Full Text of HB3791 100th General Assembly
HB3791ham001 100TH GENERAL ASSEMBLY | Rep. Carol Sente Filed: 3/24/2017
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| 1 | | AMENDMENT TO HOUSE BILL 3791
| 2 | | AMENDMENT NO. ______. Amend House Bill 3791 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Securities Law of 1953 is amended | 5 | | by changing Sections 2.35, 4, and 8d as follows: | 6 | | (815 ILCS 5/2.35) | 7 | | Sec. 2.35. Qualified escrowee. "Qualified escrowee" means | 8 | | a person, firm, partnership, association, corporation, or | 9 | | other legal entity who: (a) falls under the definition of | 10 | | "title insurance company" under, and pursuant to the terms and | 11 | | requirements of, the Title Insurance Act , or is otherwise an | 12 | | agent or affiliate of such title
insurance company, and which | 13 | | maintains at least one physical business
location within the | 14 | | State ; (b) is certified as an independent escrowee under, and | 15 | | pursuant to the terms and requirements of, the Title Insurance | 16 | | Act; or (c) is a bank, regulated trust company, savings bank, |
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| 1 | | savings and loan association, or credit union , registered
| 2 | | broker-dealer, or law firm which is authorized to do business | 3 | | in the State and which maintains at least one physical business | 4 | | location within the State.
| 5 | | (Source: P.A. 99-182, eff. 1-1-16 .)
| 6 | | (815 ILCS 5/4) (from Ch. 121 1/2, par. 137.4)
| 7 | | Sec. 4. Exempt transactions. The provisions of Sections 2a, | 8 | | 5, 6 and 7
of this Act shall not apply to any of the following | 9 | | transactions, except
where otherwise specified in this Section | 10 | | 4:
| 11 | | A. Any offer or sale, whether through a dealer or | 12 | | otherwise, of securities
by a person who is not an issuer, | 13 | | underwriter, dealer or controlling person
in respect of | 14 | | such securities, and who, being the bona fide owner of such
| 15 | | securities, disposes thereof for his or her own account; | 16 | | provided, that
such offer or sale is not made directly or | 17 | | indirectly for the benefit of
the issuer or of an | 18 | | underwriter or controlling person.
| 19 | | B. Any offer, sale, issuance or exchange of securities | 20 | | of the issuer
to or with security holders of the issuer | 21 | | except to or with persons who
are security holders solely | 22 | | by reason of holding transferable warrants,
transferable | 23 | | options, or similar transferable rights of the issuer, if
| 24 | | no commission or other remuneration is paid or given | 25 | | directly or
indirectly for or on account of the procuring |
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| 1 | | or soliciting of such sale
or exchange (other than a fee | 2 | | paid to underwriters based on their
undertaking to purchase | 3 | | any securities not purchased by security holders
in | 4 | | connection with such sale or exchange).
| 5 | | C. Any offer, sale or issuance of securities to any | 6 | | corporation, bank,
savings bank, savings institution, | 7 | | savings and loan association, trust company,
insurance | 8 | | company, building and loan association, or dealer; to a | 9 | | pension fund,
pension trust, or employees' profit sharing | 10 | | trust, other financial institution
or institutional | 11 | | investor, any government or political subdivision or
| 12 | | instrumentality thereof, whether the
purchaser is acting | 13 | | for itself or in some fiduciary capacity; to any
| 14 | | partnership or other association engaged as a substantial | 15 | | part of its
business or operations in purchasing or holding | 16 | | securities; to any trust
in respect of which a bank or | 17 | | trust company is trustee or co-trustee; to
any entity in | 18 | | which at least 90% of the equity is owned by persons
| 19 | | described under subsection C, H, or S of this Section 4; to | 20 | | any
employee benefit plan within the meaning of Title I of | 21 | | the Federal ERISA
Act if (i) the investment decision is | 22 | | made by a plan fiduciary as defined
in Section 3(21) of the | 23 | | Federal ERISA Act and such plan fiduciary is either
a bank, | 24 | | savings and loan association, insurance company, | 25 | | registered
investment adviser or an investment adviser | 26 | | registered under the Federal
1940 Investment Advisers Act, |
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| 1 | | or (ii) the plan has total assets in excess
of $5,000,000, | 2 | | or (iii) in the case of a self-directed plan, investment
| 3 | | decisions are made solely by persons that are described | 4 | | under subsection C,
D, H or S of this Section 4; to any | 5 | | plan established and maintained by,
and for the benefit of | 6 | | the employees of, any state or political subdivision
or | 7 | | agency or instrumentality thereof if such plan has total | 8 | | assets in
excess of $5,000,000; or to any organization | 9 | | described in Section 501(c)(3)
of the Internal Revenue Code | 10 | | of 1986, any Massachusetts or similar business
trust, or | 11 | | any partnership, if such organization, trust, or | 12 | | partnership has
total assets in excess of $5,000,000.
| 13 | | D. The Secretary of State is granted authority to | 14 | | create by rule or
regulation a limited offering | 15 | | transactional exemption that furthers the
objectives of | 16 | | compatibility with federal exemptions and uniformity among | 17 | | the
states. The Secretary of State shall prescribe by rule | 18 | | or regulation the
amount of the fee for filing any report | 19 | | required under this subsection, but the
fee shall not be | 20 | | less than the minimum amount nor more than the maximum | 21 | | amount
established under Section 11a of this Act and shall | 22 | | not be returnable in any
event.
| 23 | | E. Any offer or sale of securities by an executor, | 24 | | administrator,
guardian, receiver or trustee in insolvency | 25 | | or bankruptcy, or at any
judicial sale, or at a public sale | 26 | | by auction held at an advertised time
and place, or the |
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| 1 | | offer or sale of securities in good faith and not for the
| 2 | | purpose of avoiding the provisions of this Act by a pledgee | 3 | | of securities
pledged for a bona fide debt.
