Source: https://www.richmondsunlight.com/bill/2014/sb351/fulltext/
Timestamp: 2020-07-02 19:04:25
Document Index: 18403296

Matched Legal Cases: ['§ 13', '§ 3', '§ 77', '§ 230', '§ 230', '§ 3', '§ 8', '§ 78', '§ 13', '§ 13', '§ 230', '§ 13', '§ 13', '§ 13', '§ 13', '§ 77', '§ 230', '§ 230', '§ 80', '§ 13', '§ 78', '§ 15', '§ 78', '§ 230', '§ 8', '§ 3', '§ 3005', '§ 3007', '§ 3005']

SB351S1
SENATE BILL NO. 351 AMENDMENT IN THE NATURE OF A SUBSTITUTE (Proposed by the Senate Committee on Commerce and Labor on January 27, 2014) (Patron Prior to Substitute--Senator Edwards) A BILL to amend and reenact § 13.1-514 of the Code of Virginia, relating to the Securities Act; exemption.
21. Any offer or sale of a security by an issuer if the offer or sale is conducted in accordance with each of the following requirements:
a. The issuer of the security is a business entity formed under the laws of the Commonwealth;
b. The transaction meets the requirements of the federal exemption for intrastate offerings in § 3(a)(11) of the Securities Act of 1933, 15 U.S.C. § 77c(a)(11), and SEC Rule 147, 17 C.F.R. § 230.147;
c. The sum of all cash and other consideration to be received for all sales of the security in reliance upon this exemption does not exceed $2 million, less the aggregate amount received for all sales of securities by the issuer within 12 months before the first offer or sale made in reliance upon this exemption, and if the offering is:
(1) $100,000 or less, if the issuer has financial statements prepared the previous year that have been certified by the principal executive officer of the issuer to be true and complete in all material respects;
(2) More than $100,000 but less than $500,000, if the issuer has financial statements prepared the previous year that have been reviewed by an independent certified public accountant in accordance with generally accepted accounting principles; or
(3) $500,000 or more, if the issuer has financial statements prepared the previous year that have been audited by an independent certified public accountant in accordance with generally accepted accounting principles;
d. The aggregate amount sold to any investor during the 12-month period preceding the date of such transaction does not exceed:
(1) The greater of $2,000 or five percent of the annual income or net worth of such investor, as applicable, if either the annual income or net worth of the investor is less than $100,000;
(2) Ten percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount of $10,000 if either the annual income or net worth of the investor is $100,000 or more; or
(3) Unlimited, if the investor is an accredited investor as defined by Rule 501 of Securities and Exchange Commission regulation D, 17 C.F.R. § 230.501;
e. Not less than 10 days prior to the commencement of an offering of securities in reliance on this exemption or the use of any publicly available website in connection with any such offering, the issuer shall file a notice with the Commission, in writing or in electronic form as specified by the Commission, containing the following:
(1) A notice specifying that the issuer will be conducting an offering in reliance upon this exemption, accompanied by the filing fee as specified in this subdivision;
(2) A copy of the disclosure statement to be provided to prospective investors in connection with the offering, containing information material to the offering, including the following subjects:
(a) A description of the company, its history, its business plan, and the intended use of the offering proceeds;
(b) The principal owners of the company;
(c) The managers of the company, their titles, and their prior experience;
(d) The terms and conditions of the securities being offered and of any outstanding securities of the company;
(e) The identity of any person who will be offering and selling the securities, including any Internet websites;
(f) Any litigation or legal proceedings involving the company or its management; and
(g) The risk factors and any other material information, either adverse or favorable, that will or could affect the company or its business, or any material information that would tend to make any representations about the company or investment misleading or incomplete; and
(3) An escrow agreement with a bank or other depository institution located within the Commonwealth in which the investor funds will be deposited, providing that all offering proceeds will be released to the issuer only when the aggregate capital raised from all investors is equal to or greater than the minimum target offering amount specified in the business plan as necessary to implement the business plan and that all investors may cancel their commitments to invest if that target offering amount is not raised by the time stated in the disclosure document;
f. The issuer is not, either before or as a result of the offering, an investment company, as defined in § 3 of the Investment Company Act of 1940, 15 U.S.C. § 8a-3, 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);
g. The issuer shall inform all purchasers 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:
h. If the offer and sale of securities is made through an Internet website, the following requirements shall apply:
(1) Prior to the offer of an investment opportunity to residents of the Commonwealth through an Internet website, the issuer shall provide to the Internet website and to the Commission evidence that the issuer is organized under Virginia law and that it is authorized to do business within the Commonwealth;
(2) The issuer shall obtain from each purchaser of a security under this exemption evidence that the purchaser is a resident of Virginia and meets the requirements of subdivision B 21 d (1), (2) or (3);
