Securities Transactions Exempt From Registration

Link to law: http://arcweb.sos.state.or.us/pages/rules/oars_400/oar_441/441_035.html
Published: 2015

The Oregon Administrative Rules contain OARs filed through November 15, 2015

 

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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,

DIVISION OF FINANCE AND CORPORATE SECURITIES









 

DIVISION 35
SECURITIES TRANSACTIONS EXEMPT FROM REGISTRATION

441-035-0005
Self-Executing Transaction Exemptions
(1) Except for ORS 59.035(11), OAR 441-035-0045,
and the Oregon Intrastate Offering Exemption (OIO) at 441-035-0070 et seq., exemptions
available pursuant to ORS 59.035 are self-executing and do not require filing or
a fee.
(2) Persons relying on exemptions
from registration have the burden of proof, pursuant to ORS 59.275, in establishing
the availability of an exemption.
Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.035,
59.195 & 59.275
Hist.: FCS 7-2000, f. &
cert.ef. 6-2-00; FCS 2-2015, f. & cert. ef. 1-28-15
441-035-0010
Accredited Investor
For purposes of ORS 59.035(5) accredited investor includes:
(1) Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the "Act"), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; any small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; 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 excess of $5,000,000; any employee benefit plan within the meaning of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, 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 excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.
(2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
(3) 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 excess of $5,000,000.
(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold or any director, executive officer, or general partner of a general partner of that issuer.
(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of the purchase exceeds $1,000,000, excluding the value of the natural investor’s primary residence.
(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
(7) Any trust, with total assets in excess of $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 CFR 230.506(b)(2)(ii).
(8) Any entity in which all of the equity owners are accredited investors.
Stat. Auth.: ORS 59.285

Stats. Implemented: ORS 59.035(5)

Hist.: CC 12-1985(Temp), f. & ef. 11-25-85; CC 1-1987, f. & ef. 2-4-87; FCS 8-1988(Temp), f. & cert. ef. 4-11-88; Renumbered from 815-030-0042; FCS 14-1988, f. & ef. 10-10-88; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 9-2010(Temp), f. 8-2-10, cert. ef. 8-3-10 thru

1-30-11; FCS 2-2011, f. & cert. ef. 2-15-11
441-035-0020
Transactions Ineligible Under ORS 59.035(7) Exemption
The exemption under ORS 59.035(7) is not available if the transaction includes an investment contract. An investment contract may be found in:
(1) The sale of fractional interests or pooled interests in real paper. Under ORS 59.350(2), a transaction with an entity formed substantially for the purpose of acquiring the real estate paper will be treated as the sale of a fractional interest or pooled investment.
(2) Any of the following activities by the seller or its affiliates:
(a) Selection of the security;
(b) Collection of payments due under the securities;
(c) Advancement of delinquent payments;
(d) Decisions regarding default and foreclosure;
(e) Any other activity by the seller whereby management and control is exercised over the investment for the purchaser; or
(f) The mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b) guarantees the real estate paper or agrees to buy back or otherwise replace the real estate paper in the event of default.
Stat. Auth.: ORS 59.045(1) & ORS 59.285

Stats. Implemented: ORS 59.035(7) & ORS 59.045(1)