| 4 | | F. Any offer or sale by a registered dealer, either as | 5 | | principal or
agent, of any securities (except face amount | 6 | | certificate contracts and
investment fund shares) at a | 7 | | price reasonably related to the current market
price of | 8 | | such securities, provided:
| 9 | | (1) (a) the securities are issued and outstanding;
| 10 | | (b) the issuer is required to file reports pursuant | 11 | | to Section 13 or
Section 15(d) of the Federal 1934 Act | 12 | | and has been subject to such
requirements during the 90 | 13 | | day period immediately preceding the date of the
offer | 14 | | or sale, or is an issuer of a security covered by | 15 | | Section 12(g)(2)(B)
or (G) of the Federal 1934 Act;
| 16 | | (c) the dealer has a reasonable basis for believing | 17 | | that the issuer is
current in filing the reports | 18 | | required to be filed at regular intervals
pursuant to | 19 | | the provisions of Section 13 or Section 15(d), as the | 20 | | case may
be, of the Federal 1934 Act, or in the case of | 21 | | insurance companies exempted
from Section 12(g) of the | 22 | | Federal 1934 Act by subparagraph 12(g)(2)(G)
thereof, | 23 | | the annual statement referred to in Section | 24 | | 12(g)(2)(G)(i) of the
Federal 1934 Act; and
| 25 | | (d) the dealer has in its records, and makes | 26 | | reasonably available upon
request to any person |
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| 1 | | expressing an interest in a proposed transaction in
the | 2 | | securities, the issuer's most recent annual report | 3 | | filed pursuant to
Section 13 or 15(d), as the case may | 4 | | be, of the Federal 1934 Act or the annual
statement in | 5 | | the case of an insurance company exempted from Section | 6 | | 12(g)
of the Federal 1934 Act by subparagraph | 7 | | 12(g)(2)(G) thereof, together with
any other reports | 8 | | required to be filed at regular intervals under the
| 9 | | Federal 1934 Act by the issuer after such annual report | 10 | | or annual
statement; provided that the making | 11 | | available of such reports pursuant to
this | 12 | | subparagraph, unless otherwise represented, shall not | 13 | | constitute a
representation by the dealer that the | 14 | | information is true and correct, but
shall constitute a | 15 | | representation by the dealer that the information is
| 16 | | reasonably current; or
| 17 | | (2) (a) prior to any offer or sale, an application for | 18 | | the authorization
thereof and a report as set forth | 19 | | under sub-paragraph (d) of this
paragraph (2) has been | 20 | | filed by any registered dealer with and approved by
the | 21 | | Secretary of State pursuant to such rules and | 22 | | regulations as the
Secretary of State may prescribe;
| 23 | | (b) the Secretary of State shall have the power by | 24 | | order to refuse
to approve any application or report | 25 | | filed pursuant to this paragraph (2) if
| 26 | | (i) the application or report does not comply |
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| 1 | | with the provisions of
this paragraph (2), or
| 2 | | (ii) the offer or sale of such securities would | 3 | | work
or tend to work a fraud or deceit, or
| 4 | | (iii) the issuer or the applicant has violated | 5 | | any of the
provisions of this Act;
| 6 | | (c) each application and report filed pursuant to | 7 | | this paragraph (2)
shall be accompanied by a filing fee | 8 | | and an examination fee in the amount
established | 9 | | pursuant to Section 11a of this Act, which shall not be
| 10 | | returnable in any event;
| 11 | | (d) there shall be submitted to the Secretary of | 12 | | State no later than
120 days following the end of the | 13 | | issuer's fiscal year, each year
during the period of | 14 | | the authorization, one copy of a report which shall
| 15 | | contain a balance sheet and income statement prepared | 16 | | as of the issuer's
most recent fiscal year end | 17 | | certified by an independent certified public
| 18 | | accountant, together with such current information | 19 | | concerning the
securities and the issuer thereof as the | 20 | | Secretary of State may prescribe
by rule or regulation | 21 | | or order;
| 22 | | (e) prior to any offer or sale of securities under | 23 | | the provisions of
this paragraph (2), each registered | 24 | | dealer participating in the offer or
sale of such | 25 | | securities shall provide upon request of prospective
| 26 | | purchasers of such securities a copy of the most recent |
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| 1 | | report required
under the provisions of sub-paragraph | 2 | | (d) of this paragraph (2);
| 3 | | (f) approval of an application filed pursuant to | 4 | | this paragraph (2) of
subsection F shall expire 5 years | 5 | | after the date of the granting
of the approval, unless | 6 | | said approval is sooner terminated by (1) suspension or
| 7 | | revocation by the Secretary of State in the same manner | 8 | | as is provided
for in subsections E, F and G of Section | 9 | | 11 of this Act,
or (2) the applicant filing with the | 10 | | Secretary of State an affidavit to
the effect that (i) | 11 | | the subject securities have become exempt under | 12 | | Section
3 of this Act or (ii) the applicant no longer | 13 | | is capable of acting as
the applicant and stating the | 14 | | reasons therefor or (iii) the applicant no longer
| 15 | | desires to act as the applicant. In the event of the | 16 | | filing of an
affidavit under either preceding | 17 | | sub-division (ii) or (iii) the
Secretary of State may | 18 | | authorize a substitution of applicant upon the
new | 19 | | applicant executing the application as originally | 20 | | filed. However,
the aforementioned substituted | 21 | | execution shall have no effect upon the
previously | 22 | | determined date of expiration of approval of the | 23 | | application.