(3) The Internet website operator shall provide to the Commission evidence that it is a business entity that is organized under Virginia law and that it is authorized to do business within the Commonwealth and that it is being utilized to offer and sell securities pursuant to this exemption. The Internet website shall notify the Commission of its and the issuer's identity, location, and contact information;
(4) The issuer and the Internet website shall keep and maintain records of the offers and sales of securities effected through the Internet website and shall provide ready access to the records to the Commission, upon request. The Commission may access, inspect, and review such Internet website and its records; and
(5) All payments for purchase of securities shall be directed to and held by the bank or depository institution subject to the provisions of subdivision B 21 e (3). The bank or depository institution shall notify the Commission of the receipt of payments for securities and the identity and residence of the investors. The information shall be confidential while in the possession of the Commission;
i. The Internet website described in subdivision h shall not be subject to the registration provisions of § 13.1-504, provided that all of the following apply:
(1) It does not offer investment advice or recommendations;
(2) It does not solicit purchases, sales, or offers to buy the securities offered or displayed on the Internet website;
(3) It does not compensate employees, agents, or other persons for the solicitation or based on the sale of securities displayed or referenced on the Internet website;
(4) It does not hold, manage, possess, or otherwise handle investor funds or securities; and
(5) It does not engage in such other activities as the Commission, by rule, prohibits; and
j. An executive officer, director, managing member, or person occupying a similar status or performing similar functions in the name of and on behalf of the issuer shall be exempt from the registration provisions of § 13.1-504, provided that the person does not receive, directly or indirectly, any commission or remuneration for offering and selling securities of the issuer pursuant to this exemption.
An issuer of a security, the offer and sale of which is exempt under this subdivision B 21, shall provide a quarterly report to the issuer's investors until no securities issued under this exemption are outstanding. Such quarterly report shall be free of charge. An issuer may satisfy the requirement that it provide such quarterly report by making the information available on an Internet website address if the information is made available within 45 days of the end of each fiscal quarter and remains available until the succeeding quarterly report is issued. An issuer shall provide a written copy of the report to any investor upon request. The report shall contain (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, and (ii) an analysis by management of the issuer of the business operations and financial condition of the issuer. The issuer shall file each such quarterly report with the Commission.
The exemption provided in this subdivision shall not be used in conjunction with any other exemption under this chapter, except that offers and sales to controlling persons shall not count toward the limitation in subdivision B 21 c. "Controlling person" means an officer, director, partner, trustee, or individual occupying similar status or performing similar functions with respect to the issuer or to a person owning 10 percent or more of the outstanding shares of any class or classes of securities of the issuer.
The exemption allowed by this subdivision B 21 shall not apply if an issuer or person affiliated with the issuer or offering is subject to any disqualification contained in Rule 262 as promulgated under the Securities Act of 1933, 17 C.F.R. § 230.262. The provisions of this the preceding sentence shall not apply if (a) upon a showing of good cause and without prejudice to any other action by the Commission, the Commission determines that it is not necessary under the circumstances that an exemption be denied and (b) the issuer establishes that it made factual inquiry into whether any such disqualification contained in Rule 262 existed under this exemption but did not know, and in the exercise of reasonable care could not have known, that a disqualification existed. The nature and scope of the requisite inquiry will vary based on the circumstances of the issuer and the other offering participants.
The Commission may adopt rules to implement the provisions of this subdivision and to protect investors who purchase securities under this subdivision B 21.
The Commission shall charge a nonrefundable filing fee of $250 for filing an exemption notice required by this subdivision B 21.
SENATE BILL NO. 351 Offered January 8, 2014 Prefiled January 7, 2014 A BILL to amend and reenact § 13.1-514 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 13.1-514.3, relating to the Securities Act; Invest in Virginia Exemption.
1. That § 13.1-514 of the Code of Virginia is amended and reenacted and that the Code of Virginia is amended by adding a section numbered 13.1-514.3 as follows:
20. Any transaction by a bank pursuant to an unsolicited offer or order to buy or sell any security, provided such transaction is not effected by an employee of the bank who is also an employee of a broker-dealer; or
21. Any offer or sale of a security by an issuer, or each individual who represents an issuer in an offer or sale, if the offer or sale qualifies as an Invest in Virginia Exemption pursuant to§ 13.1-514.3.