Hist.: FCS 4-1987(Temp), f. 9-24-87, ef. 9-28-87; Renumbered from 815-030-0042.1; FCS 7-1988, f. 3-22-88, cert. ef. 3-25-88; FCS 16-1988(Temp), f. & ef. 11-21-88; Renumbered from 815-037-0039; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 1-1992, f. 1-31-92, cert. ef. 2-1-92
441-035-0021
Disclosure Requirements for Real Estate Paper Transactions Exempt Under ORS 59.035(7)
(1) All transactions exempt under ORS 59.035(7), involving a mortgage banker or mortgage broker must comply with the provisions of OAR 441-870-0050.
(2) All transactions exempt under ORS 59.035(7), involving a broker-dealer or person described in 59.015(1)(b) must comply with the provisions of this rule. Compliance does not relieve any person of any other duties and liabilities under the Oregon Securities Law, Oregon Administrative Rules, or any other provision of law.
(3) For transactions to be exempt under ORS 59.035(7), a broker-dealer or person described in 59.015(1)(b) must provide to the purchaser, prior to the time of sale, a written disclosure document containing the following information:
(a) The legal description of the real property underlying the real estate paper being sold;
(b) The priority of the lien created by the real estate paper and the total face amount of any senior liens including outstanding taxes; or a current title report on the real property prepared by a title insurance company;
(c) The terms of any senior lien and of any assignments thereof, or a copy of the instrument creating the senior lien and any assignments thereof;
(d) A statement whether any future advances may have a priority senior to that of the lien created by the real estate paper being sold;
(e) In the case of a sale of junior real estate paper, a statement of the risk of loss on foreclosure of a senior lien;
(f) A prominent statement of any balloon payments, including the dates payable and the amounts due;
(g) A statement of the balance of all taxes owing on the real property underlying the real estate paper, as provided by the county assessor directly or indirectly through a title insurance company;
(h) A statement of the value of the real property underlying the real estate paper, based upon the tax assessed value of the property underlying the real estate paper, as provided by the county assessor directly or indirectly through a title insurance company, and:
(A) If available, a statement of value based upon an appraisal or an opinion of value prepared by an independent licensed appraiser may also be provided; however
(B) Under no circumstances may the statement of value be based upon any source other than the county assessor or an independent licensed appraiser.
(i) If the transaction involves existing real estate paper:
(A) The debtor's payment record for the lesser of two years immediately preceding the sale or for the period of existence of the real estate paper, covering the existing real estate paper being sold; and
(B) If the payment record is less than two years, or the real estate paper being sold is a junior lien, a credit report on the debtor prepared by a credit reporting agency and current within 90 days of the transaction.
(j) If the transaction involves real estate paper to be created:
(A) The debtor's payment record, if any, for the lesser of two years immediately preceding the sale or for the period of existence of the real estate paper, covering:
(i) Any lien senior to the real estate paper being created; and
(ii) Any lien being retired with the proceeds from the subject sale.
(B) A credit report on the debtor prepared by a credit reporting agency and current within 90 days of the transaction; and
(C) A financial statement of the debtor current within 90 days of the transaction.
(k) If the seller of the real estate paper, the seller's agent, or any affiliate is the debtor, a statement disclosing that fact and the amount of cash paid to the debtor in consideration for the issuance of the real estate paper;
(l) A statement of any commissions, collection fees, and other costs chargeable to the purchaser of the real estate paper; and
(m) A statement of whether the purchaser of the real estate paper will be insured against casualty loss.
(4) The information contained in the written disclosure document described in section (3) of this rule may be provided in summary form except that copies of the tax statement and the appraisal, where applicable, must be true and complete copies of the originals.
(5) Although not a condition of the availability of the exemption granted pursuant to ORS 59.035(7), all broker-dealers relying on the exemption and this rule shall, pursuant to ORS 59.195, maintain and make available to the Director, or any purchaser involved in the subject transaction, a separate file for each transaction. Each file shall be retained for a period of six years following the date of the transaction, and shall include:
(a) A copy of the disclosure document described in section (3) of this rule;
(b) A written statement, signed and dated by the purchaser, acknowledging receipt of the written disclosure document and an opportunity to review the supporting documentation;
(c) The supporting documentation evidencing the summarized information contained in the disclosure document; and
(d) Copies of the documents described in section (6) of this rule.
(6) The broker-dealer or person described in ORS 59.015(1)(b) must:
(a) Deliver to the purchaser or licensed escrow agent or title company the written evidence of the obligation properly endorsed, together with the instrument creating the purchaser's lien or assessment of the lien;
(b) Record, or cause to have recorded, the instrument creating the purchaser's lien or assignment of the lien in a timely manner in the county or counties where the property is located and retain a copy of the recorded instrument in the purchaser's transaction file; and
(c) If a title report prepared by a title insurance company is relied upon for the disclosure required under subsection (3)(b) of this rule, deliver to the purchaser a fully paid title insurance policy running to the benefit of the purchaser.
(7) If a security transaction is exempt under ORS 59.035(7), the following are also exempt:
(a) Guarantees or surety agreements created as an integral part of the real estate paper and sold with the real estate paper if the guarantor or surety is not a mortgage banker, mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b); and
(b) "With-recourse" agreements or guarantees created by a seller and sold with the real estate paper, if the seller is not a mortgage banker, mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b).
Stat. Auth.: ORS 59.035(7), 59.045(1), 59.045(2) & 59.350(2)

Stats. Implemented: ORS 59.035(7), 59.045 & 59.350(2)

Hist.: FCS 7-1988, f. 3-22-88, cert. ef. 3-25-88; Renumbered from 815-037-0037; FCS 5-1989, f. & cert. ef. 5-17-89; Renumbered from 441-205-0160; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 1-1992, f. 1-31-92, cert. ef. 2-1-92; FCS 2-1994, f. & cert. ef. 1-7-94; FCS 4-2007, f. 10-11-07, cert. ef. 1-1-08
441-035-0030
Manual Exemption
Pursuant to ORS 59.035(10)(c), the Mergent, Standard and Poor's, and Fitch Investors Service securities manuals are approved for purposes of the exemption granted under subsection (10) of 59.035.
Stat. Auth.: ORS 59.285

Stats. Implemented: ORS 59.035(10)