Notwithstanding the provisions of this | 24 | | subparagraph (f), approvals granted
under this | 25 | | paragraph (2) of subsection F prior to the effective | 26 | | date of this
Act shall be governed by the provisions of |
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| 1 | | this Act in effect on such
date of approval; and
| 2 | | (g) no person shall be considered to have violated | 3 | | Section 5 of this
Act by reason of any offer or sale | 4 | | effected in reliance upon an
approval granted under | 5 | | this paragraph (2) after a termination thereof under | 6 | | the
foregoing subparagraph (f) if official notice of | 7 | | such termination has not
been circulated generally to | 8 | | dealers by the Secretary of State and if
such person | 9 | | sustains the burden of proof that he or she did not | 10 | | know, and in
the exercise of reasonable care, could not | 11 | | have known, of the
termination; or
| 12 | | (3) the securities, or securities of the same class, | 13 | | are the subject
of an existing registration under Section 5 | 14 | | of this Act.
| 15 | | The exemption provided in this subsection F shall apply | 16 | | only if the offer
or sale is made in good faith and not for the | 17 | | purpose of avoiding any of
the provisions of this Act, and only | 18 | | if the offer or sale is not made for the
direct or indirect | 19 | | benefit of the issuer of the securities, or the
controlling | 20 | | person in respect of such issuer.
| 21 | | G. (1) Any offer, sale or issuance of a security, whether | 22 | | to residents
or to non-residents of this State, where:
| 23 | | (a) all sales of such security to residents of this | 24 | | State (including the
most recent such sale) within the | 25 | | immediately preceding 12-month period
have been made | 26 | | to not more than 35 persons or have involved an |
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| 1 | | aggregate
sales price of not more than $1,000,000;
| 2 | | (b) such security is not offered or sold by means | 3 | | of any general
advertising or general solicitation in | 4 | | this State; and
| 5 | | (c) no commission, discount, or other remuneration | 6 | | exceeding 20%
of the
sale price of such security, if | 7 | | sold to a resident of this State, is
paid or given | 8 | | directly or indirectly for
or on account of such sales.
| 9 | | (2) In computing the number of resident purchasers or | 10 | | the aggregate sales
price under paragraph (1) (a) above, | 11 | | there shall be excluded any purchaser
or dollar amount of | 12 | | sales price, as the case may be, with respect to any
| 13 | | security which at the time of its sale was exempt under | 14 | | Section 3 or was
registered under Section 5, 6 or 7 or was | 15 | | sold in a
transaction exempt under other subsections of | 16 | | this Section 4.
| 17 | | (3) A prospectus or preliminary prospectus with | 18 | | respect to a security for
which a registration statement is | 19 | | pending or effective under the Federal
1933 Act shall not | 20 | | be deemed to constitute general advertising or general
| 21 | | solicitation in this State as such terms are used in | 22 | | paragraph (1) (b)
above, provided that such prospectus or | 23 | | preliminary prospectus has not been
sent or otherwise | 24 | | delivered
to more than 150 residents of this State.
| 25 | | (4) The Secretary of State shall by rule or regulation | 26 | | require the
filing of a report or reports of sales made in
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| 1 | | reliance upon the exemption provided by this subsection G | 2 | | and prescribe
the form of such report and the time within | 3 | | which such report shall be filed.
Such report shall set | 4 | | forth the name and address of the issuer and of the
| 5 | | controlling person, if the sale was for the direct or | 6 | | indirect benefit
of such person, and any other information | 7 | | deemed necessary by the Secretary
of State to enforce | 8 | | compliance with this subsection G. The Secretary of
State | 9 | | shall prescribe by rule or regulation the amount of the fee | 10 | | for
filing any such report, established pursuant to Section | 11 | | 11a
of this Act, which shall not be returnable in any | 12 | | event. The
Secretary of
State may impose, in such cases as | 13 | | he or she may deem appropriate, a penalty
for failure to | 14 | | file any such report in a timely manner, but no such | 15 | | penalty
shall exceed an amount equal to five times the | 16 | | filing fee. The contents
of any such report or portion | 17 | | thereof may be deemed confidential
by the Secretary of | 18 | | State by rule or order and if so deemed shall not
be
| 19 | | disclosed
to the public except by order of court or in | 20 | | court proceedings. The
failure to file any such report | 21 | | shall not affect the availability of such
exemption, but | 22 | | such failure to file any such report shall constitute a
| 23 | | violation of subsection D of Section 12 of this Act, | 24 | | subject to the
penalties enumerated in Section 14 of this | 25 | | Act. The civil remedies
provided for in subsection A of | 26 | | Section 13 of this Act and the civil
remedies of rescission |
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| 1 | | and appointment of a receiver, conservator,
ancillary | 2 | | receiver or ancillary conservator provided for in | 3 | | subsection F of
Section 13 of this Act shall not be | 4 | | available against any person by
reason of the failure to | 5 | | file any such report or on account of the contents of
any | 6 | | such report.
| 7 | | H. Any offer, sale or issuance of a security to an | 8 | | accredited investor provided that such security is not | 9 | | offered or sold by means of any general advertising or | 10 | | general solicitation, except as otherwise permitted in | 11 | | this Act.
| 12 | | I. Any offer, sale or issuance of securities to or for | 13 | | the benefit
of security holders of any person incident to a | 14 | | vote by such security
holders pursuant to such person's | 15 | | organizational document or any applicable
statute of the | 16 | | jurisdiction of such person's organization, on a merger,
| 17 | | consolidation, reclassification of securities, or sale or | 18 | | transfer of
assets in consideration of or exchange for | 19 | | securities of the same or
another person.
| 20 | | J. Any offer, sale or issuance of securities in | 21 | | exchange for one
or more outstanding securities, claims or | 22 | | property interests, or partly
in such exchange and partly | 23 | | for cash, where such offer, sale or issuance
is incident to | 24 | | a reorganization, recapitalization, readjustment,
| 25 | | composition or settlement of a claim, as approved by a | 26 | | court of competent
jurisdiction of the United States, or |
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| 1 | | any state.
| 2 | | K. Any offer, sale or issuance of securities for | 3 | | patronage,
or as patronage refunds, or in connection with | 4 | | marketing agreements by
cooperative associations organized | 5 | | exclusively for agricultural, producer,
marketing, | 6 | | purchasing, or consumer purposes; and the sale of
| 7 | | subscriptions for or shares of stock of cooperative | 8 | | associations
organized exclusively for agricultural, | 9 | | producer, marketing, purchasing,
or consumer purposes, if | 10 | | no commission or other remuneration is paid or
given | 11 | | directly or indirectly for or on account of such | 12 | | subscription,
sale or resale, and if any person does not | 13 | | own beneficially more than 5%
of the aggregate amount of | 14 | | issued and outstanding capital stock of such
cooperative | 15 | | association.
