North Carolina Administrative Code › Title 18 - SECRETARY OF STATE › Chapter 06 - SECURITIES DIVISION › Subchapter A - RECODIFIED RULES › Section .1200 - EXEMPTIONS › Section 06A .1206 - LIMITED OFFERING EXEMPTION PURSUANT TO G.S. 78A 17(17)

Current through Register Vol. 39, No. 2, July 15, 2024
(a)
				  Transactions made in reliance upon Rule 505 of Regulation D promulgated by the
				  Securities and Exchange Commission under the Securities Act of 1933, as
				  amended, and 17 C.F.R.
				  230.505 (1982) (as subsequently amended),
				  including any offer or sale made exempt by application of Rule 508(a), as made
				  effective in Release No. 33-6389 and as amended in Release Nos. 33-6437,
				  33-6663, 33-6758, and 33-6825, shall be exempt from the requirements of
				  G.S.
				  78A-24, provided there is compliance with the
				  conditions and limitations of this Rule .1206 and Rules .1207 and .1208 of this
				  Section.
(b) No exemption under
				  this Rule is available for the offer or sale of securities if the issuer or any
				  other person or entity to which Rule .1206 applies is disqualified pursuant to
				  Rule .1207 of this Section unless the administrator, upon application and a
				  showing of good cause by the issuer, or such other person or entity, modifies
				  or waives the disqualification. For purposes of this Rule, "good cause" means a
				  substantial reason amounting in law to a legal excuse for noncompliance with a
				  restriction imposed by Rule .1207, and shall be relevant to considerations of
				  the public interest, the protection of the investing public, the age and nature
				  of the particular disqualifying event, the business experience, qualifications,
				  and disciplinary history of the disqualified person, the need for full
				  disclosure of information relevant to investment decisions, and the burden and
				  cost of compliance with regulatory requirements applicable to the transaction
				  in the absence of the availability of the exemption.
(c) 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 any
				  security sold to a resident of this State in reliance upon the exemption
				  provided by this Rule 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.
(d) In all sales to
				  those accredited investors defined in
				  17 C.F.R.
				  230.501(a)(5) who reside in
				  this State (except sales to such accredited investors made by or through a
				  dealer registered under
				  G.S.
				  78A-36) and in all sales to nonaccredited
				  investors who reside in this State the issuer and any person acting on its
				  behalf shall have reasonable grounds to believe and after making reasonable
				  inquiry shall believe that the following conditions are satisfied:
(1) In the case of a security other than a
				  viatical settlement contract:
(A) The
				  investment is suitable for the purchaser upon the basis of the facts, if any,
				  disclosed by the purchaser as to his/her other security holdings and as to
				  his/her financial situation and needs. For the purpose of this condition only,
				  it may be presumed that if the investment does not exceed 10 percent of the
				  investor's net worth, it is suitable; or
(B) The purchaser, either alone or with
				  his/her purchaser representative(s), has such knowledge and experience in
				  financial and business matters that he/she is or they are capable of evaluating
				  the merits and risks of the prospective investments.