Hist.: CC 13, f. 9-19-73, ef. 10-1-73; CC 22, f. & ef. 11-25-75; Renumbered from 815-030-0035.90; Renumbered from 815-030-0045; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00; FCS 9-2001, f. & cert. ef. 9-28-01
441-035-0040
NASDAQ Exemption
Pursuant to subsection (10)(d) of ORS 59.035, the National Association of Securities Dealers Automated Quotations, NASDAQ, is approved for purposes of the exemption granted under section (10) of 59.035, except for securities quoted on the OTC Bulletin Board.
Stat. Auth.: ORS 59.285

Stats. Implemented: ORS 59.035(10)

Hist.: CC 13, f. 9-19-73, ef. 10-1-73; Renumbered from 815-030-0035.91; Renumbered from 815-030-0050; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00
441-035-0045
Solicitation of Interest for Offering of Securities Pursuant to SEC Regulation A or OAR 441-065-0225
(1) An offer, but not a sale, of a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a prospectus (or its equivalent) for such security is exempt from ORS 59.055 if all of the following conditions are satisfied:
(a) The issuer is or will be a business entity organized under the laws of one of the states or possessions of the United States or one of the provinces or territories of Canada, is engaged in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries and is not a "blank check company," as such term is defined in OAR 441-045-0010(2);
(b) The offerer intends to register the security in this state and conduct its offering pursuant to either Regulation A, as promulgated by the Securities and Exchange Commission, or OAR 441-065-0225;
(c) At least 10 business days prior to the initial solicitation of interest under this rule, the offerer files with the Director:
(A) A completed solicitation of interest application on a form prescribed by the Director along with any other materials to be used to conduct solicitations of interest, including, but not limited to, the script of any broadcast to be made and a copy of any notice to be published;
(B) The minimum registration fee as set in OAR 441-065-0001;
(C) A completed Form U-4 (salesperson application available from the Securities Section) for at least one, but no more than five, issuer salespersons (each such salesperson must be a bona fide officer, director or employee of the issuer); and
(D) A salesperson licensing fee as set in OAR 441-175-0002 for each salesperson.
(d) At least five business days prior to usage, the offerer files with the Director any amendments to the foregoing materials or additional materials to be used to conduct solicitations of interest, except for materials provided to a particular offeree pursuant to a request by that offeree;
(e) No Solicitation of Interest Form, script, advertisement or other material which the offerer has been notified by the Director not to distribute is used to solicit indications of interest;
(f) Except for scripted broadcasts and published notices, the offerer does not communicate with any offeree about the contemplated offering unless the offeree is provided with the most current Solicitation of Interest Form at or before the time of the communication or within five days from the communication;
(g) During the solicitation of interest period, the offerer does not solicit or accept money or a commitment to purchase securities;
(h) No sale is made until at least seven days after delivery to the purchaser of a final prospectus, or in those instances in which delivery of a preliminary prospectus is allowed hereunder, a preliminary prospectus;
(i) The offerer does not know, and in the exercise of reasonable care, could not know that the issuer or any of the issuer's officers, directors, ten percent shareholders or promoters:
(A) Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any federal or state securities law within five years prior to the filing of the Solicitation of Interest Form.
(B) Has been convicted within five years prior to the filing of the Solicitation of Interest Form of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud.
(C) Is currently subject to any federal or state administrative enforcement order or judgment entered by any state securities administrator or the Securities and Exchange Commission within five years prior to the filing of the Solicitation of Interest Form or is subject to any federal or state administrative enforcement order or judgment entered within five years prior to the filing of the Solicitation of Interest Form in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found.
(D) Is subject to any federal or state administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities.
(E) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction permanently restraining or enjoining, such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the Solicitation of Interest Form.
(F) The prohibitions listed in paragraphs (A) through (E) of this subsection shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against such person or if the broker-dealer employing such party is licensed in this state and the Form B-D filed with this state discloses the order, conviction, judgment or decree relating to such person. No person disqualified under this subsection may act in a capacity other than that for which the person is licensed. Any disqualification caused by this action is automatically waived if the agency which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.
(2) A failure to comply with any condition of section (1) of this rule will not result in the loss of the exemption from the requirements of ORS 59.055 for any offer to a particular individual or entity if the offerer shows:
(a) The failure to comply did not pertain to a condition directly intended to protect that particular individual or entity;
(b) The failure to comply was insignificant with respect to the offering as a whole; and
(c) A good faith and reasonable attempt was made to comply with all applicable conditions of section (1). Where an exemption is established only through reliance upon this section (2), the failure to comply shall nonetheless be actionable as a violation of the Act by the Director under ORS 59.245 and 59.255 and constitute grounds for denying, withdrawing or conditioning the exemption pursuant to 59.045 as to a specific security or transaction.
(3) The offerer shall comply with the requirements set forth below. Failure to comply will not result in the loss of the exemption from the requirements of ORS 59.055, but shall be a violation of the Oregon Securities Law, be actionable by the Director under 59.245 and 59.255, and constitute grounds for denying, withdrawing or conditioning the exemption pursuant to 59.045 as to a specific security or transaction:
(a) Any published notice or script for broadcast must contain at least the identity of the chief executive officer of the issuer, a brief and general description of its business and products, and the following legends:
(A) THIS IS A SOLICITATION OF INTEREST ONLY. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED;
(B) NO SALES OF THE SECURITIES WILL BE MADE OR COMMITMENT TO PURCHASE ACCEPTED UNTIL DELIVERY OF AN OFFERING CIRCULAR THAT INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING;
(C) AN INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND; and
(D) THIS OFFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS. NO SALE MAY BE MADE UNTIL THE OFFERING STATEMENT IS QUALIFIED BY THE SEC, IF APPLICABLE, AND IS REGISTERED IN THIS STATE.
(b) All communications with prospective investors made in reliance on this rule must cease after a registration statement is filed in this state, and no sale may be made until at least 20 calendar days after the last communication made in reliance on this rule.
(4) The Director may waive any condition of this exemption in writing, upon application by the offerer and cause having been shown. Neither compliance nor attempted compliance with this rule, nor the absence of any objection or order by the Director with respect to any offer of securities undertaken pursuant to this rule, shall be deemed to be a waiver of any condition of the rule or deemed to be a confirmation by the Director of the availability of this rule.
(5) Offers made in reliance on this rule will not result in a violation of ORS 59.055 by virtue of being integrated with subsequent offers or sales of securities unless such subsequent offers and sales would be integrated under federal securities laws.
(6) Issuers on whose behalf indications of interest are solicited under this rule may not make offers or sales in reliance on ORS 59.025(7), 59.035(5), 59.035(12) or OAR 441-035-0050 until six months after the last communication with a prospective investor made pursuant to this rule.
Stat. Auth.: ORS 59.025(4) & 59.035(11)