| 16 | | L. Offers for sale or solicitations of offers to buy | 17 | | (but not the
acceptance thereof), of securities which are | 18 | | the subject of a pending
registration statement filed under | 19 | | the Federal 1933 Act and which are the
subject of a pending | 20 | | application for registration under this Act.
| 21 | | M. Any offer or sale of preorganization subscriptions | 22 | | for any securities
prior to the incorporation, | 23 | | organization or formation of any issuer
under the laws of | 24 | | the United States, or any state, or the issuance by
such | 25 | | issuer, after its incorporation, organization or | 26 | | formation, of
securities pursuant to such preorganization |
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| 1 | | subscriptions, provided the
number of subscribers does not | 2 | | exceed 25 and either (1) no commission
or other | 3 | | remuneration is paid or given directly or indirectly for or | 4 | | on
account of such sale or sales or issuance, or (2) if any | 5 | | commission or
other remuneration is paid or given directly | 6 | | or indirectly for or on account
of such sale or sales or | 7 | | issuance, the securities are not offered or sold
by any | 8 | | means of general advertising or general solicitation in | 9 | | this
State.
| 10 | | N. The execution of orders for purchase of securities | 11 | | by a registered
salesperson and dealer, provided such | 12 | | persons act as agent for the purchaser,
have made no | 13 | | solicitation of the order to purchase the securities, have | 14 | | no
direct interest in the sale or distribution of the | 15 | | securities ordered, receive
no commission, profit, or | 16 | | other compensation other than the commissions
involved in | 17 | | the purchase and sale of the securities and deliver to the
| 18 | | purchaser written confirmation of the order which clearly | 19 | | identifies the
commissions paid to the registered dealer.
| 20 | | O. Any offer, sale or issuance of securities, other | 21 | | than fractional
undivided interests in an oil, gas or other | 22 | | mineral lease, right or
royalty, for the direct or indirect | 23 | | benefit of the issuer thereof, or of a
controlling person, | 24 | | whether through a dealer (acting either as principal
or | 25 | | agent) or otherwise, if the securities sold, immediately | 26 | | following
the sale or sales, together with securities |
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| 1 | | already owned by the
purchaser, would constitute 50% or | 2 | | more of the equity interest of any
one issuer, provided | 3 | | that the number of purchasers is not more than 5 and
| 4 | | provided further that no commission, discount or other | 5 | | remuneration
exceeding 15% of the aggregate sale price of | 6 | | the securities is paid or
given directly or indirectly for | 7 | | or on account of the sale or sales.
| 8 | | P. Any offer, sale or issuance of securities
(except | 9 | | face amount certificate contracts and investment fund | 10 | | shares)
issued by and representing an interest in an issuer | 11 | | which is a business
corporation incorporated under the laws | 12 | | of this State,
the purposes of which are to provide capital | 13 | | and supervision solely for
the redevelopment of blighted | 14 | | urban areas located in a municipality in
this State and | 15 | | whose assets are located entirely within that | 16 | | municipality,
provided: (1) no commission, discount or | 17 | | other remuneration
is paid or given directly or indirectly | 18 | | for or on account of the sale or
sales of such securities; | 19 | | (2) the aggregate amount of any securities of
the issuer | 20 | | owned of record or beneficially by any one person will not | 21 | | exceed
the lesser of $5,000 or 4% of the equity | 22 | | capitalization of the issuer; (3) the
officers and | 23 | | directors of the
corporation have been bona fide residents | 24 | | of the municipality not less than
3 years immediately | 25 | | preceding the effectiveness of the offering sheet for
the | 26 | | securities under this subsection P; and (4) the issuer |
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| 1 | | files with the
Secretary of State an offering sheet | 2 | | descriptive of the securities setting
forth:
| 3 | | (a) the name and address of the issuer;
| 4 | | (b) the title and total amount of securities to be | 5 | | offered;
| 6 | | (c) the price at which the securities are to be | 7 | | offered; and
| 8 | | (d) such additional information as the Secretary | 9 | | of State may prescribe
by rule and regulation.
| 10 | | The Secretary of State shall within a reasonable time | 11 | | examine the
offering sheet so filed and, unless the | 12 | | Secretary of State shall make a
determination that the | 13 | | offering sheet so filed does not
conform to the | 14 | | requirements of this subsection P, shall declare the | 15 | | offering
sheet to be effective, which offering sheet shall | 16 | | continue effective for a
period of 12 months from the date | 17 | | it becomes effective. The fee for
examining the offering | 18 | | sheet shall be as established pursuant to Section
11a of | 19 | | this Act, and shall not be returnable in any event. The | 20 | | Secretary
of State shall by rule or regulation require the | 21 | | filing of a report or
reports of sales made to residents of | 22 | | this State in reliance upon the
exemption provided by this | 23 | | subsection P and prescribe the form of such
report and the | 24 | | time within which such report shall be filed. The Secretary
| 25 | | of State shall prescribe by rule or regulation the amount | 26 | | of the fee for
filing any such report, but such fee shall |
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| 1 | | not be less than the minimum
amount nor more than the | 2 | | maximum amount established pursuant to Section
11a of this | 3 | | Act, and shall not be returnable in any event. The | 4 | | Secretary
of State may impose, in such cases as he or she | 5 | | may deem appropriate, a penalty
for failure to file any | 6 | | such report in a timely manner, but no such penalty
shall | 7 | | exceed an amount equal to five times the filing fee. The | 8 | | contents
of any such report shall be deemed confidential | 9 | | and shall not be disclosed
to the public except by order of | 10 | | court or in court proceedings. The
failure to file any such | 11 | | report shall not affect the availability of such
exemption, | 12 | | but such failure to file any such report shall constitute a
| 13 | | violation of subsection D of Section 12 of this Act, | 14 | | subject to the
penalties enumerated in Section 14 of this | 15 | | Act. The civil remedies
provided for in subsection A of | 16 | | Section 13 of this Act and the civil
remedies of rescission | 17 | | and appointment of a receiver, conservator,
ancillary | 18 | | receiver or ancillary conservator provided for in | 19 | | subsection F of
Section 13 of this Act shall not be | 20 | | available against any person by reason
of the failure to | 21 | | file any such report or on account of the contents of any
| 22 | | such report.
