North Carolina Administrative Code › Title 18 - SECRETARY OF STATE › Chapter 06 - SECURITIES DIVISION › Subchapter A - RECODIFIED RULES › Section .1200 - EXEMPTIONS › Section 06A .1205 - LIMITED OFFERINGS PURSUANT TO G.S. 78A 17(9)

Current through Register Vol. 39, No. 2, July 15, 2024
(a) Any issuer
				  relying upon the exemption provided by
				  G.S.
				  78A-17(9) in connection with
				  an offering of a security made in reliance upon Rule 505 of Regulation D
				  promulgated by the Securities and Exchange Commission under the Securities Act
				  of 1933, as amended, 17
				  C.F.R. 230.505 (1982) (and as subsequently
				  amended) shall comply with the provisions of Rules .1206, .1207 and .1208 of
				  this Section; provided that such compliance shall not be required if the
				  security is offered and sold only to persons who will be actively engaged, on a
				  regular basis, in the management of the issuer's business; and provided
				  further, that compliance with provisions of Paragraphs (a), (b), and (c) of
				  Rule .1208 of this Section shall not be required, except in the case of the
				  offer and sale of a viatical settlement contract, if the security is offered to
				  not more than five individuals who reside in this State.
(b) Any issuer relying upon the exemption
				  provided by
				  G.S.
				  78A-17(9) in connection with
				  an offering of a direct participation program security made solely in reliance
				  upon an exemption from registration contained in Section 4(2) or Section
				  3(a)(11) of the Securities Act of 1933 as amended, or made solely in reliance
				  upon Rule 504 of Regulation D promulgated by the Securities and Exchange
				  Commission under the Securities Act of 1933, as amended,
				  17 C.F.R.
				  230.504 (1982), (and as subsequently
				  amended), or any person relying upon the exemption provided by
				  G.S.
				  78A-17(9) in connection with
				  an offering of a viatical settlement contract, shall comply with the following
				  conditions and limitations:
(1) No
				  commission, discount, finder's fee or other similar remuneration or
				  compensation shall be paid, directly or indirectly, to any person for
				  soliciting any prospective purchaser of the security sold to a resident of this
				  State unless such person is either registered pursuant to
				  G.S.
				  78A-36 or exempt from registration thereunder
				  or the issuer reasonably believes that such person is so registered or exempt
				  therefrom.
(2) In all offers or
				  sales of direct participation program securities, the provisions of Rule .1313
				  of this Chapter regarding registered offerings of direct participation program
				  securities shall be applicable; provided that such compliance shall not be
				  required with respect to offers or sales to individuals who will be actively
				  engaged, on a regular basis, in the management of the issuer's business. In all
				  sales of viatical settlement contracts, the provisions of Rule .1320 shall be
				  applicable.
(3) Any prospectus or
				  disclosure document used in offering the securities in this state shall
				  disclose the legend(s) as required by the provisions of Rule .1316 of this
				  Chapter.
(4) Not less than 10
				  business days prior to any sale of the securities to a resident of this State
				  which shall include but not be limited to the receipt by the issuer, or any
				  person acting on the issuer's behalf of a signed subscription agreement of, or
				  the receipt of consideration from, a purchaser, the issuer shall file with the
				  administrator, or cause to be so filed:
(A) A
				  statement signed by the issuer and acknowledged before a notary public or other
				  similar officer:
(i) identifying the issuer
				  (including name, form of organization, address and telephone number);
(ii) identifying the person(s) who will be
				  selling the securities in this State (and in the case of such persons other
				  than the issuer and its officers, partners and employees, describing their
				  relationship with the issuer in connection with the transaction and the basis
				  of their compliance with or exemption from the requirements of
				  G.S.
				  78A-36) and describing any commissions,
				  discounts, fees or other remuneration or compensation to be paid to such
				  persons;
(iii) containing a summary
				  of the proposed offering including:
(I) a
				  description of the securities to be sold;
(II) the name(s) of all general partners of
				  an issuer which is a partnership and, with respect to a corporate issuer or any
				  corporate general partner(s) of any issuer which is a partnership, the date and
				  place of incorporation and the names of the directors and executive officers of
				  such corporation(s);
(III) the
				  anticipated aggregate dollar amount of the offering;
(IV) the anticipated required minimum
				  investment, if any, by each purchaser of the securities to be
				  offered;
(V) a brief description of
				  the issuer's business and the anticipated use of the proceeds of the offering;
				  and
(VI) a list of the states in
				  which the securities are proposed to be sold;
(iv) containing an undertaking to furnish to
				  the administrator, upon written request, evidence of compliance with
				  Subparagraphs (1), (2), and (3) of this Paragraph (b);
(v) in the case of a direct participation
				  program security, containing an undertaking to furnish to the administrator,
				  upon written request, a copy of any written document or materials used or
				  proposed to be used in connection with the offer and sale of the securities;
				  and
(vi) in the case of a viatical
				  settlement contract, the filing shall include a copy of all written documents
				  or materials, including advertising, used or proposed to be used in connection
				  with the offer and sale of the securities.
(B) A consent to service of process naming
				  the North Carolina Secretary of State as service agent using the Uniform
				  Consent to Service of Process (Form U-2) signed by the issuer and acknowledged
				  before a notary public or other similar officer; and accompanied by a properly
				  executed Corporate Resolution (Form U-2A), if applicable;
(C) A non-refundable filing fee as
				  established by
				  G.S.
				  78A-17(9), payable to the
				  North Carolina Secretary of State.
(5) In the case of offers of viatical
				  settlement contracts, the persons offering the security shall deliver to the
				  offeree written materials complying with
				  G.S.
				  78A-13. Additionally, any materials used in
				  the offering of the security shall comply with
				  G.S.
				  78A-14 and shall provide each offeree written
				  notice of his or her rights under
				  G.S.
				  78A-56 and under Rule .1501 of this
				  Chapter.
(6) Except in the case of
				  the offer or sale of a viatical settlement contract, compliance with the
				  provisions of Subparagraph (4) of this Paragraph (b) shall not be required if
				  the security is offered to:
(A) not more than
				  five individuals who reside in this State, excluding individuals described in
				  Subparagraph (6)(B) of this Paragraph (b); and
(B) individuals who will be actively engaged,
				  on a regular basis, in the management of the issuer's business.