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) The following
				words and terms, when used in this section, shall have the following meanings,
				unless the context clearly indicates otherwise.
(1) Private Offering Exemptions. The term
				"Private Offering Exemptions" refers to §4005.012 and §4005.013 of
				the Act.
(2) Limited Offering
				Exemptions. The term "Limited Offering Exemptions" refers to the two limited
				offering exemptions found in subsections (a)(1) and (a)(2) of
				§§4005.012 of the Act. The term "Limited Offering Exemption (a)(1)"
				refers to the exemption in subsection (a)(1) of §4005.012 of the Act, and
				the term "Limited Offering Exemption (a)(2)" refers to the exemption in
				subsection (a)(2) of §4005.012 of the Act.
(3) Registration Sections. The term
				"Registration Sections" refers to Subchapters A, B, and C of Chapter 4003 of
				the Act.
(4) Public solicitation.
				The offer for sale or sale of the securities of the issuer would not involve
				the use of public solicitation under the Private Offering Exemptions 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 either
				§4005.0012 or §4005.013 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.
(5) Well
				informed. 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.
(6)
				Sophisticated investor. 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.