Stats. Implemented: ORS 59.025(4), 59.035(11), 59.035(15) & 59.285

Hist.: FCS 10-1994, f. & cert. ef. 10-3-94; FCS 2-2003(Temp), f. & cert. ef. 11-26-03 thru 5-21-04; FCS 1-2004, f. & cert. ef. 5-19-04
441-035-0050
Isolated Issuer Transaction
(1) An exemption is granted pursuant to ORS 59.035(15) for any isolated issuer transaction not involving a public offering.
(2) For purposes of this rule, an "isolated issuer transaction" shall include sales by or on behalf of an issuer to three or fewer persons during any 24-month period.
Stat. Auth.: ORS 59.035(15)

Stats. Implemented: ORS 59.035(15)

Hist.: FCS 2-1993, f. 4-13-93, cert. ef. 4-15-93
441-035-0060
Offers of Securities on the Internet
(1) Scope of Rule. This rule applies to any offer for sale of securities placed on the Internet, except for those offers for sale from Oregon. As used in this section, the term "Internet" is to be construed liberally to include all proprietary or common carrier electronic systems or similar media.
(2) Pursuant to ORS 59.035(15), an offer for sale of securities placed on the Internet by, or on behalf of, an issuer, involving securities that will not be sold in Oregon, shall be exempt from the notice filing requirements of 59.049(1) and (2), and the registration requirements of 59.055, if the following conditions are observed:
(a) The Internet offer for sale prominently and conspicuously indicates, on a page that must be viewed by readers before reading any portion of the offering document or the subscription agreement, either that the securities are not being offered to persons in Oregon, or in which specific states, other than Oregon, the securities are being offered;
(b) The offer for sale is not otherwise specifically directed to any person in Oregon by, or on behalf of, the issuer; and
(c) No sales of the issuer's securities are made in Oregon as a direct or indirect result of the Internet offer for sale.
(3) Any issuer who places an offer for sale of securities on the Internet in accordance with this section may subsequently sell the securities to persons in Oregon:
(a) Through filing a notice of the offering under ORS 59.049(1) or (2), or registration of the offering under 59.065 and the delivery of a final prospectus to the Oregon investor prior to sale;
(b) Pursuant to a transaction exemption which permits general solicitation; or
(c) Pursuant to ORS 59.035(5), 59.035(12), or OAR 441-035-0050 provided that the sale transaction is executed no earlier than six months after the final contact between the issuer and the prospective Oregon investor.
Stat. Auth.: ORS 59.285; 59.035(15)

