10 Pa. Code § 204.010 - Increasing the number of purchasers and offerees
(a)
Increases in purchasers and
offerees. Under section 204(a) of the act (70 P.S. §
1-204(a)), the number of
purchasers and offerees permitted under section 203(d) and (e) of the act
(70 P.S. §
1-203(d) and
(e)), respectively, are increased as follows,
if the issuer complies with all the conditions described in subsection (b):
(1) The total number of persons to whom
securities may be offered in this Commonwealth during 12 consecutive months
under section 203(e) of the act is 90 persons, except that offers made to
experienced private placement investors who actually purchase the securities
being offered are not included in the limitation established by this
paragraph.
(2) The total number of
persons to whom securities may be sold in this Commonwealth during 12
consecutive months under section 203(d) of the act is 35 persons, except that
sales made to experienced private placement investors are not included in the
numerical limitation established by this paragraph.
(b)
Conditions.
(1)
Disqualification. The
issuer or a person who is an officer, director, principal, partner other than a
limited partner, promoter, or controlling person of the issuer or a person
occupying a similar status or performing a similar function on behalf of the
issuer, has not been convicted of a crime, made the subject of a sanction or
otherwise found to have met any of the criteria described in section
305(a)(ii)-(xiii) of the act (70 P.S. §
1-305(a)(ii)-(xiii)) unless
the person subject to this disqualification is registered under section 301 of
the act (70 P.S. §
1-301).
(2)
Exemption notice filing.
With respect to reliance on subsection (a)(2), the issuer files with the
Department the notice required under section 203(d) of the act and §
203.041 (relating to limited
offerings) and pays the filing fee required under section 602(b.1)(viii) of the
act (70 P.S. §
1-602(b.1)(viii)).
(3)
Broker-dealer
requirement.
(i) All offers and sales
made to persons in reliance on section 203(d) and (e) of the act, including the
increased number of offerees and purchasers permitted by subsection (a), are
effected by a broker-dealer registered under section 301 of the act.
(ii) Subparagraph (i) does not apply if the
issuer either is organized under the laws of the Commonwealth or has its
principal place of business in this Commonwealth.
(4)
Statutory requirement.
With respect to all offers and sales made to persons permitted under this
section, the issuer shall comply with all conditions imposed by section 203(d)
and (e) of the act, respectively.
(c)
Exceptions.
(1) Subsection (b)(1) does not apply if
either of the following conditions exist:
(i)
The person subject to the disqualification enumerated therein is licensed or
registered to conduct securities related business in the state in which the
administrative order or judgment was entered against the person.
(ii) The broker-dealer employing the person
is licensed or registered in this Commonwealth and disclosed the order,
conviction, judgment or decree relating to the person in the Form BD filed with
the Department.
(2)
Paragraph (1) does not allow a person disqualified under subsection (b)(1) to
act in a capacity other than that for which the person is registered.
(3) A disqualification created under this
section is automatically waived if the state securities administrator or agency
of the state which created the basis for disqualification determines on a
showing of good cause that it is not necessary under the circumstances that the
exemption be denied.
(d)
Due diligence obligation.
(1) A broker-dealer registered under section
301 of the act that sells a security to an experienced private placement
investor in reliance on subsection (a) meets the due diligence obligation if
the broker-dealer:
(i) Obtains from the
purchaser a written representation that the purchaser meets the definition of
"experienced private placement investor" in §
102.021 (relating to
definitions).
(ii) Has reasonable
grounds to believe, after reasonable inquiry, that the written representation
is correct.
(2) An issuer
that either is organized under the laws of the Commonwealth or has its
principal place of business in this Commonwealth and sells its securities to
experienced private placement investors in reliance on subsection (a) meets the
due diligence obligation if the issuer:
(i)
Obtains from the purchaser a written representation that the purchaser meets
the definition of "experienced private placement investor" in §
102.021.
(ii) Has reasonable
grounds to believe, after reasonable inquiry, that the written representation
is correct.
(e)
Statutory basis for offers and sales under this section. All
offers and sales made to persons permitted by this section are considered to be
offers and sales made under section 203(d) and (e) of the act and all
conditions imposed by those sections of the act apply to offers and sales to
persons permitted by this section.
Notes
The provisions of this § 204.010 issued under sections 204(a) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. §§ 1-204(a) and 1-609(a)); amended under section 202.C of the Department of Banking and Securities Code (71 P.S. § 733-202.C); section 609(a) of the Pennsylvania Securities Act of 1972 (70 P.S. § 1-609(a)); and section 9(b) of the Takeover Disclosure Law (70 P.S. § 79(b)).
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