equals or exceeds
the minimum amount specified in the escrow agreement.
(vi) An investor may cancel the investor's commitment to
invest if the target offering amount is not raised before the
time stated in the escrow agreement.
(G) The issuer is not, either before or as a result of the offering,
an investment company, as defined in Section 3 of the
Investment Company Act of 1940 (15 U.S.C. 80a-3), an entity
that would be an investment company but for the exclusions
provided in Section 3(c) of the Investment Company Act of
1940 (15 U.S.C. 80a-3(c)), or subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d)).
(H) The issuer informs all prospective purchasers of securities
offered under an exemption under this subdivision that the
securities have not been registered under federal or state
securities law and that the securities are subject to limitations
on resale. The issuer shall display the following legend
conspicuously on the cover page of the disclosure document:
"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 HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR DIVISION OR OTHER
REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED
THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
BY SUBSECTION (e) OF SEC RULE 147 (17 CFR
230.147(e)) AS PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.".
(I) The issuer requires each purchaser to certify in writing or
electronically as follows:
"I UNDERSTAND AND ACKNOWLEDGE THAT I am
investing in a high-risk, speculative business venture. I may
lose all of my investment, or under some circumstances more
than my investment, and I can afford this loss. This offering
has not been reviewed or approved by any state or federal
securities commission or division or other regulatory
authority and no such person or authority has confirmed the
accuracy or determined the adequacy of any disclosure made
to me relating to this offering. The securities I am acquiring
in this offering are illiquid, there is no ready market for the
sale of such securities, it may be difficult or impossible for
me to sell or otherwise dispose of this investment, and,
accordingly, I may be required to hold this investment
indefinitely. I may be subject to tax on my share of the
taxable income and losses of the company, whether or not I
have sold or otherwise disposed of my investment or received
any dividends or other distributions from the company.".
(J) The issuer obtains from each purchaser of a security offered
under an exemption under this subdivision evidence that the
purchaser is a resident of Indiana and, if applicable, is an
accredited investor.
(K) All payments for purchase of securities offered under an
exemption under this subdivision are directed to and held by
the financial institution specified in clause (F)(iv). The
commissioner may request from the financial institutions
information necessary to ensure compliance with this section.
This information is not a public record and is not available for
public inspection.
(L) The issuer of securities offered under an exemption under
this subdivision provides a disclosure document to each
prospective investor at the time the offer of securities is made
to the prospective investor that contains all the following:
(i) A description of the company, its type of entity, the
address and telephone number of its principal office, its
history, its business plan, and the intended use of the offering
proceeds, including any amounts to be paid, as compensation
or otherwise, to any owner, executive officer, director,
managing member, or other person occupying a similar status
or performing similar functions on behalf of the issuer.
(ii) The identity of all persons owning more than twenty
percent (20%) of the ownership interests of any class of
securities of the company.
(iii) The identity of the executive officers, directors,
managing members, and other persons occupying a similar
status or performing similar functions in the name of and on
behalf of the issuer, including their titles and their prior
experience.
(iv) The terms and conditions of the securities being offered
and of any outstanding securities of the company; the
minimum and maximum amount of securities being offered,
if any; either the percentage ownership of the company
represented by the offered securities or the valuation of the
company implied by the price of the offered securities; the
price per share, unit, or interest of the securities being
offered; any restrictions on transfer of the securities being
offered; and a disclosure of any anticipated future issuance of
securities that might dilute the value of securities being
offered.
(v) The identity of any person who has been or will be
retained by the issuer to assist the issuer in conducting the
offering and sale of the securities, including any Internet web
site operator but excluding persons acting solely as
accountants or attorneys and employees whose primary job
responsibilities involve the operating business of the issuer
rather than assisting the issuer in raising capital.
(vi) For each person identified as required in this clause, a
description of the consideration being paid to the person for
such assistance.
(vii) A description of any litigation, legal proceedings, or
pending regulatory action involving the company or its
management.
(viii) The names and addresses, including the Uniform
Resource Locator, of each Internet web site that will be used
by the issuer to offer or sell securities under an exemption
under this subdivision.
