limited offering transactional exemption. Any sale by an issuer having its
principal office in this state is eligible for the intrastate limited offering
transactional exemption according to the following conditions:
A. (1) The
total number of sales is not made to more than thirty-five non-accredited
persons in this state;
in this state" include any sale that physically takes place within this
state, whether to residents or nonresidents;
Offers and sales that are made more than six months before the start of an
intrastate limited offering or are made more than six months after completion
of an intrastate limited offering will not be considered part of that offering,
so long as during those six month periods there are no offers or sales of
securities by or for the issuer that are of the same or a similar class as
those offered or sold under the intrastate limited offering, other than those
offers or sales of securities under an employee benefit plan pursuant to SDCL 47-31B-202(21);
(2). An intrastate limited
offering may be offered and sold no more than twelve consecutive months from
the approval date of the filing;
(3). The issuer believes
that all of the buyers in this state, other than those designated in SDCL 47-31B-202(13), are purchasing for investment;
(4). No commission or other
remuneration is paid or given directly or indirectly for soliciting any
prospective buyer in this state other than a finder as defined in
§ 20:08:03:17, except reasonable and customary commissions paid by the
issuer to a broker or agent registered with the division;
(5). Ten days prior to any
sale, the issuer must submit to the director, a completed "Statement of
the Issuer Form", (appendix A) and pay a filing fee pursuant to SDCL 47-31B-203. The offering may not be sold prior to approval by the director; and
(6). The issuer must file
the report of sales form (appendix B) within 30 days of the end of the grant of
the exemption or after the offering is closed, whichever occurs first.
B. (1) Unless
the issuer complies with § 20:08:07:27 with respect to the
testing-the-waters exemption, there can be no public advertising of an offer to
sell securities; and any offers made under this section may only be directed to
persons with whom the issuer has a pre-existing relationship or persons acting
on the issuer's behalf who have a pre-existing business relationship. The term,
no public advertising, means that neither the issuer nor any person acting on
behalf of the issuer may offer or sell the securities by any form of general
solicitation or general advertising, including an advertisement, article,
notice, or other communication published in a newspaper, magazine, or similar
media or broadcast over television or radio and a seminar or meeting whose
attendees have been invited by general solicitation or general advertising.
(2). The director may
increase the number of purchasers for purposes of this rule if the issuer shows
the director that:
(a) The number
limitation is unwarranted for this offering;
(b) The increased
number is necessary to complete a particular community or economic development
(c) The purchasers are
limited to a particular identified group; and the issuer discloses the number
of intended purchasers to the director.
(3). For the purpose of
computing the number of sales which have been made or will have been made upon
completion of a proposed offering pursuant to this rule, the following sales
shall be excluded:
(a) The sale to a
relative or spouse of a purchaser and a relative of the spouse who has the same
home as the purchaser;
(b) The sale to a
trust or estate in which a purchaser or any of the persons related to the
purchaser as specified in subdivision (a) of this section collectively have 100
percent of the beneficial interest, excluding contingent interest;
(c) The sale to a
corporation or other organization of which a purchaser or any of the persons
related to him as specified in subdivision (a) of this section collectively are
the beneficial owners of all the equity securities, excluding directors'
qualifying shares, or equity interests.
(4). A sale to a
corporation, partnership, limited liability company, association, joint stock
company, trust, or unincorporated organization shall be counted as one sale;
however, if the entity was organized for the specific purpose of acquiring the
securities offered, each beneficial owner of equity interest or equity
securities in the entity shall count as a separate sale. A tenancy by the
entirety is one person.
(5). A sale made to an
accredited investor as defined in 17 C.F.R. § 230.501, or a sale pursuant to
SDCL 47-31B-202(13) may not be construed as a sale for the purpose of computing the maximum number of sales allowed under this rule.
(6). Intrastate limited
offerings are presumed confidential and shall receive confidential treatment.
28 SDR 48, effective October 10, 2001; 30 SDR 211, effective July 1, 2004; 33
SDR 63, effective October 18, 2006.
Authority: SDCL 47-31B-605(a)(1) to (3), inclusive.
Implemented: SDCL 47-31B-103, 47-31B-203.