Arkansas Code of 1987 (2023) › Title 23 - PUBLIC UTILITIES AND REGULATED INDUSTRIES (§§ 23-1-101 — 23-119-105) › Subtitle 2 - FINANCIAL INSTITUTIONS AND SECURITIES (§§ 23-30-101 — 23-55-1007) › Chapter 42 - ARKANSAS SECURITIES ACT (§§ 23-42-101 — 23-42-509) › Subchapter 5 - REGULATION OF TRANSACTIONS (§§ 23-42-501 — 23-42-509) › Section 23-42-504 - Exempted transactions

(a)
The following transactions are exempted from §§
23-42-501
and
23-42-502
:
(1)
Any isolated nonissuer transactions, whether effected through a broker-dealer or not, provided that repeated or successive transactions shall be prima facie evidence that the transactions are not isolated nonissuer transactions;
(2)
Any nonissuer transaction by a registered agent of a registered broker-dealer, and any 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, provided at the time of the transaction:
(A)
The issuer of the security is actually engaged in business and not in the organization stage or in bankruptcy or receivership and is not a blank check, blind pool, or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;
(B)
The security is sold at a price reasonably related to the current market price of the security;
(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;
(D)
A nationally recognized securities manual designated by rule or order of the Securities Commissioner or a document filed with the United States Securities and Exchange Commission is publicly available through the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval system and contains:
(i)
A description of the business and operations of the issuer;
(ii)
The names of the issuer's officers and directors, if any, or, in the case of an issuer not domiciled in the United States, the corporate equivalents of such persons in the issuer's country of domicile;
(iii)
An audited balance sheet of the issuer as of a date within eighteen (18) months or, in the case of a reorganization or merger when the parties to the reorganization or merger had such audited balance sheets, a pro forma balance sheet; and
(iv)
An audited income statement for each of the issuer's immediately preceding two (2) fiscal years, or for the period of existence of the issuer, if in existence for less than two (2) years, or, in the case of a reorganization or merger when the parties to the reorganization or merger had such audited income statements, a pro forma income statement; and
(E)
The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934,
15 U.S.C. § 78a
et seq., as it existed on January 1, 2011, unless:
(i)
The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940,
15 U.S.C. § 80a-1
et seq., as it existed on January 1, 2011;
(ii)
The issuer and predecessors of the issuer of the security have been engaged in continuous business for at least three (3) years; or
(iii)
The issuer of the security has total assets of at least two million dollars ($2,000,000) based on:
(a)
An audited balance sheet dated within the past eighteen (18) months; or
(b)
In the case of a reorganization or merger of parties with audited balance sheets dated within the past eighteen (18) months showing total assets of at least two million dollars ($2,000,000), a pro forma balance sheet;
(3)
Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;
(4)
Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit;
(5)
Any transactions by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;
(6)
Any transaction executed by a bona fide pledgee without any purpose of evading this chapter;
(7)
A transaction by a person exempted from registration under §
23-42-102(3)(B)(v)
if the transaction would be lawful in the place of residence of the offeree or purchaser had it occurred there instead of in this state;
(8)
(A)
Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity.
(B)
The commissioner may by order, upon petition by any person, determine if the petitioner may be deemed, upon the basis of knowledge, experience, volume, and number of transactions, and other securities background, an "institutional buyer" for purposes of subdivision (a)(8)(A) of this section;
(9)
(A)
Any transaction pursuant to an offer and sale to not more than thirty-five (35) purchasers other than those designated in subdivision (a)(8) of this section during any period of twelve (12) consecutive months, if:
(i)
The seller reasonably believes that all the buyers are purchasing for investment; and
(ii)
A commission or other remuneration shall not be paid or given directly or indirectly for soliciting any prospective buyer in this state unless the person receiving any such commission or remuneration is registered under §
23-42-301
.