| 23 | | Q. Any isolated transaction, whether effected by a | 24 | | dealer or
not.
| 25 | | R. Any offer, sale or issuance of a security to any | 26 | | person who purchases
at least $150,000 of the securities |
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| 1 | | being offered, where the purchaser's
total purchase price | 2 | | does not, or it is reasonably believed by the person
| 3 | | relying upon this subsection R that said purchase price | 4 | | does not, exceed
20 percent of the purchaser's net worth at | 5 | | the time of sale, or if a
natural person a joint net worth | 6 | | with that person's spouse, for one
or any combination of | 7 | | the following: (i) cash, (ii) securities for which
market | 8 | | quotations are readily available, (iii) an unconditional | 9 | | obligation
to pay cash or securities for which quotations | 10 | | are readily available,
which obligation is to be discharged | 11 | | within five years of the sale of the
securities to the | 12 | | purchaser, or (iv) the cancellation of any indebtedness
| 13 | | owed by the issuer to the purchaser; provided that such | 14 | | security is not
offered or sold by means of any general | 15 | | advertising or general solicitation
in this State.
| 16 | | S. Any offer, sale or issuance of a security to any | 17 | | person who is, or
who is reasonably believed by the person | 18 | | relying upon this subsection S to
be, a director, executive | 19 | | officer, or general partner of the issuer of the
securities | 20 | | being offered or sold, or any director, executive officer, | 21 | | or
general partner of a general partner of that issuer. For | 22 | | purposes of this
subsection S, "executive officer" shall | 23 | | mean the president, any vice
president in charge of a | 24 | | principal business unit, division or function
(such as | 25 | | sales, administration or finance), any other officer who | 26 | | performs
a policy making function, or any other person who |
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| 1 | | performs similar policy
making functions for the issuer. | 2 | | Executive officers of subsidiaries may be
deemed executive | 3 | | officers of the issuer if they perform such policy making
| 4 | | functions for the issuer.
| 5 | | A document being filed pursuant to this Section 4 shall | 6 | | be deemed filed,
and any fee paid pursuant to this Section | 7 | | 4 shall be deemed paid, upon the date
of actual receipt | 8 | | thereof by the Secretary of State.
| 9 | | T. An offer or sale of a security , by an issuer that is | 10 | | organized
and, as of the time of the offer and the time of | 11 | | sale is , in good standing under
the laws of the State of | 12 | | Illinois and that is , made solely to persons or entities | 13 | | that are, as of the time of the offer and time of sale, | 14 | | residents of the State of Illinois, subject to the | 15 | | following provided : | 16 | | (1) The offering is made in compliance with the | 17 | | requirements of meets all of the requirements of the
| 18 | | federal exemption for intrastate offerings provided in | 19 | | Section
3(a)(11) of the Securities Act of 1933 (15 | 20 | | U.S.C. 77c(a)(11)) and
Rule 147 adopted under the | 21 | | Securities Act of 1933 (17 CFR
230.147) , Rule 147A (17 | 22 | | CFR 230.147A), or any other federal exemption | 23 | | providing for intrastate offerings from time to time in | 24 | | effect . | 25 | | (2) The aggregate purchase price of all securities | 26 | | sold by an issuer in reliance on the exemption under |
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| 1 | | this subsection, within any 12-month period, does not | 2 | | exceed: (i) $1,000,000; or (ii) $4,000,000 if the | 3 | | issuer has undergone and made available (directly, or | 4 | | through a registered Internet portal), to each | 5 | | prospective purchaser and the Secretary of State, | 6 | | copies of its most recent financial statements which | 7 | | have been audited by an independent auditor and | 8 | | certified by a senior officer of the issuer as fairly, | 9 | | completely, and accurately presenting the financial | 10 | | condition of the issuer, in all material respects, as | 11 | | of the dates indicated therein. Amounts received in | 12 | | connection with any offer or sale to any accredited | 13 | | investor or any of the following shall not count toward | 14 | | the calculation of the foregoing monetary limitations: | 15 | | (a) any entity (including, without limitation, | 16 | | any trust) in which all of the equity interests are | 17 | | owned by (or with respect to any trust, the primary | 18 | | beneficiaries are) persons who are accredited | 19 | | investors or who meet one or more of the criteria | 20 | | in subparagraphs (b) through (d) of this paragraph | 21 | | (2); | 22 | | (b) with respect to participating in an | 23 | | offering of a particular issuer, a natural person | 24 | | serving as an officer, director, partner, or | 25 | | trustee of, or otherwise occupying similar status | 26 | | or performing similar functions with respect to, |
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| 1 | | such issuer; | 2 | | (c) with respect to participating in an | 3 | | offering of a particular issuer, a natural person | 4 | | or entity who owns 10% or more of the then | 5 | | aggregate outstanding voting capital securities of | 6 | | such issuer; or | 7 | | (d) such other person or entity as the | 8 | | Secretary of State may hereafter exempt by rule. | 9 | | The Secretary of State may hereafter cumulatively | 10 | | increase the dollar limitations provided in this | 11 | | paragraph (2) . | 12 | | (3) The aggregate amount sold by an issuer to any | 13 | | purchaser (other than an accredited investor or a | 14 | | person or entity which meets one or more of the | 15 | | criteria in subparagraphs (a) through (d) of paragraph | 16 | | (2) of this subsection T) in an offering of securities | 17 | | made in reliance on the exemption provided in this | 18 | | subsection T, within any consecutive 12-month period, | 19 | | does not exceed $5,000. | 20 | | (4) The Secretary of State shall establish by rule | 21 | | the duties of the issuer including disclosure and | 22 | | filing requirements, treatment of escrow funds and | 23 | | agreements, production of financial statements, and | 24 | | other requirements as deemed necessary. | 25 | | (5) The issuer has made available, to each | 26 | | prospective purchaser and the Secretary of State, |