(ix) Any additional information material to the offering,
including, if appropriate, a discussion of significant factors
that make the offering speculative or risky. This discussion
must be concise and organized logically and may not be
limited to risks that could apply to any issuer or any offering.
(M) The exemption under this subdivision may not be used in
conjunction with any other exemption under this article, except
for offers and sales to individuals identified in the disclosure
document, during the immediately preceding twelve (12) month
period.
(N) The exemption described in this subdivision does not apply
if an issuer or person affiliated with the issuer or offering is
subject to disqualification established by the commissioner by
rule or contained in the Securities Act of 1933 (15 U.S.C.
77c(a)(11)) and Rule 262 adopted under the Securities Act of
1933 (17 CFR 230.262). However, this clause does not apply if
both of the following are met:
(i) On a showing of good cause and without prejudice to any
other action by the commissioner, the commissioner
determines that it is not necessary under the circumstances
that an exemption is denied.
(ii) The issuer establishes that it made a factual inquiry into
whether any disqualification existed under this subdivision
but did not know, and in the exercise of reasonable care,
could not have known that a disqualification existed under
this subdivision. The nature and scope of the requisite inquiry
will vary based on the circumstances of the issuer and the
other offering participants.
(O) The offering exempted under this subdivision is made
exclusively through one (1) or more Internet web sites and each
Internet web site is subject to the following:
(i) Before any offer or sale of securities, the issuer must
provide to the Internet web site operator evidence that the
issuer is organized under the laws of Indiana and is
authorized to do business in Indiana.
(ii) Subject to items (iii) and (v), the Internet web site
operator must register with the division by filing a statement,
accompanied by the filing fee established by the
commissioner, that includes all the information described in
section 2.3(b) of this chapter.
(iii) The Internet web site operator is not required to register
as a broker-dealer if all the conditions in section 2.3(c) of this
chapter apply with respect to the Internet web site and its
operator.
(iv) If any change occurs that affects the Internet web site's
registration exemption, the Internet web site operator must
notify the division within thirty (30) days after the change
occurs.
(v) The Internet web site operator is not required to register
as a broker-dealer under item (ii) if the Internet web site
operator is registered as a broker-dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78o) or is a funding portal
registered under the Securities Act of 1933 (15 U.S.C. 77d-1)
and the Securities and Exchange Commission has adopted
rules under authority of Section 3(h) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(h)) and P.L.112-106,
Section 304, governing funding portals. This item does not
require an Internet web site operator to register as a
broker-dealer under the Securities Exchange Act of 1934 or
as a funding portal under the Securities Act of 1933.
(vi) The issuer and the Internet web site operator must
maintain records of all offers and sales of securities effected
through the Internet web site and must provide ready access
to the records to the division, upon request. The records of an
Internet web site operator under this clause are subject to the
reasonable periodic, special, or other audits or inspections by
a representative of the commissioner, in or outside Indiana,
as the commissioner considers necessary or appropriate in the
public interest and for the protection of investors. An audit or
inspection may be made at any time and without prior notice.
The commissioner may copy, and remove for audit or
inspection copies of, all records the commissioner reasonably
considers necessary or appropriate to conduct the audit or
inspection. The commissioner may assess a reasonable
charge for conducting an audit or inspection under this item.
(vii) The Internet web site operator shall limit web site access
to the offer or sale of securities to only Indiana residents.
(viii) The Internet web site operator shall not hold, manage,
possess, or handle investor funds or securities.
(ix) The Internet web site operator may not be an investor in
any Indiana offering under this subdivision or subdivision
(26).
(P) An issuer of a security, the offer and sale of which is
exempt under this subdivision, shall provide, free of charge, a
quarterly report to the issuer's investors until no securities
issued under an exemption under this subdivision are
outstanding. An issuer may satisfy the reporting requirement of
this clause by making the information available on an Internet
web site if the information is made available within forty-five
(45) days after the end of each fiscal quarter and remains
available until the succeeding quarterly report is issued. An
issuer shall file each quarterly report under this clause with the
division and, if the quarterly report is made available on an
Internet web site, the issuer shall also provide a written copy of
the report to any investor upon request. The report must contain
all the following:
(i) Compensation received by each director and executive
officer, including cash compensation earned since the
previous report and on an annual basis and any bonuses,
stock options, other rights to receive securities of the issuer
or any affiliate of the issuer, or other compensation received.