Stats. Implemented: ORS 59.035

Hist.: FCS 7-2000, f. & cert.ef. 6-2-00
441-035-0070
Policy and Purpose of the Oregon Intrastate
Offering Exemption (OIO)
Crowdfunding, or raising money through
small investments from a large number of investors can provide smaller enterprises
access to capital for new or expanded business ventures. OAR 441-035-0070 through
OAR 441-035-0230, provide an exemption from the securities registration requirements
under ORS 59.055 in limited circumstances in order to facilitate investment by Oregon
residents in Oregon businesses while protecting investors.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0080
Definitions
For purposes of OAR 441-035-0070 through
OAR441-035-0230, the following definitions apply unless the context requires otherwise:
(1) “Business Technical
Service Provider” means a Small Business Development Center as defined in
OAR 123-022-0070, an Economic Development District as defined in 13 CFR 304.1, or
a not-for-profit incubator, accelerator, or business resource provider approved
by the Director.
(2) “Director”
means the Director of the Department of Consumer and Business Services.
(3) “Issuer”
has the same meaning as that term is defined in ORS 59.015(9). For the purposes
of these rules, “issuer” includes persons with direct control over the
Oregon business or over the offer or sale of securities exempted under these rules.
(4) “Offer” includes
every attempt to dispose of an OIO security for value. The publication of any information
and statements, and publicity efforts — including any advertising materials
— in advance of or in connection with an OIO that contributes to the conditioning
of the public mind or arousing public interest in the issuer or is intended to arouse
public interest investing in the issuer or purchasing its securities — even
though it does not contain an express “offer” — is an “offer”
of OIO securities for purposes of this definition.
(5) “Offering Documents”
means the representations and disclosures required under OAR 441-035-0120.
(6) “Oregon business”
means a business formed under the laws of Oregon and registered with the Secretary
of State of Oregon as a domestic business, with its principal office in Oregon,
doing business in the state and having 50 or fewer employees.
(7) “Third Party Platform
Provider” means an internet based platform provided by a business technical
service provider or other entity authorized by the Director to post, on behalf of
issuers, information related to OIOs to interested persons who certify Oregon residency.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0090
Requirements for Exemption From Securities
Registration
The offer or sale of an OIO by an issuer
shall be exempt from the securities registration requirements under ORS 59.055 if
the offer or sale is conducted in accordance with the following:
(1) The issuer must be an
existing Oregon business in good standing. The OIO exemption cannot be applied if
the issuer, or a person affiliated with the issuer, would be disqualified under
OAR 441-035-0210.
(2) The offer and sale must
be conducted in accordance with section 3(a)(11) of the Securities Act of 1933,
as amended. For purposes of this requirement, it is sufficient that the offer and
sale complies with Rule 147 under section 3(a)(11).
(3)(a) OIO securities may
only be offered or sold to natural persons who are residents of the state of Oregon.
(b) Prior to making any offer
under this exemption, an interested person must make an affirmative declaration
to the issuer or third party platform that they are an Oregon resident;
(c) Prior to any sale under
the OIO exemption, the issuer must have a reasonable documentary basis to believe
the prospective purchaser is a resident of Oregon and obtained the signed acknowledgement
required under OAR 441-035-0120(4). A reasonable documentary basis includes, but
is not limited to:
(A) A current Oregon Driver
License or a current personal identification card issued by the State of Oregon;
or
(B) A document that indicates
the prospective purchaser owns or occupies property in the state as his or her principal
residence, such as a current voter registration, or official business mail from
a state or federal agency.
(4) The duration of an OIO
will not exceed twelve (12) months, unless the issuer applies to extend the offering
for a period not to exceed twelve (12) additional months. An issuer may apply to
extend the offering by submitting an amended filing with the Director in conformance
with these rules.
(5) All proceeds from the
sale of OIO securities must be used in accordance with representations made to investors,
including the disclosures required under OAR 441-035-0120.
(6) The aggregate purchase
price of all OIO securities cannot exceed two hundred fifty thousand dollars ($250,000).
(7) An issuer may not accept
more than two thousand five hundred dollars ($2,500) from any individual in reliance
on the OIO exemption.
(8) Issuers offering or selling
OIO securities must have met in person and reviewed their business plan with a business
technical service provider prior to advertising, offering or selling securities.
(9) OIO securities sold pursuant
to this exemption are limited to notes, stocks, and debentures.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0100
Resale Limitations
(1) An OIO security may not be resold
during the nine (9) month period immediately after purchase, except:
(a) To the issuer; or
(b) Pursuant to an order
of registration under ORS 59.065.
(2) After the immediate nine
(9) month period has ended, an OIO security may also be sold pursuant to an available
exemption to securities registration requirements under ORS 59.025 or 59.035 or
accompanying rules.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0110
Required Filings
(1) Not less than seven (7) days prior
to the advertisement, offer or sale of any OIO security, the issuer shall file a
notice with the Director, in writing, that it plans to conduct an OIO and pay a
$200 filing fee.
(2) The notice shall contain
the following:
(a) The name(s) and address