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| 1 | | copies of its most recent financial statements | 2 | | personally certified by one or more senior officers of | 3 | | the issuer as fairly, completely, and accurately | 4 | | presenting the financial condition of the issuer, in | 5 | | all material respects, as of the dates indicated | 6 | | therein. | 7 | | (6) No commission or other remuneration is paid or | 8 | | given
directly or indirectly to any person or entity | 9 | | (including,
without limitation, any registered | 10 | | Internet portal) for
soliciting any investor, other | 11 | | than such payments made person in this State, except to | 12 | | registered dealers
and registered salespersons | 13 | | licensed in this State and such finder fees and other | 14 | | payments now or hereafter permitted under applicable | 15 | | federal law or a United States Securities and Exchange | 16 | | Commission rule or interpretive letter . | 17 | | (7) Not less than 15 days before the earlier of
the | 18 | | first sale of securities made in reliance on the | 19 | | exemption provided in this subsection T,
or the use of | 20 | | any general solicitation with respect thereto
(other | 21 | | than a general announcement made by or on behalf of), | 22 | | an issuer shall file a notice filing with the Secretary | 23 | | of State together with such other forms, materials, and | 24 | | fees as required by the Secretary of State by rule. | 25 | | The Secretary of State shall prescribe by rule the | 26 | | amount of the fee for filing the notice filing required |
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| 1 | | under this subsection, but the fee shall not be less | 2 | | than the minimum amount nor more than the maximum | 3 | | amount in subparagraph (a) , established under pursuant | 4 | | to Section
11a of this Act and shall not be returnable | 5 | | in any event . The
Secretary of State may impose, in | 6 | | such cases as the Secretary he or she may
deem | 7 | | appropriate, a penalty for failure to file any such | 8 | | notice
in a timely manner, but no such penalty shall | 9 | | exceed an
amount equal to 5 times the filing fee. The | 10 | | contents of any
such notice or portion thereof may be | 11 | | deemed confidential by the
Secretary of State by rule | 12 | | or order and if so deemed shall not
be disclosed to the | 13 | | public except by order of court or in court
| 14 | | proceedings. The failure to file any such notice does | 15 | | not
affect the availability of such exemption, but such | 16 | | failure to
file any such report constitutes a violation | 17 | | of subsection
D of Section 12 of this Act and is | 18 | | subject to the penalties and remedies available in this | 19 | | Act and under the law. | 20 | | (8) All payments for purchase of securities | 21 | | offered
pursuant to the exemption provided under this | 22 | | subsection T are made directly to, and held by, a
the | 23 | | qualified escrowee identified in the escrow agreement
| 24 | | required pursuant to subparagraph (c) of paragraph | 25 | | (4) . | 26 | | (9) The issuer includes each of the following in |
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| 1 | | one or more of the offering materials delivered to a | 2 | | prospective purchaser, or to which a prospective | 3 | | purchaser has been granted electronic access, in | 4 | | connection with the offering: | 5 | | (a) a description of the issuer, its type of | 6 | | entity, the address, and telephone number of its | 7 | | principal office; | 8 | | (b) a reasonably detailed description of the | 9 | | intended use of the offering proceeds, including | 10 | | any amounts to be paid, as compensation or | 11 | | otherwise, to any owner, executive officer, | 12 | | director, managing member, or other person | 13 | | occupying a similar status or performing similar | 14 | | functions on behalf of the issuer; | 15 | | (c) the identity of all persons owning more | 16 | | than 20% 10% of the voting capital securities of | 17 | | the issuer; | 18 | | (d) the identity of the executive officers, | 19 | | directors, managing members, and other persons | 20 | | occupying a similar status or performing similar | 21 | | functions in the name of and on behalf of the | 22 | | issuer, including their titles and a reasonably | 23 | | detailed description of their prior experience; | 24 | | (e) the identity of any person or entity who | 25 | | has been or will be retained by the issuer to | 26 | | assist the issuer in conducting the offering and |
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| 1 | | sale of the securities (including all registered | 2 | | Internet portals but excluding persons acting | 3 | | solely as accountants or attorneys and employees | 4 | | whose primary job responsibilities involve the | 5 | | operating business of the issuer rather than | 6 | | assisting the issuer in raising capital) and a | 7 | | description of the consideration being paid to | 8 | | each such person or entity for such assistance; | 9 | | (e-5) to the extent the issuer is an affiliate | 10 | | or
related party of the registered Internet portal | 11 | | being used
to conduct the offering, a reasonably | 12 | | detailed description
of the relationship between | 13 | | the parties; | 14 | | (f) any additional information material to the | 15 | | offering, including a description of significant | 16 | | factors that make the offering speculative or | 17 | | risky for the purchaser; | 18 | | (g) (blank). the information required pursuant | 19 | | to subparagraphs (a) and (b) of paragraph (4) of | 20 | | this subsection T; | 21 | | (h) such other information as the Secretary of | 22 | | State may hereafter require by rule. | 23 | | (10) The issuer (directly or through a registered | 24 | | Internet
portal) requires each purchaser to certify, | 25 | | in writing or
electronically, that the purchaser: | 26 | | (a) is a resident of the State of Illinois; |