(ii) An analysis by management of the issuer of the business
operations and financial condition of the issuer.
(Q) In 2019 and every fifth year thereafter, the commissioner
shall cumulatively adjust the dollar limitations provided in
clause (C) to reflect the change in the Consumer Price Index for
all Urban Consumers published by the federal Bureau of Labor
Statistics rounding each dollar limitation to the nearest fifty
thousand dollars ($50,000).
(28) An offer to sell or a sale of a security of an issuer made after
June 30, 2017, in which the offer or sale is made in compliance
with federal Regulation Crowdfunding (17 CFR 227) and
Sections 4(a)(6) and 18(b)(4)(C) of the Securities Act of 1933.
The following apply to an offering exempt under federal
Regulation Crowdfunding (17 CFR 227):
(A) If the issuer either has its principal place of business in
Indiana or sells fifty percent (50%) or greater of the aggregate
amount of the offering to residents of Indiana, the issuer shall
file the following with the commissioner:
(i) A completed Uniform Notice of Federal Crowdfunding
Offering form or copies of all documents filed with the
Securities and Exchange Commission.
(ii) A consent to service of process on Form U-2 if not filing
on the Uniform Notice of Federal Crowdfunding Offering
form.
(B) If the issuer has its principal place of business in Indiana,
the filing required by clause (A) must be filed with the
commissioner when the issuer makes its initial Form C filing
concerning the offering with the Securities and Exchange
Commission. If the issuer does not have its principal place of
business in Indiana but residents of Indiana have purchased
fifty percent (50%) or greater of the aggregate amount of the
offering, the filing required by clause (A) must be filed when
the issuer becomes aware that the purchases have met this
threshold and not later than thirty (30) days after the date of
completion of the offering.
(C) The initial notice filing is effective for twelve (12) months
after the date of the filing with the commissioner.
(D) For each additional twelve (12) month period in which the
same offering is continued, an issuer conducting an offering
under federal Regulation Crowdfunding (17 CFR 227) may
renew its notice filing by filing, on or before the expiration of
the notice filing:
(i) a completed Uniform Notice of Federal Crowdfunding
Offering form marked "renewal";
(ii) a cover letter or other document requesting renewal; or
(iii) both the form described in item (i) and a cover letter or
other document described in item (ii).
(E) The issuer may increase the amount of securities offered in
Indiana by submitting a completed Uniform Notice of Federal
Crowdfunding Offering form marked "amendment" or another
document describing the transaction.
(29) An offer to sell or a sale of a security of an issuer made after
June 30, 2017, in which the offer or sale is made in compliance
with Tier 2 of federal Regulation A and Section 18(b)(3) or
Section 18(b)(4) of the Securities Act of 1933. The following
apply to an offering exempt under Tier 2 of federal Regulation A:
(A) The issuer shall file the following with the commissioner at
least twenty-one (21) calendar days before the initial sale in
Indiana:
(i) A completed Uniform Notice of Regulation A - Tier 2
Offering form or copies of all documents filed with the
Securities and Exchange Commission.
(ii) A consent to service of process on Form U-2 if not filing
on the Uniform Notice of Regulation A - Tier 2 Offering
form.
(B) The initial notice filing is effective for twelve (12) months
from the date of the filing with the commissioner.
(C) For each additional twelve (12) month period in which the
same offering is continued, an issuer conducting a Tier 2
offering under federal Regulation A may renew its notice filing
by filing, on or before the expiration of the notice filing:
(i) the Uniform Notice of Regulation A - Tier 2 Offering form
marked "renewal";
(ii) a cover letter or other document requesting renewal; or
(iii) both the form described in item (i) and a cover letter or
other document described in item (ii).
(D) The issuer may increase the amount of securities offered in
Indiana by submitting a completed Uniform Notice of
Regulation A - Tier 2 Offering form marked "amendment" or
another document describing the transaction.

Legislative History

As added by P.L.27-2007, SEC.23. Amended by P.L.71-2014, SEC.1; P.L.106-2014, SEC.3; P.L.160-2015, SEC.3; P.L.158-2017, SEC.2; P.L.32-2018, SEC.1.