Code of Vermont Rules › Agency 21 - DEPARTMENT OF FINANCIAL REGULATION › Sub-Agency 030 - SECURITIES DIVISION › Chapter 007 - VERMONT SMALL BUSINESS OFFERINGS › Section 21 030 007 - VERMONT SMALL BUSINESS OFFERINGS

Current through June,
				2024
Section a
				Definitions
The following terms as used in this regulation are defined
				  as:
(1) " Accredited Investor" means
				an investor that satisfies the definition of "accredited investor" pursuant to
				17 C.F.R. §
											230.501(a).
(2) " Bad Actor" means an issuer; any
				predecessor of an issuer; any affiliated issuer; any director, executive
				officer, other officer participating in an offering, general partner or
				managing member of the issuer; any beneficial owner of twenty (20) percent or
				more of the issuer's outstanding voting equity securities, calculated on the
				basis of voting power; any promoter connected with the issuer in any capacity
				at the time of such sale (including any director, executive officer, other
				officer participating in the offering, general partner or managing member of
				the promoter); any investment manager of an issuer that is a pooled investment
				fund; any person that has been or will be paid (directly or indirectly)
				remuneration for solicitation of purchasers in connection with such sale of
				securities; any general partner or managing member of any such investment
				manager or solicitor; or any director, executive officer or other officer
				participating in the offering of any such investment manager or solicitor or
				general partner or managing member of such investment manager or solicitor;
				who:
(A) Was convicted, within ten years
				before such sale (or five years, in the case of issuers, their predecessors and
				affiliated issuers), of any felony or misdemeanor in connection with the
				purchase or sale of any security; involving the making of any false filing with
				the Commissioner or the SEC; or arising out of the conduct of the business of
				an underwriter, broker, dealer, municipal securities dealer, investment adviser
				or paid solicitor of purchasers of securities;
(B) Is subject to any order, judgment or
				decree of any court of competent jurisdiction, entered within five years before
				such sale that, at the time of such sale, restrains or enjoins such person from
				engaging or continuing to engage in any conduct or practice: in connection with
				the purchase or sale of any security; involving the making of any false filing
				with the Commissioner or the SEC; or arising out of the conduct of the business
				of an underwriter, broker, dealer, municipal securities dealer, investment
				adviser or paid solicitor of purchasers of securities;
(C) Is subject to a final order of a state
				securities administrator (or an agency or officer of a state performing like
				functions); a state authority that supervises or examines banks, savings
				associations, or credit unions; a state insurance commission (or an agency or
				officer of a state performing like functions); an appropriate federal banking
				agency; the U.S. Commodity Futures Trading Commission; or the National Credit
				Union Administration that: at the time of such sale, bars the person from:
				association with an entity regulated by such commission, authority, agency, or
				officer; engaging in the business of securities, insurance or banking; or
				engaging in savings association or credit union activities; or constitutes a
				final order based on a violation of any law or regulation that prohibits
				fraudulent, manipulative, or deceptive conduct entered within ten years before
				such sale;
(D) Is subject to an
				order of the SEC pursuant to 15 U.S.C. § 78 o(b) or 78o-4(c) or 15 U.S.C.
				§ 80b -
				3(e)
				or (f) that, at the time of such sale:
				suspends or revokes such person's registration as a broker, dealer, municipal
				securities dealer, or investment adviser; places limitations on the activities,
				functions, or operations of such person; or bars such person from being
				associated with any entity or from participating in the offering of any penny
				stock;
(E) Is subject to any order
				of the SEC entered within five years before such sale that, at the time of such
				sale, orders the person to cease and desist from committing or causing a
				violation or future violation of: any scienter-based anti-fraud provision of
				the federal securities laws, including without limitation section
				15 U.S.C.
				§
												77 q(a)(1), 15 U.S.C. § 78 j(b)
				and 17 R § 240.10b -5, 15 U.S.C. § 78 o(c)(1), 15 U.S.C. § 80b -
				6(1),
				or any other rule or regulation thereunder; or
				15 U.S.C.
				§
												77 e.
(F) Is suspended or expelled from membership
				in, or suspended or barred from association with a member of, a registered
				national securities exchange or a registered national or affiliated securities
				association for any act or omission to act constituting conduct inconsistent
				with just and equitable principles of trade;
(G) Filed (as a registrant or issuer), or was
				named as an underwriter in, any registration statement or Regulation A offering
				statement filed with the SEC that, within five years before such sale, was the
				subject of a refusal order, stop order, or order suspending the Regulation A
				exemption, or is, at the time of such sale, the subject of an investigation or
				proceeding to determine whether a stop order or suspension order should be
				issued; or
(H) Is subject to a
				United States Postal Service false representation order entered within five
				years before such sale, or is, at the time of such sale, subject to a temporary
				restraining order or preliminary injunction with respect to conduct alleged by
				the United States Postal Service to constitute a scheme or device for obtaining
				money or property through the mail by means of false representations.