of the issuer and of all officers, directors, principals, managing partners and
shareholders of the Oregon business possessing a 20% interest or more, or persons
holding a substantially similar position.
(b) A copy of any proposed
advertising materials, including a URL if a website will be used in connection with
the offering, and name of the third party platform provider, if applicable;
(c) A brief description of
the business and the specific project or product that is the reason for the offering;
(d) The minimum and maximum
amounts issuer is seeking to raise through the offering or total offering amount;
(e) A copy of the offering
documents;
(f) A form approved by the
Director verifying that the issuer has met in person with a business technical service
provider and reviewed the relevant business plan.
(3) The $200 filing fee,
which will be used to defray the costs incurred in administering and enforcing these
rules, must be made payable to the Department of Consumer and Business Services.
(4) The filing must be signed
by the issuer or a duly authorized representative of the issuer certifying that
the issuer has verified the material accuracy and completeness of the information.
(5) These filing requirements
may be met by submitting a form adopted by the Director or through individual submission
of all the information required by the rule.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0120
Required Disclosures
(1) Except as allowed under OAR 441-035-0130,
prior to any offer or sale of an OIO security, each prospective investor must be
given, in a single written document, the disclosures identified in subsection (2).
For the purposes of this exemption, “in writing” includes printed, electronic,
and internet media. An interested party must be given the option to receive the
disclosures and subsequent reports in one or more formats, including printed copies
at no charge.
(2) The disclosures required
by these rules must include:
(a) The name(s) and physical
address(es) of the issuer and of all officers, principals, managing partners and
shareholders of the issuer holding a 20% interest or more, or persons holding a
substantially similar position;
(b) A description of the
experience and qualifications of the issuer officers, principals, managing partners
and persons holding substantially similar positions;
(c) A description of the
business, including how long it has been in operation and the specific reason for
the offering;
(d) A discussion in plain
language of the significant factors material to the offering, including those that
make the offering speculative or risky;
(e) The total offering amount
and how the issuer expects to use the proceeds of the offering, including compensation
and expenses related to the offering.
(f) If an issuer needs to
raise a minimum amount to achieve the stated funding goal, they must disclose that
minimum offering amount and how the issuer intends to use funds raised through the
offering if the minimum goal is not met, or if they intend to return the funds if
the goal is not met;
(g) The terms and conditions
of the securities being offered, the total amount of securities that are outstanding
prior to the OIO, and the total amount of securities being offered or sold in reliance
on the OIO exemption:
(A) If the issuer is offering
stock, the terms and conditions must include either the percentage of ownership
represented by a single share, or the total value of the Oregon business implied
by the offering price.
(B) If the issuer is offering
notes or debentures, the terms and conditions must include the interest rate and
specific terms of repayment.
(h) A description of any
litigation or legal proceedings within the past five (5) years, if any, involving
the issuer or any persons associated with the issuer.
(3) The issuer must inform
all investors that the securities exempted by these rules are not registered with
the state, that they are subject to a limitation on re-sale and investors may not
be able to sell their securities promptly or may only be able to sell them at a
substantial discount from the offering price. Disclosures must also contain the
following language on the cover page of the offering document:
“THESE SECURITIES ARE
BEING SOLD IN RELIANCE ON AN EXEMPTION TO THE FEDERAL SECURITIES REGISTRATION REQUIREMENTS
UNDER SECTION 3(a)(11) OF THE SECURITIES ACT OF 1933 AND UNDER ORS 59.035 OF THE
OREGON SECURITIES LAW. THESE SECURITIES CAN ONLY BE SOLD TO RESIDENTS OF OREGON
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE. INVESTORS SHOULD
BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION,
INVESTORS SHOULD RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS REVEALED
IN THESE OFFERING DOCUMENTS, INCLUDING THE MERITS AND RISKS INVOLVED.
THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE AUTHORITY OR REGULATORY COMMISSION NOR
HAVE THEY CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. BUSINESS TECHNICAL SERVICE
PROVIDERS HAVE NOT REVIEWED THE OFFERING DOCUMENTS AND CANNOT DETERMINE THE MERITS
OF THIS OFFERING”
(4) At the time of sale the
issuer must require all purchasers to sign the following acknowledgement. For the
purposes of this provision, “signed” includes a scanned, faxed or virtual
signature:
"I have been provided and
have reviewed the complete offering document, including the disclosures. I acknowledge
that I am investing in a high-risk, business venture with no guarantee of success,
that I may lose all of my investment, and that I can afford the loss of my investment.
I understand this offering has not been reviewed by the State, and no authority
has expressed an opinion on the merits or accuracy of this offering. By entering
into this transaction with the issuer, I am affirmatively representing myself as
an Oregon resident.”
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0130
Advertising and Solicitation
Issuers and third party platform providers
may engage in general advertising or solicitation of OIO securities provided that:
(1) The issuer files a copy
of the advertising materials with the Director at least seven (7) days prior to
use. The Director may prohibit the use of any advertisement that they consider false
