In addition to U.S. federal securities laws, individual states have their own securities laws, called “Blue Sky Laws,” that regulate the offering and selling of securities in their jurisdiction and implement safeguards for investors against securities fraud.
Who is affected?
If your principal place of business is located in one of these states, and/or if residents of one of these states purchased 50% or greater of the aggregate amount of your offering, you may be subject to notice filing obligations.
See the updated list of states with the corresponding notice obligations here.
Where is my principal place of business?
A company’s principal place of business is the location where officers direct, control, and coordinate the company’s activities. This is typically the location where the primary functions and decision-making activities of the enterprise occur. The principal place of business is generally the location where the headquarters of a company is situated, but not always.
Blue Sky laws vary by state and require issuers to register securities offerings and sales within the state, unless an exemption is available under the Securities Act of 1933. Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012, also called Regulation Crowdfunding (Reg CF), provides an exemption.
Title III of the JOBS Act preempts certain Regulation Crowdfunding (Reg CF) transactions from registration under state Blue Sky Laws. However, some states still require notice filings be made in order for the state to review the securities offering. A Reg CF notice filing usually comprises of: (1) a Form C filed with the SEC (you are doing this already); (2) a consent to service of process on Form U-2; and (3) the state filing fee, if applicable. This filing should be made to the state securities regulators, as indicated by each state’s statute.
This FAQ sheet does not constitute as legal advice, please consult with your legal counsel as to whether a state filing is necessary for your offering. This summary was last updated on July 8, 2019.
Republic Core LLC (“Core”) provides technology and support services to OpenDeal Inc. and its affiliates (collectively, the “Republic Ecosystem”). Republic Note holders and as well as users of the site and services maintained by the Republic Ecosystem, regardless of and their activities on or relating to the Republic Ecosystem, are subject to the applicable terms of service, in their entirety.
Core is currently conducting an offering of Republic Notes under Rule 506(c) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) to persons who are accredited investors, as that term is defined in Rule 501. Only accredited investors are eligible to participate in the Rule 506(c) offering. Accredited investors who wish to participate in the Rule 506(c) offering should receive and review carefully the Private Placement Memorandum pertaining to that offering, as it contains important information for potential investors to consider prior to making an investment decision. Accredited investors who wish to participate in the Rule 506(c) offering will be required to (i) complete a subscription agreement, (ii) acknowledge that they have received and read the Private Placement Memorandum, and (iii) provide information verifying their status as accredited investors.
Core is also “testing the waters” with respect to the sale of Republic Notes under Regulation A of the Securities Act. The “testing the waters” process allows companies to determine whether there may be interest in an eventual offering of its securities to qualified purchasers under Regulation A. Core is not under any obligation to make an offering under Regulation A. No money or other consideration is being solicited for an offering under Regulation A at this time and, if sent, it will not be accepted.
Core may choose to make an offering to some, but not all, of the people who indicate an interest in investing, and that offering may or may not be made under Regulation A. For example, Core may choose to proceed with its offering under Rule 506(c) without ever conducting a Regulation A offering, in which case only accredited investors within the meaning of Rule 501 will be able to buy Republic Notes.
If and when Core conducts an offering under Regulation A of the Act, it will do so only once (i) it has filed an offering statement with the Securities and Exchange Commission (“SEC”), (ii) the SEC has qualified such offering statement and (iii) investors have subscribed to the offering in the manner provided for in the offering statement. The information in the offering statement will be more complete than any test-the-waters materials and could differ in important ways. Prospective investors who are interested in participating in the Regulation A offering must read the offering statement filed with the SEC, when that offering statement becomes publicly available.
No money or other consideration is being solicited at this time in connection with any potential Regulation A offering and, if tendered, will not be accepted. No offer to buy securities in a Regulation A offering can be accepted and no part of the purchase price can be received until an offering statement is qualified with the SEC. Any offer to buy securities may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. Any indication of interest in Core’s offering involves no obligation or commitment of any kind.