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| 1 | | (b) understands that the purchaser he or she is | 2 | | investing in a high-risk, highly speculative, | 3 | | business venture, that the purchaser he or she may | 4 | | lose all of the his or her investment, and that the | 5 | | purchaser that he or she can afford such a loss of | 6 | | the his or her investment; | 7 | | (c) understands that the securities being | 8 | | offered are highly illiquid, that there is no ready | 9 | | market for the sale of such securities, that it may | 10 | | be difficult or impossible for purchaser to sell or | 11 | | otherwise dispose of such securities, and (where | 12 | | applicable) that purchaser may be required to hold | 13 | | the securities for an indefinite period of time; | 14 | | and | 15 | | (d) understands that purchaser may be subject | 16 | | to the payment of certain taxes with respect to the | 17 | | securities being purchased whether or not | 18 | | purchaser has sold, or otherwise disposed of, such | 19 | | securities or whether purchaser has received any | 20 | | distributions or other amounts from the issuer. | 21 | | (11) The issuer (directly or through a registered | 22 | | Internet
portal) obtains from each purchaser of a | 23 | | security offered under
this subsection T evidence that | 24 | | the purchaser is a resident of
this State and, if | 25 | | applicable, is an accredited investor. Without | 26 | | limiting the generality of the
foregoing, and not to |
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| 1 | | the exclusion of other reasonable methods
which may be | 2 | | used by the issuer in connection with the
foregoing, an | 3 | | issuer may rely on
any evidence permitted under the | 4 | | applicable federal exemption
relied upon pursuant to | 5 | | paragraph (1) of this subsection T . | 6 | | (12) The issuer (and to the extent a registered | 7 | | Internet
portal is used, such registered Internet | 8 | | portal) maintains
records of all offers and sales of | 9 | | securities made
pursuant to the exemption granted by | 10 | | this subsection T and provides ready access to such | 11 | | records to the Secretary of State,
upon notice from the | 12 | | Secretary of State. | 13 | | (13) The issuer is not, either before or as a | 14 | | result of
the offering: | 15 | | (a) an investment company, as defined in | 16 | | Section 3 of the Investment Company Act of 1940 (15 | 17 | | U.S.C. 80a-3), as amended and in effect (unless the | 18 | | issuer qualifies for exemption from the terms | 19 | | thereof exclusion from such definition pursuant | 20 | | to : one or more of the exceptions provided in | 21 | | Section 3(c) of the Investment Company Act of | 22 | | 1940 ; , any other provision of the Investment | 23 | | Company Act of 1940 ; , or any United States | 24 | | Securities and Exchange Commission administrative | 25 | | rule,
regulation, or interpretive letter ruling | 26 | | rule or regulation promulgated with respect to the |
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| 1 | | Investment Company Act of 1940 or in connection | 2 | | therewith ; or any other applicable federal | 3 | | regulation or exemption ); or | 4 | | (b) subject to the reporting requirements of | 5 | | Section 13 or 15(d) of the Securities Exchange Act | 6 | | of 1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d). | 7 | | (14) Neither the issuer, nor any person owning more | 8 | | than 20% of the voting capital securities of the issuer | 9 | | affiliated with
the issuer (either before or as a | 10 | | result of the offering), nor
the offering itself, nor | 11 | | the registered Internet portal (to the
extent used) is | 12 | | subject to disqualification established by the
| 13 | | Secretary of State by rule or contained in the | 14 | | applicable federal exemption relied upon pursuant to | 15 | | paragraph (1) of this subsection T the Securities Act | 16 | | of 1933
(15 U.S.C. 77c(a)(11)) and Rule 147 adopted | 17 | | under the Securities Act of 1933 (17 CFR 230.147) , | 18 | | unless both of the following are
met: | 19 | | (a) on a showing of good cause and without
| 20 | | prejudice to any other action by the Secretary of | 21 | | State,
the Secretary of State determines that it is | 22 | | not necessary
under the circumstances that an | 23 | | exemption is denied; and | 24 | | (b) the issuer establishes that it made a | 25 | | factual
inquiry into whether any disqualification | 26 | | existed under
this paragraph (14), but did not |
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| 1 | | know, and in the exercise of reasonable care could | 2 | | not have known, that a
disqualification existed | 3 | | under this paragraph (14); the nature
and scope of | 4 | | the requisite inquiry will vary based on the
| 5 | | circumstances of the issuer and the other offering
| 6 | | participants. | 7 | | (15) A separate investment vehicle may be used to
| 8 | | aggregate investments in the offering being made by an | 9 | | issuer
under this Section provided that such separate | 10 | | investment vehicle is permitted pursuant to federal | 11 | | law or the rules or an interpretive letter of the | 12 | | United States Securities and Exchange Commission. The | 13 | | Secretary shall adopt rules consistent with federal | 14 | | law, rules, or interpretive opinions regarding such | 15 | | separate investment vehicles. For purposes of | 16 | | determining compliance with the
provisions of this | 17 | | subsection T and the related administrative
rules, | 18 | | such investment vehicle shall be disregarded and the
| 19 | | subject offering shall be assessed as if the issuer had
| 20 | | made a direct offering to the participating investors. | 21 | | Such separate investment vehicle shall not be | 22 | | considered as an entity qualifying under subparagraph | 23 | | (c) of paragraph (2) of this subsection T for purposes | 24 | | of calculating the purchase price totals permitted | 25 | | under the exemption. The Secretary of State may | 26 | | establish by rule the duties of the separate investment |
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| 1 | | vehicle under this subsection including the production | 2 | | of financial statements, maintenance of certain books | 3 | | and records of the separate investment vehicle, and | 4 | | other requirements as deemed necessary. | 5 | | (Source: P.A. 99-182, eff. 1-1-16 .)
