If I want to sell securities only locally, is the sec involved?
If the offering is purely local, it may qualify for the " Intrastate Offering Exemption " from the SEC's registration requirements.
To qualify for the intrastate offering exemption, a company must be incorporated in the same state where it is offering the securities and carry out a very significant amount of its business in that state. It may offer the securities only to residents of that state, and may not sell any of the securities to anyone not a resident of that state. (Experience shows that in practice it is very difficult to make sure offers are only being made to state residents, especially if someone is helping the company sell the issue.) If even one share of the securities are offered or sold to just one out-of-state person, the Intrastate exemption may be lost. Similarly, if an in-state purchaser of the shares resells any of them to a person who resides outside the state within a short period of time after the company's offering is complete (the usual test is nine months), the entire transaction, including the original sales, might violate the Securities Act.
Most of the benefits of the Intrastate exemption can be obtained by adhering to SEC Rule 147's "safe harbor" provisions. Our advice to companies seeking to raise capital is never to rely on the Intrastate exemption unless a securities lawyer is closely involved in the process. Further, even if an offering may qualify for an exemption from registration under the Federal Securities Act of 1933, it may well have to register and/or qualify under the Blue Sky Laws of the state in which the offering is made.
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