(I) Subsection (H) may not apply: upon a
				showing of good cause and without prejudice to any other action by the
				Commissioner, if the Commissioner determines that it is not necessary under the
				circumstances that an exemption be denied; if, before the relevant sale, the
				court or regulatory authority that entered the relevant order, judgment or
				decree advises in writing (whether contained in the relevant judgment, order or
				decree or separately to the Commissioner) that disqualification under paragraph
				(H) should not arise as a consequence of such order, judgment or decree; or if
				the issuer establishes that it did not know and, in the exercise of reasonable
				care, could not have known that a disqualification existed under paragraph (H).
				Instruction to subsection (a)(1)(I): An issuer will not be able to establish
				that it has exercised reasonable care unless it has made, in light of the
				circumstances, factual inquiry into whether any disqualifications exist. The
				nature and scope of the factual inquiry will vary based on the facts and
				circumstances concerning, among other things, the issuer and the other offering
				participants.
(J) For purposes of
				paragraph (viii), events relating to any affiliated issuer that occurred before
				the affiliation arose will be not considered disqualifying if the affiliated
				entity is not: in control of the issuer; or (ii) Under common control with the
				issuer by a third party that was in control of the affiliated entity at the
				time of such events.
(3)
				" Vermont Certified Investor" means any person who comes within any of the
				following categories, or who the issuer reasonably believes comes within any of
				the following categories, at the time of the sale of the securities to that
				person:
(A) Any plan established and
				maintained by a state, its political subdivisions, or any agency or
				instrumentality of a state or its political subdivisions, for the benefit of
				its employees, if such plan has total assets in between $ 2,500,000 and $
				5,000,000; any employee benefit plan within the meaning of the Employee
				Retirement Income Security Act of 1974 if the investment decision is made by a
				plan fiduciary, as defined in section
				3(21)
				of such act, which is either a bank, savings and loan association, insurance
				company, or registered investment adviser, or if the employee benefit plan has
				total assets in between 2,500,000 and $ 5,000,000 or, if a self-directed plan,
				with investment decisions made solely by persons that are certified
				investors;
(B) Any organization
				described in section
				501(c)(3)
				of the Internal Revenue Code, corporation, Massachusetts or similar business
				trust, or partnership, not formed for the specific purpose of acquiring the
				securities offered, with total assets in between $ 2,500,000 and
				5,000,000;
(C) Any natural person
				whose individual liquid net worth, or joint net worth with that person's
				spouse, exceeds $ 500,000.
(i) Except as
				provided in paragraph (3)(C)(ii) of this section, for purposes of calculating
				net worth under this paragraph (3)(C)(i):
(I)
				The person's primary residence must not be included as an asset;
(II) Indebtedness that is secured by the
				person's primary residence, up to the estimated fair market value of the
				primary residence at the time of the sale of securities, must not be included
				as a liability (except that if the amount of such indebtedness outstanding at
				the time of sale of securities exceeds the amount outstanding 60 days before
				such time, other than as a result of the acquisition of the primary residence,
				the amount of such excess must be included as a liability); and
(III) Indebtedness that is secured by the
				person's primary residence in excess of the estimated fair market value of the
				primary residence at the time of the sale of securities must be included as a
				liability;
(ii) Paragraph
				(3)(C)(i) of this section will not apply to any calculation of a person's net
				worth made in connection with a purchase of securities in accordance with a
				right to purchase such securities, provided that:
(I) Such right was held by the person on July
				20, 2010;
(II) The person qualified
				as an accredited investor on the basis of net worth at the time the person
				acquired such right; and
(III) The
				person held securities of the same issuer, other than such right, on July 20,
				2010.
(D) Any
				natural person who had an individual income in excess of $ 100,000 in each of
				the two most recent years or joint income with that person's spouse in excess
				of $ 150,000 in each of those years and has a reasonable expectation of
				reaching the same income level in the current year;
(E) Any trust, with total assets in between $
				2,500,000 and $ 5,000,000, not formed for the specific purpose of acquiring the
				securities offered, whose purchase is directed by a sophisticated person as
				described in
				17
				C.F.R. §
												230.506(b)(2)(ii);
				and
(F) Any entity in which all of
				the equity owners are Vermont Certified Investors.
(4) " Vermont Main Street Investor" means any
				person who does not satisfy the definition of "Vermont Certified Investor" or
				"Accredited Investor."