§ 17-4-203 — Intrastate crowdfunding exemption

Wyoming § 17-4-203

• Jurisdiction: Wyoming
• Title 17: Corporations, Partnerships and Associations
• Ch. 4: SECURITIES
• Art. 2: EXEMPTIONS FROM REGISTRATION OF SECURITIES

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(a) Except as otherwise provided in this act, an offer or
sale of a security by an issuer is exempt from the requirements
of W.S. 17-4-301 through 17-4-306 and 17-4-504 if the offer or
sale meets all of the following requirements:
(i) The issuer of the security is:
(A) An entity that is incorporated or organized
under the laws of this state;
(B) A resident of this state under securities
and exchange commission rule 147, (17 C.F.R. 230.147), or rule
147A, (17 C.F.R. 230.147A); and
(C) Authorized to do business in this state.
(ii) The transaction meets the requirements for the
federal exemption for intrastate offerings under 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 C.F.R.
230.147), including, but not limited to, the requirements for
determining whether an offeree or purchaser is a resident of
this state, or under 15 U.S.C. 77e and securities and exchange
commission rule 147A, (17 C.F.R. 230.147A). All of the following
apply concerning these requirements:
(A) Each of the following is prima facie
evidence that an individual is a resident of this state:
(I) A valid operator's license, chauffeur's
license, or official personal identification card issued by this
state;
(II) A current Wyoming voter registration;
(III) A signed affidavit showing that the
purchaser is a resident of this state as defined by W.S.
22-1-102(a)(xxx); or
(IV) Any other record or documents issued
by this state that establishes that the purchaser's principal
residence is in this state.
(B) The provisions of securities and exchange
commission rule 147, (17 C.F.R. 230.147), or rule 147A, (17
C.F.R. 230.147A), apply in determining the residency of an
offeree or purchaser that is a corporation, partnership, trust,
or other form of business organization;
(C) If a purchaser of a security that is exempt
under this section resells that security within six (6) months
after the closing of the particular offering in which the
purchaser obtained that security to a person that is not a
resident of this state, the original investment agreement
between the issuer and the purchaser is void. If an agreement to
purchase, or the purchase of, a security is void under this
subparagraph, the issuer may recover damages from the
misrepresenting offeree or purchaser. These damages include, but
are not limited to, the issuer's expenses in resolving the
misrepresentation. However, damages described in this
subparagraph shall not exceed the amount of the person's
investment in the security.
(iii) The sum of all cash and other consideration to
be received for all sales of the security in reliance on this
exemption does not exceed the following amounts:
(A) Three million dollars ($3,000,000.00), 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 this exemption, if the issuer has not
made available to each prospective purchaser and the secretary
of state audited financial statements or reviewed financial
statements for the issuer's most recently completed fiscal year,
prepared by a certified public accountant, holding a certificate
pursuant to W.S. 33-3-109, in accordance with the statements on
auditing standards of the American Institute of Certified Public
Accountants or the statements on standards for accounting and
review services of the American Institute of Certified Public
Accountants, as applicable;
(B) Ten million dollars ($10,000,000.00), 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 this exemption, if the issuer has made
available to each prospective purchaser and the secretary of
state audited financial statements or reviewed financial
statements for the issuer's most recently completed fiscal year,
prepared by a certified public accountant, holding a certificate
pursuant to W.S. 33-3-109, in accordance with the statements on
auditing standards of the American Institute of Certified Public
Accountants or the statements on standards for accounting and
review services of the American Institute of Certified Public
Accountants, as applicable.
