Intrastate Offerings

Section 3(a)(11) of the Securities Act is generally known as the “intrastate offering exemption.” This exemption seeks to facilitate the financing of local business operations. To qualify for the intrastate offering exemption, a company must:

  • Be organized in the state where it is offering the securities;
  • Carry out a significant amount of its business in that state; and,
  • Make offers and sales only to residents of that state.

The intrastate offering exemption does not limit the size of the offering or the number of purchasers. A company must determine the residence of each offeree and purchaser. If any of the securities are offered or sold to even one out-of-state person, the exemption may be lost. Without the exemption, the company would be in violation of the Securities Act if the offering does not qualify for another exemption.

Rule 147

Rule 147 is considered a “safe harbor” under Section 3(a)(11), providing objective standards that a company can rely on to meet the requirements of that exemption. Rule 147, as amended, has the following requirements:

  • The company must be organized in the state where it offers and sells securities;
  • The company must have its “principal place of business” in-state and satisfy at least one “doing business” requirement that demonstrates the in-state nature of the company’s business;
  • Offers and sales of securities can only be made to in-state residents or persons who the company reasonably believes are in-state residents; and,
  • The company obtains a written representation from each purchaser providing the residency of that purchaser.

Securities purchased in an offering under Rule 147 limit resales to persons residing within the state of the offering for a period of six months from the date of the sale by the issuer to the purchaser. In addition, a company must comply with state securities laws and regulations in the states in which securities are offered or sold.

Rule 147A

Rule 147A is a new intrastate offering exemption adopted by the SEC in October 2016. Rule 147A is substantially identical to Rule 147 except that Rule 147A:

  • Allows offers to be accessible to out-of-state residents, so long sales are only made to in-state residents; and,
  • Permits a company to be incorporated or organized out-of-state, so long as the company has its “principal place of business” in-state and satisfies at least one “doing business” requirement that demonstrates the in-state nature of the company’s business.

Intrastate Offering Documents

For your Intrastate Offerings, use our Rule 147/147A set of offering documents.  Documents in these kits include the Offering Memorandum, Investor Questionnaire, Subscription Agreement, Jurisdictional Legends for all 50 states and more and are available for your corporation or LLC.

Relevant FAQs

Do the anti-fraud provisions apply?

All securities transactions, even exempt transactions, are subject to the antifraud provisions of the federal securities laws. This means that you and your company will be responsible for false or misleading statements that you or others on your behalf make regarding your company, the securities offered, or the offering. You and your company are responsible for any such statements, whether made by your company or on behalf of the company, and regardless of whether they are made orally or in writing.

The government enforces the federal securities laws through criminal, civil and administrative proceedings. Private parties also can bring actions under certain securities laws. Also, if all conditions of the exemptions are not met, purchasers may be able to return their securities and obtain a refund of their purchase price.

Do state law requirements apply?

While the SEC regulates and enforces the federal securities laws, each state has its own securities regulator who enforces what are known as “blue sky” laws. If a company is selling securities, it must comply with both federal regulations and state securities laws and regulations in the states where securities are offered and sold (typically, the states where offerees and investors are based).

Under the Securities Act, if a company’s offering qualifies for certain exemptions from registration, that offering is not required to be registered or qualified by state securities regulators. Even if the offering is made under one of those exemptions, the states still have authority to investigate and bring enforcement actions for fraud, impose state notice filing requirements, and collect state fees. The failure to file, or pay filing fees regarding, any such materials may cause state securities regulators to suspend the offer or sale of securities within their jurisdiction. Companies should contact state securities regulators in the states in which they intend to offer or sell securities for further guidance on compliance with state law requirements. The following table illustrates which offerings are potentially subject to state registration or qualification under the Securities Act.

Securities Act Exemption Under the Securities Act, is the offering potentially subject to state registration or qualification?
Rule 504 Yes
Rule 506(b) No
Rule 506(c) No
Regulation Crowdfunding No
Regulation A – Tier 1 Yes
Regulation A – Tier 2 No
Rules 147 and 147A Yes

For the offerings that are potentially subject to state registration or qualification, each state’s securities laws have their own separate registration requirements and exemptions to registration requirements. Even if the offering is not subject to state registration or qualification, there may still be state notice filing requirements and fees.

To locate a state securities regulator and learn more about a particular state’s securities laws, please visit the North American Securities Administrators Association (NASAA) website.

    How can an investor resell non-restricted securities?

    An investor that is not affiliated with the issuer and wishes to sell securities that are not restricted must either register the transaction or have an exemption for the transaction. An exemption commonly relied upon for the resale of the securities is Section 4(a)(1) of the Securities Act which is available to any person other than an issuer, underwriter or dealer.  Please be aware that several exemptions, including the exemptions under Regulation D, are only available for offers and sales by an issuer of securities to initial purchasers and are not available to any affiliate of the issuer or to any person for resales of the securities.


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     Our SEC compliant documents and other services are not a substitute for the advice of legal counsel.