or misleading or otherwise not in compliance with these rules.
(2) The advertisement is
directed only to Oregon residents. Prior to viewing advertising materials, each
person must affirmatively certify that they are an Oregon resident. A person who
does not or can not affirmatively certify that they are an Oregon resident may not
view the advertising materials.
(3) The advertisement contains
no more than the following information:
(a) The name and contact
information of the issuer;
(b) A brief description of
the general type of business of the issuer;
(c) Whether securities being
offered are stocks, notes or debentures or a combination;
(d) The total offering amount;
(e) A description of how
the issuer will use the funds;
(f) The duration of the OIO
and deadline for raising funds through the offering; and
(g) The issuer’s logo;
(h) A link to the issuer’s
website or the third party platform in which the securities are offered or sold.
(4) Any amendments to the
advertising materials are filed with the Director.
(5) The advertisement, including
any advertisement through a website, clearly states that the advertisement does
not constitute an offer to sell a security and includes contact or other relevant
information notifying an interested person how they can obtain the required disclosure
information, in writing, free of charge.
(6) Advertising to the general
public without regard to residency, or advertising information outside the scope
of this rule is prohibited.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0140
Use of Internet General Requirements
(1) Websites that advertise or offer
an OIO security must obtain an affirmative declaration from an interested person
under 441-035-0090(3)(b) that the interested person is an Oregon resident prior
to allowing access to any of the information allowed under OAR 441-035-0130 or to
the offering documents under 441-035-0120;
(2) Websites that advertise,
offer or sell an OIO security must take reasonable steps to ensure that an investor’s
financial and personal information is properly secured and kept private and must
conform to ORS 646A.622.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0150
Use of the Internet by Issuers
(1) An Oregon business using its existing
website must segregate information related to the advertising, offer or sale of
OIO securities on a webpage distinct from webpages accessible to the general public.
(2) An issuer may use a webpage
to sell securities if the issuer obtains reasonable documentary evidence under 441-035-0090(3)(c)
that the prospective purchaser is an Oregon resident prior to the sale.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0160
Use of the Internet by Third Party Platform
Providers
(1) A third party platform provider
may post advertising materials allowed under OAR 441-035-0130 and offering documents
under 441-035-0120 for OIO securities, under the following conditions:
(a) The platform is used
to host for not less than five (5) OIO issuers;
(b) The platform does not
solicit, sell, or effect transactions in securities unless it is a registered broker-dealer
under ORS 59.015(a). However, a third party platform may:
(A) Allow an investor to
transmit investor funds to an unaffiliated third party that is licensed or authorized
to transmit money;
(B) Allow an investor to
transmit funds to the issuer; or
(C) Direct an unaffiliated
third party to transmit investor funds to the issuer pursuant to an written agreement;
(D) Collect certification
and documentary evidence regarding an interested party’s residency required
by OAR 441-035-0090 provided the third party platform provider complies with the
records requirement in 441-035-0220.
(b) On portions of the platform
accessible to the general public, a third party platform only makes viewable the
general business and contact information of the issuer;
(c) The platform does not
offer investment advice, endorse, or solicit for any issuer on the platform;
(d) The platform does not
engage in secondary trading of an issuer’s securities; and
(e) A platform only charges
a nominal flat fee for the upkeep of the website and may not obtain any interest
in the issuer in return for posting information on the platform.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0170
Prohibited Offerings
The OIO exemption is unavailable for
the following types of offerings:
(1) Offerings involving development
stage companies without a specific business plan or purpose, or in which the issuer
has indicated that its business is to engage in a merger or acquisition with an
unidentified company or companies, or other unidentified entities or persons, or
without an allocation of proceeds for sufficiently identifiable properties or objectives
(e.g., “blank check” offerings);
(2) Offerings that involve
the sale of securities other than notes, stocks, or debentures.
(3) Offerings involving petroleum
exploration or production, mining, or any other extractive industries; or
(4) Offerings involving an
investment company as defined and classified under Section 4 of the Investment Company
Act of 1940.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0180
Prohibition on Commissions, Fees and Other
Remuneration
No person may receive a commission,
fee, or other remuneration for offering, soliciting or selling any OIO security.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0190
Integration
(1) All separate sales of securities
will be included as part of the OIO if, after considering the following elements,
there are compelling reasons to treat the sale as part of the same offering. The
elements to be considered are:
(a) Whether the sales are
part of a single plan of financing;
(b) Whether the sales involved
issuance of the same type of security;
(c) Whether the sales are
made at or about the same time;
(d) Whether the same type
of consideration is received; and
(e) Whether the sales are
made for the same general purpose.
(2) Employee benefit plans.
Offers and sales of any securities registered under OAR 441-065-0270 are not included
for purposes of this rule.
(3) Sales of securities made