(B)
However, the commissioner may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of purchasers permitted, or waive the conditions in subdivisions (a)(9)(A)(i) and (ii) of this section with or without the substitution of a limitation on remuneration;
(10)
Any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities or warrants, if no commission or other remuneration, other than a standby commission, is paid or given directly or indirectly for soliciting any security holder in this state, unless the commissioner shall, upon written application, permit the payment of a commission or other remuneration with or without the substitution of a limitation on remuneration;
(11)
Any offer, but not a sale, of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under either act;
(12)
An offer or sale of a security by an issuer if:
(A)
Either of the following applies:
(i)
The issuer of the security is a corporation or other business entity organized and operating under the laws of this state and has its principal place of business in Arkansas and 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)
, as it existed on January 1, 2017, and Rule 147 of the United States Securities and Exchange Commission,
17 C.F.R. § 230.147
, as it existed on January 1, 2017, and as such, the securities shall be offered to and sold only to persons who are residents of this state at the time of purchase; or
(ii)
The issuer of the security is a corporation or other business entity with its principal place of business in Arkansas and the transaction meets the requirements of the federal exemption for intrastate offerings in section 28 of the Securities Exchange Act of 1933,
15 U.S.C. § 77z-3
, as it existed on January 1, 2017, and Rule 147A of the United States Securities and Exchange Commission,
17 C.F.R. § 230.147A
, as it existed on January 1, 2017, and as such, the securities shall be sold only to persons who are residents of this state at the time of purchase;
(B)
The sum of all cash and other consideration to be received for all sales of the security in reliance upon the exemption described in this subdivision (a)(12) shall not exceed one million dollars ($1,000,000), less the aggregate amount received for all sales of securities by the issuer within six (6) months after the completion of the offering;
(C)
The issuer shall not accept more than five thousand dollars ($5,000) from any single purchaser unless the purchaser is an accredited investor as defined by Rule 501 of United States Securities and Exchange Commission Regulation D,
17 C.F.R. § 230.501
, as it existed on January 1, 2017;
(D)
The issuer should reasonably believe that all purchasers of securities are purchasing for investment and not for sale in connection with a distribution of the security;
(E)
A commission or remuneration shall not be paid or given, directly or indirectly, for a person's participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer or agent under this chapter;
(F)
The commissioner may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition the exemption under this subdivision (a)(12); and
(G)
A filing fee of one hundred dollars ($100) shall be paid to the commissioner for every proof of exemption filed with the commissioner under this subdivision (a)(12);
(13)
Any other transaction that the commissioner by rule or order exempts as not being necessary or appropriate in the public interest for the protection of investors; and
(14)
An offer or sale of a security to a person who is not a resident of this state and is not present in this state, if the offer or sale is not:
(A)
A violation of the laws of the state or foreign jurisdiction in which the offeree or purchaser is present; and
(B)
Part of an unlawful plan or scheme to evade this chapter.
(b)
(1)
Before any transaction shall be executed as an exempted transaction under subdivision (a)(9) or subdivision (a)(10) of this section, except, in the case of dividend reinvestment and stock purchase programs pursuant to subdivision (a)(10) of this section, a proof of exemption must first be filed with the commissioner and the commissioner by order shall not have disallowed the exemption within the next ten (10) full business days. Before any dividend reinvestment and stock purchase program shall be executed as an exempt transaction under subdivision (a)(10) of this section, an initial proof of exemption shall be filed. Thereafter, in every fifth year a proof of exemption must be filed with the commissioner, and the commissioner by order must not have disallowed the exemption within the next ten (10) full business days.
(2)
The proof of exemption shall contain a statement of the grounds upon which the exemption is claimed and a designation of the subsection of this section under which the exemption is claimed.
(3)
Proofs of exemption which have not been completed within a period of one hundred eighty (180) days after filing with the commissioner may be deemed abandoned and considered withdrawn by the applicant, provided the applicant has been notified of the deficiencies to the proof and afforded a reasonable opportunity to correct such deficiencies.
(4)
(A)
For every proof of exemption filed with the commissioner under subdivision (a)(9) of this section, there shall be paid to the commissioner a filing fee of one-tenth percent (0.1%) of the maximum aggregate offering price at which the securities are to be offered in this state, but the fee shall in no case be less than twenty-five dollars ($25.00) or more than five hundred dollars ($500).
(B)
For every proof of exemption filed with the commissioner under subdivision (a)(10) of this section, there shall be paid to the commissioner a filing fee of fifty dollars ($50.00).
(C)
The commissioner shall have authority under this subsection to amend or rescind the filing fees by rule or order if the commissioner determines that the fee is excessive under the circumstances.
Amended by Act 2019, No. 110,§ 4, eff. 7/24/2019.
Amended by Act 2019, No. 110,§ 3, eff. 7/24/2019.
Amended by Act 2017, No. 668,§ 23, eff. 8/1/2017.
Amended by Act 2013, No. 460,§ 13, eff. 8/16/2013.
Acts 1959, No. 254, § 14; 1961, No. 248, § 7; 1963, No. 512, § 1; 1971, No. 131, § 4; 1973, No. 47, §§ 13, 15; 1975, No. 844, §§ 9, 10, 12; 1977, No. 493, § 8; 1983, No. 836, §§ 20, 25; 1985, No. 610, § 1; 1985, No. 939, § 8; A.S.A. 1947, § 67-1248; Acts 1995, No. 845, § 27; 1997, No. 173, § 21; 1999, No. 363, § 3; 2005, No. 420, § 3; 2009, No. 462, § 12; 2011, No. 339, § 14.