(iv) The issuer has not accepted more than twenty-
five thousand dollars ($25,000.00) from any single purchaser
unless the purchaser is an accredited investor as defined by
rule 501 of securities and exchange commission regulation D, (17
C.F.R. 230.501) who comes within any category listed in the
definition of that rule or who the issuer reasonably believes
comes within any category listed in the definition of that rule,
at the time of the sale. The issuer may rely on confirmation
that the purchaser is an accredited investor from information
provided by the purchaser, a licensed broker-dealer or another
third party in making a determination that the purchaser is an
accredited investor;
(v) At least ten (10) days before an offer of
securities is made in reliance on this exemption or the use of
any publicly available website in connection with an offering of
securities in reliance on this exemption, the issuer files a
notice with the secretary of state, in writing or in electronic
form as specified by the secretary of state, that contains all
of the following:
(A) A notice of claim of exemption from
registration, specifying that the issuer intends to conduct an
offering in reliance on this exemption, accompanied by the
filing fee specified in this section;
(B) A copy of the disclosure statement to be
provided to prospective investors in connection with the
offering. The disclosure statement shall be provided at the time
the offer of securities is made to the prospective purchaser and
shall contain all of the following:
(I) A description of the issuer, including
its type of entity, the address and telephone number of its
principal office, its formation 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 each person that owns
more than ten percent (10%) of the ownership interests of any
class of securities of the issuer;
(III) The identity of the executive
officers, directors, and managing members of the issuer, and any
other individuals who occupy similar status or perform 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 issuer, the minimum and maximum amount of securities being
offered, if any, and either the percentage ownership of the
issuer represented by the offered securities or the valuation of
the issuer implied by the price of the offered securities;
(V) The identity of any person that the
issuer has or intends to retain to assist the issuer in
conducting the offering and sale of the securities, including
the owner of any websites, if known, but excluding any person
acting solely as an accountant or attorney and any employees
whose primary job responsibilities involve the operating
business of the issuer rather than assisting the issuer in
raising capital, and for each person identified in response to
this subdivision, a description of the consideration being paid
to that person for that assistance;
(VI) A description of any litigation or
legal proceedings involving the issuer or its management;
(VII) The name and address of any website
that the issuer intends to use in connection with the offering,
including its uniform resource locator (URL). If the issuer has
not engaged a website described in this subdivision at the time
the issuer files the disclosure statement described in this
subparagraph with the secretary of state under this paragraph
but subsequently does engage a website for use in connection
with the offering, the issuer shall provide the information
described in this subdivision to the secretary of state by
filing a supplemental notice;
(VIII) Additional information material to
the offering, including, where appropriate, a discussion of
significant factors that make the offering speculative or risky.
This discussion shall be concise and organized logically and
need not present risks that could apply to any issuer or any
offering.
(C) An escrow agreement with a bank or other
depository institution located in this state, in which the
purchaser funds will be deposited, that provides that all
offering proceeds will be released to the issuer only when the
aggregate capital raised from all purchasers is equal to or
greater than the minimum target offering amount specified in the
disclosure statement as necessary to implement the business plan
and that all purchasers will receive a return of their
subscription funds if that target offering amount is not raised
by the time stated in the disclosure statement. The bank or
other depository institution may contract with the issuer to
collect reasonable fees for its escrow services regardless of
whether the target offering amount is reached.
(vi) 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), or
an entity that would be an investment company but for the
exclusions provided in subsection (c) of that section, or
subject to the reporting requirements of section 13 or 15(d) of
the Securities Exchange Act of 1934, (15 U.S.C. §§ 78m and
78o(d));
(vii) The issuer informs each prospective purchaser
that the securities are not registered under federal or state
securities laws and that the securities are subject to
limitations on transfer or resale and displays the following
legend conspicuously on the cover page of the disclosure
statement:
"IN MAKING AN INVESTMENT DECISION, PURCHASERS 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 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 C.F.R. 230.147(E)), OR RULE 147A, (17 C.F.R. 230.147A(E)),
AS PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY
WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.".
(viii) The issuer requires each purchaser to certify
in writing, and to include as part of that certification his
signature, and his initials next to each paragraph of the
certification, as follows:
"I understand and acknowledge that:
I am investing in a high-risk, speculative business venture. I
may lose all of my investment, and I can afford the loss of my
investment. This offering has not been reviewed or approved by
any state or federal securities commission or other regulatory
authority and that no regulatory 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,
that the securities are subject to possible dilution, that there
is no ready market for the sale of those securities, that it may
be difficult or impossible for me to sell or otherwise dispose
of this investment, and that, 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 issuer, whether or not I have sold or otherwise
disposed of my investment or received any dividends or other
distributions from the issuer.
By entering into this transaction with the issuer, I am
affirmatively representing myself as being a Wyoming resident at
the time that this contract is formed, and if this
representation is subsequently shown to be false, the contract
is void.
If I resell any of the securities I am acquiring in this
offering to a person that is not a Wyoming resident, within six
(6) months after the closing of the offering, my contract with
the issuer for the purchase of these securities is void.".
(ix) If the offer and sale of securities under this
section is made through an internet website, all of the
following requirements are met:
(A) Before any offer of an investment
opportunity to residents of this state through the use of a
website, the issuer provides to the website and to the secretary
of state evidence that the issuer is organized under the laws of
this state and that it is authorized to do business in this
state;
(B) The issuer obtains from each purchaser of a
security under this section evidence that the purchaser is a
resident of this state and, if applicable, an accredited
investor;
(C) The website operator files a written notice
with the secretary of state that includes the website operator's
name, business address, and contact information and states that
it is authorized to do business in this state and is being
utilized to offer and sell securities under this exemption.
