Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 7 - STATE SECURITIES BOARD › Chapter 109 - TRANSACTIONS EXEMPT FROM REGISTRATION › Section 109.13 - Limited Offering Exemptions

Current through Reg. 49, No. 28; July 12, 2024
(a)
				Public solicitation, well-informed, and sophisticated investor. The offer for
				sale or sale of the securities of the issuer would not involve the use of
				public solicitation under the Act, § 5.I, if the issuer, after having made
				a reasonable factual inquiry has reasonable cause to believe, and does believe,
				that the purchasers of the securities are sophisticated, well-informed
				investors or well-informed investors who have a relationship with the issuer or
				its principals, executive officers, or directors evincing trust between the
				parties (namely close business association, close friendship, or close family
				ties), and such purchasers acquire the securities as ultimate purchasers and
				not as underwriters or conduits to other beneficial owners or subsequent
				purchasers. The use of a registered dealer in a sale otherwise meeting the
				requirements of § 5.I does not necessarily mean that the transaction
				involves the use of public solicitation. The offer without advertising to a
				person who did not come within the class of persons described in this
				subsection does not alone result in public solicitation if the issuer had a
				reasonable cause to believe and did believe that such person fell within the
				class of persons described, and that such offer was not made indiscriminately.
(1) The term "well-informed" could be
				satisfied through the dissemination of printed material to each purchaser prior
				to his or her purchase, which by a fair and factual presentation discloses the
				plan of business, the history, and the financial statements of the issuer,
				including material facts necessary in order that the statements made, in the
				light of circumstances under which they are made, not be misleading.
(2) In determining who is a sophisticated
				investor at least the following factors should be considered.
(A) The financial capacity of the investor,
				to be of such proportion that the total cost of that investor's commitment in
				the proposed investment would not be material when compared with his total
				financial capacity. It may be presumed that if the investment does not exceed
				20% of the investor's net worth (or joint net worth with the investor's spouse)
				at the time of sale that the amount invested is not material.
(B) Knowledge of finance, securities, and
				investments, generally. This criteria may be met by the investor's purchaser
				representative if such purchaser representative has such knowledge, so long as
				such purchaser representative:
(i) has no
				business relationship with the issuer;
(ii) represents only the investor and not the
				issuer; and
(iii) is compensated
				only by the investor.
(C) Experience and skill in investments based
				on actual participation. This criteria may be met by the investor's purchaser
				representative if such purchaser representative has such experience and skill,
				so long as such purchaser representative:
(i)
				has no business relationship with the issuer;
(ii) represents only the investor and not the
				issuer; and
(iii) is compensated
				only by the investor.