| 6 | | (815 ILCS 5/8d) | 7 | | Sec. 8d. Offerings made through
registered Internet | 8 | | portals. | 9 | | (a) An issuer shall make an offering or
sale of securities | 10 | | pursuant to subsection T of Section 4 of this Act
through the | 11 | | use of one or more registered Internet portals. | 12 | | (b) The Internet portal: | 13 | | (1) shall be a registered broker-dealer under the
| 14 | | Securities Exchange Act of 1934 (15 U.S.C. 78o); | 15 | | (2) shall be a funding portal registered under the
| 16 | | Securities Act of 1933 (15 U.S.C. 77d-1) and the
Securities | 17 | | and Exchange Commission has adopted rules
under authority | 18 | | of Section 3(h) of the Securities
Exchange Act of 1934 (15 | 19 | | U.S.C. 78c) and Section
304 of the Jumpstart Our Business | 20 | | Startups
Act (P.L. 112-106) governing funding portals; | 21 | | (3) shall be a dealer registered under this Act as of
| 22 | | the date of any offer or sale of securities made
through | 23 | | the Internet portal; or | 24 | | (4) shall, to the extent it meets
the qualifications | 25 | | for exemption from registration
pursuant to subsection (d) |
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| 1 | | of this Section: | 2 | | (A) file, not later than 30 days
before the date of | 3 | | the first offer or sale of
securities made within this | 4 | | State, an
application for registration (or renewal of
| 5 | | registration, as applicable) as a registered
Internet | 6 | | portal with the Secretary of State, in
writing or in | 7 | | electronic form as prescribed by
the Secretary of | 8 | | State, which the Secretary of
State shall make | 9 | | available as an electronic
document on the Secretary of | 10 | | State's Internet
website, containing such information | 11 | | and
required deliveries as specified therein; and | 12 | | (B) pay the application filing fee
established | 13 | | under Section 11a of this Act; the Secretary of State | 14 | | shall, within a reasonable
time, examine the filed | 15 | | application and other
materials filed and, approve or | 16 | | deny the application. | 17 | | (c) If any change occurs in the information submitted by,
| 18 | | or on behalf of, an Internet portal to the Secretary of State,
| 19 | | the Internet portal shall notify the Secretary of State within | 20 | | 10
days after such change occurs and shall provide the | 21 | | Secretary of
State with such additional information (if any) | 22 | | requested by the
Secretary of State in connection therewith. | 23 | | (d) Notwithstanding anything contained in this Act to the
| 24 | | contrary, neither an Internet portal nor its owning or | 25 | | operating
entity is required to register as a dealer or an
| 26 | | investment advisor under this Act if each of the following |
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| 1 | | applies
with respect to the Internet portal and its owning or | 2 | | operating
entity: | 3 | | (1) It does not solicit purchases, sales, or offers
to | 4 | | buy the securities offered or displayed on the
Internet | 5 | | portal. | 6 | | (2) It does not collect or hold funds in
connection | 7 | | with any purchase, sale, or offer to buy any
securities | 8 | | offered or displayed on the Internet portal. | 9 | | (3) It does not compensate employees, agents, or
other | 10 | | persons for the solicitation or based on the sale
of | 11 | | securities displayed or referenced on the Internet
portal. | 12 | | (4) It is not compensated based on the amount of
| 13 | | securities sold. | 14 | | (5) The fee it charges an issuer for an offering of | 15 | | securities on the Internet portal is a fixed amount for | 16 | | each offering, a variable amount based on the length of | 17 | | time that the securities are offered on the Internet | 18 | | portal, a variable amount based on the total proposed | 19 | | offering amount, or any combination of such fixed and | 20 | | variable amounts. | 21 | | (6) It does not offer investment advice or
| 22 | | recommendations; however, an Internet portal
is not deemed | 23 | | to be offering investment advice or
recommendations simply | 24 | | by virtue of: | 25 | | (A) selecting transactions in which the
Internet | 26 | | portal shall serve as an intermediary; |
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| 1 | | (B) establishing reasonable selection criteria
for | 2 | | an issuer to meet in order to establish an offer or
| 3 | | sale of securities through the Internet portal; | 4 | | (C) establishing reasonable selection criteria
for | 5 | | a potential purchaser to meet in order to
participate | 6 | | in an offer or sale of securities made
through the | 7 | | Internet portal; or | 8 | | (D) terminating an issuer transaction at any
time | 9 | | before the first sale of the securities of such
issuer | 10 | | if the Internet portal determines such action
is | 11 | | appropriate, after reasonable due diligence, to
| 12 | | protect potential purchasers, and the Internet portal
| 13 | | is able to direct the qualified escrowee to return all | 14 | | funds then provided by potential purchasers, if
any. | 15 | | (7) It does not engage in such other
activities as the | 16 | | Secretary of State, by rule, determines
are prohibited. | 17 | | (e) Upon completion of an offering made pursuant to | 18 | | subsection T of Section 4, each registered Internet portal | 19 | | involved with the transactions (and the issuer, to the extent | 20 | | applicable) shall store any and all electronic materials | 21 | | related to the completed offering (including copies of all | 22 | | offering documents, all offering materials, and all purchaser | 23 | | information) on a secure, non-public, server or in such other | 24 | | manner as the Secretary of State may hereafter deem acceptable | 25 | | by rule.
| 26 | | (f) Notwithstanding anything contained in this Act to the
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| 1 | | contrary, in connection with any offering or sale of securities
| 2 | | pursuant to subsection T of Section 4 of this Act, the hosting
| 3 | | registered Internet portal may elect, in its discretion, to
| 4 | | accept as compensation (in whole or part) for the services
| 5 | | provided in connection with the subject offering: | 6 | | (1) such equity in, or other securities issued by,
| 7 | | issuer on the Internet portal as part of the subject
| 8 | | offering; or | 9 | | (2) equity in, or other securities issued by, issuer
of | 10 | | any kind, provided that any right to distribution or
| 11 | | payment with respect to such class of equity or other
| 12 | | securities received by the registered Internet portal be
| 13 | | equal, or junior, in terms of priority to the distribution | 14 | | and payment
rights, as applicable, of the securities being | 15 | | offered on the Internet
portal as part of the subject | 16 | | offering. | 17 | | (Source: P.A. 99-182, eff. 1-1-16 .)".
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