Beginning twelve (12) months after the date of the written
notice, a website operator that has filed a written notice under
this subparagraph shall annually notify the secretary of state
in writing of any changes in the information provided to the
secretary of state under this subparagraph;
(D) The issuer and the website keep and maintain
records of the offers and sales of securities made through the
website and provide ready access to the records to the secretary
of state on request. The secretary of state may access, inspect,
and review any website described in this paragraph and its
records.
(x) All payments for the purchase of securities are
directed to and held by the bank or depository institution
subject to the provisions of subparagraph (v)(C) of this
subsection;
(xi) Offers or sales of a security are not made
through an internet website unless the website has filed the
written notice required under subparagraph (ix)(C) of this
subsection with the secretary of state;
(xii) The issuer does not pay, directly or
indirectly, any commission or remuneration to an executive
officer, director, managing member, or other individual who has
a similar status or performs similar functions in the name of
and on behalf of the issuer for offering or selling the
securities unless he or she is registered as a broker-dealer,
investment adviser, or investment adviser representative under
article 4 of this act. An executive officer, director, managing
member, or other individual who has a similar status or performs
similar functions in the name of and on behalf of the issuer is
exempt from the registration requirements under article 4 of
this act if he or she does not receive, directly or indirectly,
any commission or remuneration for offering or selling
securities of the issuer that are exempt from registration under
this section;
(xiii) Repealed by Laws 2018, ch. 71, § 2.
(xiv) The term of the offering does not exceed twelve
(12) months after the date of the first offer.
(b) If the offer and sale of a security of an issuer is
exempt under this section, the issuer shall provide the
information described in paragraph (iv) of this subsection upon
request of the issuer's purchasers until none of the securities
issued under this section are outstanding. All of the following
apply:
(i) The issuer shall provide the information free of
charge to the purchasers;
(ii) An issuer may satisfy the information
requirement under this subsection by making the information
available on an internet website;
(iii) The issuer must provide a written copy of the
information to any purchaser or the secretary of state on
request;
(iv) The information provided must include all of the
following:
(A) The compensation received by each director
and executive officer of the issuer, including cash compensation
earned 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;
(B) An analysis by management of the issuer of
the business operations and financial condition of the issuer.
(c) The exemption provided in this section shall not be
used in conjunction with any other exemption under this article,
except offers and sales to controlling persons shall not count
toward the limitation in paragraph (a)(iii) of this section.
(d) The exemption described in this section does not apply
if an issuer or person that is affiliated with the issuer or
offering is subject to any disqualification established by the
secretary of state by rule or contained in rule 262 as
promulgated under the Securities Act of 1933, (17 C.F.R.
230.262). However, this subsection 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 secretary of state, the secretary of
state determines that it is not necessary under the
circumstances that an exemption be denied; and
(ii) The issuer establishes that it made factual
inquiry into whether any disqualification existed under this
subsection but did not know, and in the exercise of reasonable
care could not have known, that a disqualification existed under
this subsection. The nature and scope of the requisite inquiry
will vary based on the circumstances of the issuer and the other
offering participants.
(e) The secretary of state may adopt rules to implement
the provisions of this section and to protect purchasers that
purchase securities that are exempt from registration under this
section.
(f) The secretary of state shall charge a nonrefundable
filing fee for filing an exemption notice required under
subsection (a) of this section according to the following
conditions:
(i) If the offering is being made by the issuer the
filing fee is two hundred dollars ($200.00);
(ii) Internet websites filing written notice shall
pay a filing fee of one hundred dollars ($100.00), for a period
of twelve (12) consecutive months following the date of written
notice. Internet websites may file renewal notices every twelve
(12) months accompanied by a one hundred dollar ($100.00)
renewal fee.
(g) A website through which an offer or sale of securities
under this section is made is not subject to the broker-dealer,
investment adviser, or investment adviser representative
registration requirements under article 4 of this act if the
website meets all of the following conditions:
(i) It does not offer investment advice or
recommendations;
(ii) It does not solicit purchases, sales, or offers
to buy the securities offered or displayed on the website;
(iii) It does not compensate employees, agents, or
other persons for the solicitation or based on the sale of
securities displayed or referenced on the website;
(iv) It does not hold, manage, possess, or otherwise
handle purchaser funds or securities;
(v) It does not engage in any other activities that
the secretary of state by rule determines are inappropriate for
an exemption from the registration requirements under article 4
of this act.
(h) Except for W.S. 17-4-504, article 5 of this act
applies to a violation of this section, including a violation
concerning website operation.
(j) As used in this section, "controlling person" means an
officer, director, partner, or trustee, or another individual
who has similar status or performs similar functions, of or for
the issuer or to a person that owns ten percent (10%) or more of
the outstanding shares of any class or classes of securities of
the issuer.
(k) The exemption described in this section may be
referred to as the "Wyoming Invests Now (WIN) exemption".