Section 45.55.175. Exemption for certain security sales and offerings.

   (a) An offer or sale of securities conducted solely in this state to a person who has established residency in this state by an issuer in a transaction that meets the requirements of this section is exempt from the requirements of AS 45.55.070 - 45.55.120 and 45.55.150 and is subject to the following limitations:
        (1) the issuer of the security shall be a for-profit corporation, another for-profit entity, or a business cooperative, have its principal place of business in this state, and be licensed by the department;
        (2) the transaction must meet the requirements of the federal exemption for intrastate offerings in 15 U.S.C. 77c(a)(11)(Securities Act of 1933) and 17 C.F.R. 230.147; the securities must be offered to and sold only to persons who have established residency in this state at the time of purchase; before any offer or sale under this exemption, the seller shall obtain documentary evidence from each prospective purchaser that provides the seller with a reasonable basis to believe the investor has established residency in this state;
        (3) the sum of all cash and other consideration to be received for all sales of the security in reliance on this exemption may not exceed $1,000,000, less the aggregate amount received for all sales of securities by the issuer within the 12 months before the first offer or sale made in reliance on this exemption;
        (4) the issuer may not accept more than $10,000 from a single purchaser during a 12-month period unless the purchaser is an accredited investor as defined by 17 C.F.R. 230.501;
        (5) the issuer reasonably believes that all purchasers of securities are purchasing for investment and not for sale in connection with a distribution of the security;
        (6) a commission or remuneration may not be paid or given, directly or indirectly, for any person's participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer, agent, investment adviser representative, or state investment adviser under AS 45.55.030 or 45.55.035;
        (7) the issuer of the security shall deposit in an escrow account in a bank or other depository institution authorized to do business in this state all funds received from investors until the minimum target dollar amount for the security offering is met; the issuer shall file the escrow agreement with the administrator, and the contents of the escrow agreement must include a statement that the proceeds of the sale under this section will not be released from the escrow account until the minimum target dollar amount for the security offering is met; all funds shall be used in accordance with representations made to investors;
        (8) not less than 10 days before the use of a general solicitation or within 15 days after the first sale of a security under this exemption if general solicitation has not been used before the sale, whichever occurs first, the issuer shall provide a notice to the administrator as prescribed in regulations for this section; the notice must specify that the issuer is conducting an offering in reliance on this exemption and must contain the names and addresses of
             (A) the issuer;
             (B) officers, directors, and any person who controls the issuer;
             (C) all persons who will be involved in the offer or sale of securities on behalf of the issuer; and
             (D) the bank or other depository institution in which investor funds will be deposited;
        (9) the issuer may not be, either before or as a result of the offering,
             (A) an investment company as defined by 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), or subject to the reporting requirements of 15 U.S.C. 78m or 78o (Securities Exchange Act of 1934); or
             (B) a broker-dealer, agent, investment adviser representative, or state investment adviser subject to AS 45.55.030 or 45.55.035;
        (10) the issuer shall inform all purchasers that the securities have not been registered under AS 45.55.070 - 45.55.120, are exempt from AS 45.55.150, and may not be resold unless the securities are registered or qualify for an exemption from registration under AS 45.55.900; in addition, the issuer shall make the disclosures required by 17 C.F.R. 230.147(f);
        (11) the issuer shall require all purchasers to sign the following statement at the time of sale: "I acknowledge that I am investing in a high-risk, speculative business venture, that I may lose all of my investment, and that I can afford the loss of my investment";
        (12) this exemption may not be used in conjunction with any other exemption under this chapter, except the exemption related to institutional investors under AS 45.55.030(c) and for offers and sales to persons who control the issuer; sales to persons who control the issuer do not count toward the limitation in (3) of this subsection;
        (13) this exemption may not be construed to remove a person from the anti-fraud and other provisions under AS 45.55.010 - 45.55.028, and the exemption may not be construed to provide relief from another provision of this chapter other than as expressly stated.
   (b) The administrator may by order deny or revoke the exemption specified in this section with respect to a specific security if the administrator finds that the sale of the security would work or tend to work a fraud on the purchasers of the security. An order under this subsection may not operate retroactively. A person may not be considered to have violated the order because of an offer or sale effected after the entry of an order under this subsection if the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care, could not have known of the order.
   (c) The department shall assess a person who makes application to the department for an exemption under this section a filing fee as prescribed in regulations for this section.
   (d) Exemption from registration under this section is not available for a security or transaction if the issuer, or any of its officers, persons in control, or promoters, is subject to a disqualifier described in the regulations adopted under 15 U.S.C. 78c(a)(39)(Dodd-Frank Wall Street Reform and Consumer Protection Act) as of the date of the transaction or offer.
   (e) In this section,
        (1) "control" means having the power, directly or indirectly, to direct the management or policies of the issuer, whether through ownership of securities, by contract, or otherwise;
        (2) "department" means the Department of Commerce, Community, and Economic Development;
        (3) "residency" has the meaning given in AS 01.10.055.

Authorities

45.55.900

Notes

References

AS 45.55.900 Exemptions.

History

(Sec. 1 ch 38 SLA 2016)