§ 13.1-514.3. Invest in Virginia Exemption.
A. As used in this section, unless the context requires otherwise, "individual" means a natural person residing in the Commonwealth or a corporation, trust, partnership, association, or any other legal entity duly organized under the laws of the Commonwealth, which natural person or entity does not:
2. Solicit purchases of, sales of, or offers to purchase the securities exempted by this section;
3. Compensate employees, agents, or other persons for the solicitation of purchases of, sales of, or offers to purchase the securities exempted by this section; or
4. Take custody of investor funds or securities.
B. The offer or sale of a security by an issuer, and each individual who represents an issuer in an offer or sale, shall be exempt from the securities, broker-dealer, and agent registration requirements of this chapter if the offer or sale is conducted in accordance with each of the following requirements:
1. The issuer of the security is a for-profit business entity formed under the laws of the Commonwealth;
2. 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 17 C.F.R. § 230.147;
3. The sum of all cash and other consideration to be received for all sales of the security in reliance upon this exemption does not exceed $1 million, less the aggregate amount received for all sales of securities by the issuer within the 12 months preceding the first offer or sale made in reliance upon this exemption;
4. The issuer does not accept more than $10,000 from any single purchaser unless the purchaser is an accredited investor as defined by 17 C.F.R. § 230.501;
5. All funds received from investors are required to be (i) deposited into a bank or depository institution authorized to do business in the Commonwealth and (ii) used in accordance with representations made to investors;
6. Before the use of any general solicitation or the twenty-fifth sale of the security, whichever occurs first, the issuer files a notice with the Commission in writing or in electronic form (i) specifying that the issuer is conducting an offering in reliance upon this exemption and (ii) containing the names and addresses of the following persons:
a. The issuer;
b. All persons who will be involved in the offer or sale of securities on behalf of the issuer; and
c. The bank or other depository institution in which investor funds will be deposited;
7. The issuer shall not be, 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 subject to the reporting requirements of § 13 of the Securities Exchange Act of 1934, 15 U.S.C. § 78m, or § 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o(d); and
8. The issuer shall inform all purchasers that the securities have not been registered under this chapter and that the securities are subject to the limitation on resales contained in subsection (e) of 17 C.F.R. § 230-147(e).
C. The exemption from the securities, broker-dealer, and agent registration requirements of this chapter created by this section shall not be used in conjunction with any other exemption under this chapter, except that offers and sales to the following persons shall not count toward the limitation in subdivision B 3:
1. An officer, director, partner, or trustee of the issuer or an individual occupying similar status with, or performing similar functions for, the issuer; or
2. A person owning 10 percent or more of the outstanding shares of any class or classes of securities of the issuer.
D. The exemption from the securities, broker-dealer, and agent registration requirements of this chapter created by this section shall not be available if the issuer; any predecessor of the issuer; any affiliate of the issuer; any member of the board of directors, officer, general partner, limited liability company manager, or managing member of the issuer; or any person that has been or will be paid, directly or indirectly, remuneration for solicitation of purchasers in connection with such sale of securities pursuant to the offering:
1. Has filed a registration statement which is the subject of any pending proceeding or examination under § 8 of the Securities Act of 1933 or has been the subject of any refusal order or stop order thereunder within five years prior to the offering;
2. Is subject to any pending proceeding under Securities and Exchange Commission Rule 258 promulgated under the Securities Act of 1933, or any similar section adopted under § 3(b) of the Securities Act of 1933, or to an order entered thereunder within five years prior to the offering;
3. Has been convicted within five years prior to the offering of any felony or misdemeanor in connection with the purchase or sale of any security or involving the making of any false filing related to the offer or sale of any security;
4. Is subject to any order, judgment, or decree of any court of competent jurisdiction or regulatory authority, including non-U.S. regulatory authorities, temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment, or decree of any court of competent jurisdiction or regulatory authority entered within five years prior to the offering permanently restraining or enjoining, such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing related to the offer or sale of any security; or
5. Is subject to a U.S. Postal Service false representation order entered under 39 U.S.C. § 3005 within five years prior to the offering, or is subject to a temporary restraining order or preliminary injunction entered under 39 U.S.C. § 3007 with respect to conduct alleged to have violated 39 U.S.C. § 3005.
E. The exemption authorized by this section shall be known and may be cited as the “Invest in Virginia Exemption."