more than six months prior to the offer or sale of securities in reliance on this
exemption, or more than six months after the termination offer or sale of securities
in reliance on this exemption will not be counted or included as sales made as part
of the same offering under this rule if there are no sales of securities of the
same or similar type by the issuer during either six month period other than sales
of securities under an employee benefit plan registered under OAR 441-065-0270.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0200
Reporting
(1) An issuer of an OIO security shall
provide a report to all individuals having an outstanding security interest obtained
through this exemption at least twice a year. An issuer may satisfy the reporting
requirement of this subdivision by making the information available on a Website
if the information is made available within 45 days of the end of each fiscal half-year
and remains available for at least 60 days. An issuer must provide a written copy
of the report to any shareholder as requested. The report required by this section
shall be provided free of charge regardless of format. A copy of the report shall
be filed with the Director at the same time it is provided to the issuer’s
investors. The report must contain the following:
(a) Compensation received
by each Director and executive officer, or person occupying a substantially similar
role, including cash compensation earned since the previous report and on an annual
basis and any bonuses, stock options, other rights to receive securities of the
issuer or any affiliate of the issuer, or other compensation received.
(b) An explanation and discussion
of the business operations and financial condition of the issuer such as a recent
financial statement and profit and loss statement.
(c) The Director may require
any issuer to file periodic reports to keep the information contained in the notice
reasonably current and to disclose the progress of the offering.
(2)(a) The issuer must file
a sales report with the Director no later than thirty (30) calendar days after the
expiration of the offering in a form prescribed by the Director.
(b) A sales report must state
the total amount raised through the offering, how many investors purchased securities
through the offering, and whether, if funds were held in escrow the funds were released
to the issuer.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0210
Bad Actors
(1) The OIO exemption is not available
if, within five years prior to the offering, any of the following apply:
(a) An issuer or person affiliated
with the issuer has filed a registration statement which is the subject of any pending
proceeding or examination under section 8 of the Securities Act of 1933 or has been
the subject of any refusal order or stop order thereunder.
(b) An issuer or person affiliated
with the issuer is subject to any pending proceeding under SEC rule 258 promulgated
under the Securities Act of 1933, or any similar section adopted under section 3(b)
of the Securities Act of 1933, or to an order entered thereunder.
(c) An issuer or person affiliated
with the issuer has been convicted of any felony or misdemeanor involving the offer,
purchase, or sale of any security, or involving the making of any false filing related
to the offer or sale of any security, or any felony or misdemeanor involving dishonesty.
(d) An issuer or a person
affiliated with the issuer is, or has been, subject to a state administrative order
or judgment containing findings that the issuer or person affiliated with the issuer
engaged in fraud or deceit, including but not limited to, making untrue statements
of material facts and omitting to state material facts, in connection with the purchase
or sale of securities.
(e) An issuer or person affiliated
with the issuer has ever been subject to any order, judgment, or decree of any court
of competent jurisdiction or regulatory authority (including non-U.S. regulatory
authorities) preliminarily, temporarily, or permanently restraining or enjoining
such person from engaging in or continuing any conduct or practice in connection
with the purchase or sale of any security or involving the making of any false filing
related to the offer or sale of any security.
(f) An issuer or a person
affiliated with the issuer is the subject of a cease and desist order entered after
notice and opportunity for hearing by the Director, a securities agency or administrator
of another state or Canadian province or territory, the United States Securities
and Exchange Commission or the United States Commodity Futures Trading Commission
that contains allegations of securities fraud or misrepresentations in connection
with investment offerings.
(2) The disqualification
under this rule may not apply if:
(a) The Director determines
that it is not necessary under the circumstances that an exemption be unavailable;
and
(b) The issuer establishes
that they did not know, and in the exercise of reasonable care could not have known,
that a disqualification existed under this rule.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0220
Records
The issuer shall maintain the following
records for inspection by the Director for four (4) years from the date the OIO
is concluded.
(1) Records relating to purchasers
and materials and data relied upon to determine the qualifications of the purchasers;
(2) Records relating to securities
sales following the close of the offering that are considered as part of the offering;
and
(3) All disclosure, advertising,
and purchaser acknowledgement materials used in connection with offerings.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15
441-035-0230
Burden of Proof
Under ORS 59.275, persons relying upon
the OIO rules have the burden in any civil, criminal or administrative action brought
under or in connection with Oregon Securities Law of proving that they satisfied
all of the conditions of this exemption.
Stat. Auth.: ORS 59.035
Stats. Implemented: ORS 59.035
Hist.: FCS 1-2015, f. &
cert. ef. 1-15-15

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