Kan. Admin. Regs. § 81-5-13 - Accredited investor exemption
(a) Exemption. Each
offer or sale of a security by an issuer shall be exempt from the registration
requirements of K.S.A. 17-12a301 through 17-12a306 and K.S.A. 17-12a504, and
amendments thereto, if each of the following requirements is met:
(1) Sales shall be made only to persons who
are or whom the issuer reasonably believes to be accredited investors, as
defined in SEC regulation D, rule 501(a), 17 C.F.R. §
230.501(a), as
adopted by reference in K.A.R. 81-2-1.
(2) The issuer shall reasonably believe that
all purchasers are purchasing for investment and not with the view to or for
resale in connection with a distribution of the security. Each resale of a
security sold in reliance on this exemption within 12 months of sale shall be
presumed to be with a view to distribution and not for investment, except a
resale pursuant to a registration statement effective K.S.A. 17-12a305(h) and
amendments thereto or a resale to an accredited investor pursuant to an
exemption available under the act.
(3) Each communication with a prospective
investor shall meet the requirements of subsection (d).
(4) Within 15 days after the first sale in
this state, the issuer shall file with the administrator a notice of
transaction on form D or the NASAA model accredited investor exemption uniform
notice of transaction, a copy of the general announcement, and the fee
specified in K.A.R. 81-5-8.
(b) Disqualifications. The exemption is
specified in subsection (a) shall not be available to an issuer under either of
the following conditions:
(1) The issuer is
in the development stage and either has no specific business plan or purpose or
has indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person.
(2) The issuer, any of the
issuer's predecessors, any affiliated issuer, any of the issuer's directors,
officers, general partners, beneficial owners of 10% or more of any class of
its equity securities, any of the issuer's promoters presently connected with
the issuer in any capacity, any underwriter of the securities to be offered, or
any partner, director, or officer of the underwriter meets any of the following
conditions:
(A) Has filed a registration
statement that is subject to a currently effective registration stop order
entered by any state securities administrator or the SEC within the last five
years;
(B) has been convicted
within the last five years of any criminal offense in connection with the
offer, purchase, or sale of any security, or involving fraud or deceit;
(C) is subject to any current
state or federal administrative enforcement order or judgment, entered within
the last five years, finding fraud or deceit in connection with the purchase or
sale of any security; or
(D) is
subject to any current order, judgment, or decree of any court of competent
jurisdiction, entered within the last five years, temporarily, preliminarily,
or permanently restraining or enjoining the party from engaging in or
continuing to engage in any conduct or practice involving fraud or deceit in
connection with the purchase or sale of any security.
(c) Waivers. Upon application by
the issuer, any disqualification specified in paragraph (b)(2) may be waived in
writing by the administrator if one of the following conditions is met:
(1) The party subject to the disqualification
is licensed or registered to conduct securities-related business in the state
in which the order, judgment, or decree creating the disqualification was
entered against the party.
(2)
Before the first offer under this exemption, the court or regulatory authority
that entered the order, judgment, or decree waives the disqualification, and
the administrator determines that there was good cause for the waiver.
(3) The issuer establishes that it
did not know and, in the exercise of reasonable care and based on a factual
inquiry, could not have known that a disqualification existed.
(d) Communication with prospective
investors.
(1) A general announcement of a
proposed offering may be made and may be disseminated to persons who are not
accredited investors. However, the general announcement shall include only the
following information, unless additional information is specifically authorized
in writing by the administrator:
(A) The
name, address, and telephone number of the issuer of the securities;
(B) the name, a brief description, and the
price, if known, of any security to be issued;
(C) a brief description of the business of
the issuer in 25 or fewer words;
(D) the type, number, and aggregate amount of
securities being offered;
(E) the
name, address, and telephone number of the person to contact for additional
information; and
(F) the following
statements:
(i) Sales will be made only to
accredited investors;
(ii) no
money or other consideration is being solicited or will be accepted by way of
this general announcement; and
(iii) the securities have not been registered
with or approved by any state securities agency or the United States securities
and exchange commission and are being offered and sold pursuant to an exemption
from registration.
(2) The issuer, in connection with an offer,
may provide information in addition to the general announcement under paragraph
(d)(1) if the information meets either of the following conditions:
(A) The information is delivered through an
electronic database that is restricted to persons who have been prequalified as
accredited investors.
(B) The
information is delivered after the issuer reasonably believes that the
prospective purchaser is an accredited investor.
(3) No telephone solicitation shall be
permitted, unless, before placing the call, the issuer reasonably believes that
the prospective purchaser to be solicited is an accredited investor.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.